80 FR 21754 - Section 8 Housing Assistance Payments Program-Fiscal Year (FY) 2015 Inflation Factors for Public Housing Agency (PHA) Renewal Funding

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 80, Issue 75 (April 20, 2015)

Page Range		21754-21755
FR Document		2015-09011

The Consolidated Appropriations Act, 2015 requires that HUD apply ``an inflation factor as established by the Secretary, by notice published in the Federal Register'' to adjust FY 2015 renewal funding for the Tenant-based Rental Assistance Program or Housing Choice Voucher (HCV) Program of each PHA. HUD began using Renewal Funding Inflation Factors in FY 2012. These Renewal Funding Inflation Factors incorporate economic indices to measure the expected change in per unit costs (PUC) for the HCV program. The methodology for FY 2015 is similar to that used in FY 2014.

Federal Register, Volume 80 Issue 75 (Monday, April 20, 2015)

[Federal Register Volume 80, Number 75 (Monday, April 20, 2015)]
[Notices]
[Pages 21754-21755]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-09011]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5857-N-01]

Section 8 Housing Assistance Payments Program--Fiscal Year (FY)
2015 Inflation Factors for Public Housing Agency (PHA) Renewal Funding

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

ACTION: Notice.

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SUMMARY: The Consolidated Appropriations Act, 2015 requires that HUD
apply ``an inflation factor as established by the Secretary, by notice
published in the Federal Register'' to adjust FY 2015 renewal funding
for the Tenant-based Rental Assistance Program or Housing Choice
Voucher (HCV) Program of each PHA. HUD began using Renewal Funding
Inflation Factors in FY 2012. These Renewal Funding Inflation Factors
incorporate economic indices to measure the expected change in per unit
costs (PUC) for the HCV program. The methodology for FY 2015 is similar
to that used in FY 2014.

DATES: Effective Date: April 20, 2015. Comments Due Date: June 19,
2015.

ADDRESSES: Interested persons are invited to submit comments on
potential improvements to HUD's per unit cost (PUC) forecasting model
to the Office of the General Counsel, Rules Docket Clerk, Department of
Housing and Urban Development, 451 Seventh Street SW., Room 10276,
Washington, DC 20410-0001. Communications should refer to the above
docket number and title and should contain the information specified in
the ``Request for Comments'' section. 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. Due to security measures at all federal
agencies, however, submission of comments by mail often results in
delayed delivery. To ensure timely receipt of comments, HUD recommends
that comments submitted by mail be submitted at least two weeks in
advance of the public comment deadline.
2. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
http://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
http://www.regulations.gov Web site can be viewed by other commenters
and interested members of the public. Commenters should follow
instructions provided on that site to submit comments electronically.

Note: To receive consideration as public comments, comments must
be submitted through one of the two methods specified above. Again,
all submissions must refer to the docket number and title of the
notice.

No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
Public Inspection of Comments. All comments and communications
submitted to HUD will be available, without change, 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). Copies of all comments submitted are available for
inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Miguel A. Fontanez, Director, Housing
Voucher Financial Division, Office of Public Housing and Voucher
Programs, Office of Public and Indian Housing, telephone number 202-
402-4212; or Peter B. Kahn, Director, Economic and Market Analysis
Division, Office of Policy Development and Research, telephone number
202-402-2409, for technical information regarding the development of
the schedules for specific areas or the methods used for calculating
the inflation factors, Department of Housing and Urban Development, 451
7th Street SW., Washington, DC 20410. Hearing- or speech-impaired
persons may contact the Federal Relay Service at 800-877-8339 (TTY).
(Other than the ``800'' TTY number, the above-listed telephone numbers
are not toll free.)

SUPPLEMENTARY INFORMATION:

I. Background

Tables showing Renewal Funding Inflation Factors will be available
electronically from the HUD data information page at: http://www.huduser.org/portal/datasets/rfif/FY2015/FY2015_RFIF_FMR_AREA_REPORT.pdf.
Division K, Title II, Consolidated and Further Continuing
Appropriations Act, 2015 requires that the HUD Secretary, for the
calendar year 2015 funding cycle, provide renewal funding for each
public housing agency (PHA) based on validated voucher management
system (VMS) leasing and cost data for the prior calendar year and by
applying an inflation factor as established by the Secretary, by notice
published in the Federal Register. This notice provides the FY 2015
inflation factors and describes the methodology for calculating them.

