83 FR 24815 - Section 8 Housing Assistance Payments Program-Fiscal Year 2018 Inflation Factors for Public Housing Agency Renewal Funding

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 83, Issue 104 (May 30, 2018)

Page Range		24815-24817
FR Document		2018-11587

This notice establishes Renewal Funding Inflation Factors (RFIFs) to adjust Fiscal Year (FY) 2018 renewal funding for the Housing Choice Voucher (HCV) program of each public housing agency (PHA), as required by the Consolidated Appropriations Act, 2018. HUD produces the FY 2018 RFIFs by apportioning the expected percent change in national per unit cost (PUC) for the HCV program, 3.47 percent, to each PHA based on the change in Fair Market Rents (FMRs) for their operating area. HUD's FY 2018 methodology is the same as that which was used in FY 2017. However, HUD is seeking comment on potential RFIF methodology changes related to the use of ad hoc surveys conducted for purposes of reevaluating FMRs and their effect on the calculation of RFIFs.

Federal Register, Volume 83 Issue 104 (Wednesday, May 30, 2018)

[Federal Register Volume 83, Number 104 (Wednesday, May 30, 2018)]
[Notices]
[Pages 24815-24817]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-11587]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6099-N-01]

Section 8 Housing Assistance Payments Program--Fiscal Year 2018
Inflation Factors for Public Housing Agency Renewal Funding

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

ACTION: Notice.

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SUMMARY: This notice establishes Renewal Funding Inflation Factors
(RFIFs) to adjust Fiscal Year (FY) 2018 renewal funding for the Housing
Choice Voucher (HCV) program of each public housing agency (PHA), as
required by the Consolidated Appropriations Act, 2018. HUD produces the
FY 2018 RFIFs by apportioning the expected percent change in national
per unit cost (PUC) for the HCV program, 3.47 percent, to each PHA
based on the change in Fair Market Rents (FMRs) for their operating
area. HUD's FY 2018 methodology is the same as that which was used in
FY 2017. However, HUD is seeking comment on potential RFIF methodology
changes related to the use of ad hoc surveys conducted for purposes of
reevaluating FMRs and their effect on the calculation of RFIFs.

DATES:
Comment Due Date: June 29, 2018.
Applicability Date: May 30, 2018.

FOR FURTHER INFORMATION CONTACT: For technical information regarding
the development of the schedules for specific areas or the methods used
for calculating the inflation factors, 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; Peter B. Kahn, Director, Economic and Market
Analysis Division, Office of Policy Development and Research, telephone
number 202-402-2409, or Adam Bibler, Economist, Economic and Market
Analysis Division, Office of Policy Development and Research, telephone
number 202-402-6057. Mail for these individuals should be addressed to
the 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

Division L, Title II of the Consolidated Appropriations Act, 2018
requires that the HUD Secretary, for the calendar year 2018 funding
cycle, provide renewal funding for each 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, published in the Federal Register. This notice announces the
availability of the FY 2018 inflation factors and describes the
methodology for calculating them. Tables in PDF and Microsoft Excel
formats showing RFIFs will be available electronically from the HUD
data information page at: https://www.huduser.gov/portal/datasets/rfif/rfif.html.

II. Methodology

RFIFs are used to adjust the allocation of HCV program funds to
PHAs for local changes in rents, utility costs, and tenant incomes. To
calculate the RFIFs, HUD first forecasts a national inflation factor,
which is the annual change in the national average PUC. HUD then
calculates individual area inflation factors, which are based on the
annual changes in the two-bedroom FMR for each area. Finally, HUD
adjusts the individual area inflation factors to be consistent with the
national inflation factor.
HUD's forecast of the national average PUC is based on forecasts of
gross rent and tenant income. Each forecast is produced using
historical and forecasted macroeconomic data as independent variables,
where the forecasts are consistent with the economic assumptions of the
Administration's FY 2018 Budget. The forecast of gross rent is itself
based on

[[Page 24816]]

forecasts of the Consumer Price Index (CPI) Rent of Primary Residence
Index and the CPI Fuels and Utilities Index. Forecasted values of these
series are applied to the FY 2018 national average two-bedroom FMR to
produce a projected calendar year (CY) 2018 gross rent value. A
``notional'' PUC is calculated as the difference between gross rent
value and 30 percent of average tenant income (the standard percentage
for tenant rent contributions in the voucher program). The change
between the CY 2017 notional PUC and the forecasted CY 2018 notional
PUC is the expected national change in PUC, or 3.47 percent. HUD uses a
notional PUC as opposed to the actual PUC to project costs that are
consistent with PHAs leasing the same number and quality of units. For
several years, growth in observed PUC was lower than this notional PUC
as PHAs reacted to reduced overall program funding by reducing payment
standards relative to the FMR. For more information on HUD's forecast
methodology, see 82 FR 26710.
The inflation factor for an individual geographic area is based on
the annualized change in the area's FMR between FY 2017 and FY 2018.
These changes in FMRs are then scaled such that the voucher-weighted
average of all individual area inflation factors is equal to the
national inflation factor, i.e., the expected annual change in national
PUC from CY 2017 to CY 2018, and such that no area has a factor less
than one. For PHAs operating in multiple FMR areas, HUD calculates a
voucher-weighted average inflation factor based on the count of
vouchers in each FMR area administered by the PHA as captured in HUD
administrative data as of December 31, 2017.