II. Methodology

The Department has focused on measuring the change in average PUC
as captured in HUD's administrative data in VMS. In order to predict
the likely path of PUC over time, HUD has implemented a model that uses
three economic indices that capture key components of the economic
climate and assist in explaining the changes in PUC. These economic
components are the seasonally-adjusted unemployment rate (lagged twelve
months), the Consumer Price Index from the Bureau of Labor Statistics,
and the ``wages and salaries'' component of personal income from the
National Income and Product Accounts from the Bureau of Economic
Analysis. This model subsequently forecasts the expected annual change
in average PUC from Calendar Year (CY) 2014 to CY 2015 for the voucher
program on a national basis by incorporating comparable economic
variables from the Administration's

[[Page 21755]]

economic assumptions. For reference, these economic assumptions are
described in Chapter 2 of the Analytical Perspectives in the
President's FY 2016 Budget Proposal.
Using the Per Unit Cost forecasting model, HUD forecasts average
PUC to decrease slightly in 2015. The PUC forecast for 2015 uses VMS
data and actual performance of economic indices through December of
2014. With no increases in PUCs predicted for 2015, the Renewal Funding
Inflation Factor for each area will be 1.0.

III. The Use of Inflation Factors

Typically, the inflation factors have been developed to account for
relative differences in the PUC of vouchers so that HCV funds can be
allocated among PHAs. However, since the current forecast is for the
PUC to decline in 2015, HUD has set all areas to have an inflation
factor of 1.0, which is consistent with the statutory requirements
governing the Annual Adjustment Factor.

IV. Geographic Areas and Area Definitions

Inflation factors based on PUC forecasts are produced for all FMR
areas. The tables showing the Renewal Funding Inflation Factors
available electronically from the HUD data information page list the
inflation factors for each FMR area and are created on a state by state
basis. The inflation factors use the same OMB metropolitan area
definitions, as revised by HUD, that are used in the FY 2015 FMRs. To
make certain that they are referencing the correct inflation factors,
PHAs should refer to the Area Definitions Table on the following Web
page: http://www.huduser.org/portal/datasets/rfif/FY2015/FY2015_RFIF_FMR_AREA_REPORT.pdf. The Area Definitions Table lists areas
in alphabetical order by state, and the counties associated with each
area. In the six New England states, the listings are for counties or
parts of counties as defined by towns or cities.

V. Request for Comments

HUD has forecasted the decline in national PUC for 2015 to be -0.79
percent. While more analysis is necessary, HUD is concerned that the
current model used to predict the amount of per unit cost, when
interacted with voucher program appropriations decisions, may have
inadvertently locked in PHA cost reduction behaviors used to cope with
funding reductions under sequestration in 2013.
Rather than terminate assistance from families participating in the
program, PHAs often respond to reduced funding by not reissuing
vouchers when families leave the program. However there is a strong
incentive for PHAs to reduce spending in the voucher program by means
other than reducing the number of families served because PHA
administrative fees are based on the number of vouchers under lease.
These policies have the effect of reducing the (average) subsidy cost
of vouchers, and as a result, reduce a family's ability to rent in
higher rent markets and higher opportunity areas. These policies, while
necessary to handle the budget constraints, may also be viewed as
reducing the effectiveness of vouchers in meeting the goals of the
program.
One of the primary tools PHAs use in administering the voucher
program is through setting payment standards. Payment standards, rather
than Fair Market Rents (FMR), form the basis of the subsidy (the lower
of the payment standard or gross rent less the total tenant payment--
typically 30 percent of adjusted household income) since a tenant
selecting a unit with a gross rent higher than the payment standard
must make up the additional rent to the owner. When payment standards
decrease relative to FMR, the selection of units available to tenants
decreases and higher opportunity neighborhoods with generally higher
rents may no longer be available for tenants. A reduction of payment
standards relative to FMRs is likely to cause gross rents to grow more
slowly than FMRs as tenants choose units available within the payment
standard.
Other tools PHAs may use to reduce subsidy cost include policies
that encourage more earnings among tenants or by approving more cases
of tenants paying more than 30 percent of adjusted income toward rent.
Thus, the model's projections for PUC may not accurately forecast
the true cost of maintaining a voucher program when there is a
significant external event. As stated in prior notices, HUD may update
the methodology for future funding estimates to improve the forecasting
model, if necessary. HUD is also continuing to review and refine the
methodology, especially for area differences in the factors, which will
be described in future inflation factor notices. One option the
Department is considering is to create a ``constant quality'' PUC
forecast that addresses reduced payment standards and increases in
tenant contributions as a way to account for outside disruptions such
as sequestration. The Department welcomes comments on other ways to
calculate the Renewal Funding Inflation Factor for the Housing Choice
Voucher program for 2016 and beyond.

VI. Environmental Impact

This notice involves a statutorily required establishment of a rate
or cost determination which does not constitute a development decision
affecting the physical condition of specific project areas or building
sites. Accordingly, under 24 CFR 50.19(c)(6), this notice is
categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Dated: April 10, 2015.
Katherine M. O'Regan,
Assistant Secretary for Policy Development and Research.
[FR Doc. 2015-09011 Filed 4-17-15; 8:45 am]
BILLING CODE 4210-67-P

Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Notices 21755

economic assumptions. For reference, Rather than terminate assistance from calculate the Renewal Funding Inflation
these economic assumptions are families participating in the program, Factor for the Housing Choice Voucher
described in Chapter 2 of the Analytical PHAs often respond to reduced funding program for 2016 and beyond.
Perspectives in the President’s FY 2016 by not reissuing vouchers when families
VI. Environmental Impact
Budget Proposal. leave the program. However there is a
Using the Per Unit Cost forecasting strong incentive for PHAs to reduce This notice involves a statutorily
model, HUD forecasts average PUC to spending in the voucher program by required establishment of a rate or cost
decrease slightly in 2015. The PUC means other than reducing the number determination which does not constitute
forecast for 2015 uses VMS data and of families served because PHA a development decision affecting the
actual performance of economic indices administrative fees are based on the physical condition of specific project
through December of 2014. With no number of vouchers under lease. These areas or building sites. Accordingly,
increases in PUCs predicted for 2015, policies have the effect of reducing the under 24 CFR 50.19(c)(6), this notice is
the Renewal Funding Inflation Factor (average) subsidy cost of vouchers, and categorically excluded from
for each area will be 1.0. as a result, reduce a family’s ability to environmental review under the
rent in higher rent markets and higher National Environmental Policy Act of
III. The Use of Inflation Factors opportunity areas. These policies, while 1969 (42 U.S.C. 4321).
Typically, the inflation factors have necessary to handle the budget Dated: April 10, 2015.
been developed to account for relative constraints, may also be viewed as Katherine M. O’Regan,
differences in the PUC of vouchers so reducing the effectiveness of vouchers
Assistant Secretary for Policy Development
that HCV funds can be allocated among in meeting the goals of the program. and Research.
PHAs. However, since the current One of the primary tools PHAs use in
[FR Doc. 2015–09011 Filed 4–17–15; 8:45 am]
forecast is for the PUC to decline in administering the voucher program is
through setting payment standards. BILLING CODE 4210–67–P
2015, HUD has set all areas to have an
Payment standards, rather than Fair
inflation factor of 1.0, which is
Market Rents (FMR), form the basis of
consistent with the statutory DEPARTMENT OF HOUSING AND
the subsidy (the lower of the payment
requirements governing the Annual URBAN DEVELOPMENT
standard or gross rent less the total
Adjustment Factor.
tenant payment—typically 30 percent of [Docket No. FR–5869–D–02]
IV. Geographic Areas and Area adjusted household income) since a
Definitions tenant selecting a unit with a gross rent Order of Succession for the Office of
higher than the payment standard must Community Planning and Development
Inflation factors based on PUC make up the additional rent to the
forecasts are produced for all FMR AGENCY: Office of the Secretary, HUD.
owner. When payment standards
areas. The tables showing the Renewal decrease relative to FMR, the selection ACTION: Notice of Order of Succession
Funding Inflation Factors available of units available to tenants decreases for the Office of Community Planning
electronically from the HUD data and higher opportunity neighborhoods and Development.
information page list the inflation with generally higher rents may no
factors for each FMR area and are SUMMARY: In this notice, the Secretary of
longer be available for tenants. A HUD designates the Order of Succession
created on a state by state basis. The reduction of payment standards relative
inflation factors use the same OMB for the Office of Community Planning
to FMRs is likely to cause gross rents to and Development. This Order of
metropolitan area definitions, as revised grow more slowly than FMRs as tenants
by HUD, that are used in the FY 2015 Succession supersedes all prior Orders
choose units available within the of Succession for the Assistant Secretary
FMRs. To make certain that they are payment standard.
referencing the correct inflation factors, for Community Planning and
Other tools PHAs may use to reduce Development, including the Order of
PHAs should refer to the Area subsidy cost include policies that
Definitions Table on the following Web Succession published on May 30, 2012.
encourage more earnings among tenants
page: http://www.huduser.org/portal/ DATES: Effective upon date of signature.
or by approving more cases of tenants
datasets/rfif/FY2015/FY2015_RFIF_ paying more than 30 percent of adjusted FOR FURTHER INFORMATION CONTACT:
FMR_AREA_REPORT.pdf. The Area income toward rent. David H. Enzel, Director, Office of
Definitions Table lists areas in Thus, the model’s projections for PUC Technical Assistance and Management,
alphabetical order by state, and the may not accurately forecast the true cost Department of Housing and Urban
counties associated with each area. In of maintaining a voucher program when Development, 451 7th Street SW., Room
the six New England states, the listings there is a significant external event. As 7228, Washington, DC 20410–7000;
are for counties or parts of counties as stated in prior notices, HUD may update telephone number 202–402–5557. (This
defined by towns or cities. the methodology for future funding is not a toll-free number.) This number
estimates to improve the forecasting may be accessed via TTY by call the
V. Request for Comments Federal Relay Service at 1–800–877–
model, if necessary. HUD is also
HUD has forecasted the decline in continuing to review and refine the 8339 (this is a toll-free number).
national PUC for 2015 to be ¥0.79 methodology, especially for area SUPPLEMENTAL INFORMATION: The
percent. While more analysis is differences in the factors, which will be Secretary of HUD is issuing this Order
necessary, HUD is concerned that the described in future inflation factor of Succession of officials authorized to
mstockstill on DSK4VPTVN1PROD with NOTICES