III. The Use of Inflation Factors

HUD subsequently applies the calculated individual area inflation
factors to eligible renewal funding for each PHA based on VMS leasing
and cost data for the prior calendar year.

IV. Geographic Areas and Area Definitions

As explained above, inflation factors based on area FMR changes are
produced for all FMR areas and applied to eligible renewal funding for
each PHA. The tables showing the RFIFs, available electronically from
the HUD data information page, list the inflation factors for each FMR
area on a state-by-state basis. The inflation factors use the same OMB
metropolitan area definitions, as revised by HUD, that are used for the
FY 2018 FMRs. PHAs should refer to the Area Definitions Table on the
following web page to make certain that they are referencing the
correct inflation factors: http://www.huduser.org/portal/datasets/rfif/FY2018/FY2018_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. HUD is
also releasing the data in Microsoft Excel format to assist users who
may wish to use these data in other calculations. The Excel file is
available at https://www.huduser.gov/portal/datasets/rfif/rfif.html.

V. Request for Comment on the Use of FMRs Based on Ad Hoc Surveys for
Renewal Funding

As described above, HUD uses the annual change in an area's FMR in
part to produce its inflation factor. HUD allows for the use of PHA-
sponsored local rent survey data in calculating FMRs, and the use of
this data can produce erratic RFIFs as certain areas switch from FMRs
based on American Community Survey (ACS) data to FMRs based on local
rent surveys and vice versa. For example, in cases where rents are
increasing and an area's FMR was based on the same sponsored local rent
survey for two consecutive years, or was previously based on a (higher-
rent) local survey that was superseded by more current (lower-rent) ACS
data, that area's RFIF will be lower relative to underlying rent growth
in the area, leaving PHAs with the choice to either fund additional
surveys or accept the lower RFIF. With this notice, HUD seeks comment
on this issue, including its equitability to PHAs that have not
sponsored local surveys, and on potential method changes to the RFIF
calculation. Funds are not available for HUD to carry out extensive
local rent surveys. Given this limitation, HUD seeks comment on the
following possible ways to calculate the local rent change used in the
calculation of RFIFs:
Maintain the current policy of including the survey-based
FMR change in the first calculation of RFIFs following the
implementation of the survey and continue using the change in FMRs
while the survey is still in effect.
Stop incorporating local rent surveys in the calculation
of the FMR change component of the RFIF calculation.
As with current policy, include the survey-based FMR
change in the first calculation of RFIFs following the implementation
of the survey. In subsequent years, while the survey is still being
used in the calculation of the published FMRs, use the change in
underlying rent data collected via the ACS. By doing this, the rent
change component of the RFIF will be based on a local measure of actual
year-to-year rent change.
Instead of having a large increase in the FMR in the first
year of using local survey data, with little to no inflation for the
next several years, spread the increase over the expected usable life
of the survey. HUD would do this by calculating the average annual
change between the survey-derived rent and the ACS rent over a two- or
three-year period. Surveys conducted in January through June generally
are used in two FMR calculations and surveys conducted in July through
December are typically used in three FMR calculations. By using the
annual average increase as the FMR change component of the RFIF
calculation, PHAs in areas submitting local survey data will ultimately
have the full increase in their survey-based FMR realized in their
inflation factors, but the distortive impacts of implementing the
entire change in the first year of the use of the local survey-based
rent will also be ameliorated. This would also likely lessen the
mismatch between the RFIF and local rent growth rates at the transition
back from survey data to ACS data.
Pursue another strategy recommended by commenters.
HUD recognizes that PHAs may need additional renewal funding to
support their HCV program when they must increase payment standards
commensurate with increases in FMRs due to submission of locally funded
survey data. Including the full survey-based FMR change in the RFIF
calculation helps to achieve this need; \1\ however, use of survey-
based FMRs in the RFIF calculation skews the distribution of renewal
funding towards those areas where surveys are conducted, all other
factors remaining constant. Therefore, HUD is interested in comments
from all interested parties, including those PHAs that have engaged in
a local survey program, and those PHAs that have not supplied local
survey data.
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\1\ HUD notes that even when the FMR change component of the
RFIF calculation uses a local survey, the RFIF calculated for the
given area is not as large as the FMR change itself since no PHA may
receive a negative RFIF. Consequently, the allocation process
dampens both FMR increases and FMR decreases towards a central
value.
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VI. Environmental Impact

This notice involves a statutorily required establishment of a rate
or cost determination which does not constitute

[[Page 24817]]

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: May 23, 2018.
Todd Richardson,
Acting General Deputy Assistant Secretary for Policy Development and
Research.
[FR Doc. 2018-11587 Filed 5-29-18; 8:45 am]
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Federal Register / Vol. 83, No. 104 / Wednesday, May 30, 2018 / Notices 24817

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Todd Richardson,
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Document Created: 2018-05-30 01:02:10
Document Modified: 2018-05-30 01:02:10

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		Comment Due Date: June 29, 2018.
Contact		For technical information regarding the development of the schedules for specific areas or the methods used for calculating the inflation factors, 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; Peter B. Kahn, Director, Economic and Market Analysis Division, Office of Policy Development and Research, telephone number 202-402-2409, or Adam Bibler, Economist, Economic and Market Analysis Division, Office of Policy Development and Research, telephone
FR Citation		83 FR 24815