current model used to predict the notices. One option the Department is perform the functions and duties of the
amount of per unit cost, when considering is to create a ‘‘constant Office of the Assistant Secretary for
interacted with voucher program quality’’ PUC forecast that addresses Community Planning and Development
appropriations decisions, may have reduced payment standards and when the Assistant Secretary is not
inadvertently locked in PHA cost increases in tenant contributions as a available to exercise the powers or
reduction behaviors used to cope with way to account for outside disruptions perform the duties of the office. This
funding reductions under sequestration such as sequestration. The Department publication supersedes all prior orders
in 2013. welcomes comments on other ways to of succession for the Office of

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Document Created: 2018-02-21 10:13:08
Document Modified: 2018-02-21 10:13:08

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice.
Dates		Effective Date: April 20, 2015. Comments Due Date: June 19, 2015.
Contact		Miguel A. Fontanez, Director, Housing Voucher Financial Division, Office of Public Housing and Voucher Programs, Office of Public and Indian Housing, telephone number 202- 402-4212; or Peter B. Kahn, Director, Economic and Market Analysis Division, Office of Policy Development and Research, telephone number 202-402-2409, for technical information regarding the development of the schedules for specific areas or the methods used for calculating the inflation factors, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410. Hearing- or speech-impaired persons may contact the Federal Relay Service at 800-877-8339 (TTY). (Other than the ``800'' TTY number, the above-listed telephone numbers are not toll free.)
FR Citation		80 FR 21754