[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25391]


[[Page Unknown]]

[Federal Register: October 13, 1994]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Public and Indian Housing

24 CFR Parts 905 and 990

[Docket No. R-94-1681; FR-2971-F-02]
RIN 2577-AA99

 

Low-Income Public Housing; Performance Funding System: 
Elimination of Heating Degree Day Adjustment

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Final rule.

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SUMMARY: This rule will eliminate the application of the heating degree 
day adjustment factor in determining the component of operating subsidy 
eligibility relating to utility consumption under the Performance 
Funding System (PFS). The rule implements section 508 of the Cranston-
Gonzalez National Affordable Housing Act.

EFFECTIVE DATE: November 14, 1994.

FOR FURTHER INFORMATION CONTACT: For information concerning part 990, 
Mr. John T. Comerford, Director, Financial Management Division, Office 
of Assisted Housing, Public and Indian Housing, Room 4212, U.S. 
Department of Housing and Urban Development, 451 Seventh Street, S.W., 
Washington D.C. 20410, telephone (202) 708-1872.
    For information concerning part 905, Mr. Dominic Nessi, Director, 
Office of Native American Programs, U.S. Department of Housing and 
Urban Development, L'Enfant Plaza, Building 490, Room 8204, Washington 
D.C. 20410, telephone (202) 755-0032.
    Hearing or speech impaired individuals may call HUD's TDD number, 
(202) 708-0850. [These telephone numbers are not toll-free.]

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Statement

    This rule eliminates a previously required adjustment and therefore 
reduces the public reporting burden. The information collection 
requirements contained in this rule have been reviewed by the Office of 
Management and Budget under the Paperwork Reduction Act of 1980 (44 
U.S.C. 3501-3520), and assigned OMB control number 2577-0029.

II. Background

    Section 508 of the Cranston-Gonzalez National Affordable Housing 
Act of 1990 (104 Stat. 4187) directs the Department to incorporate into 
the PFS a methodology to adjust utility consumption to account for 
Cooling Degree Days that is the same as the methodology used to account 
for Heating Degree Days. The impetus for this legislation was that 
housing agencies in the sunbelt who had to pay higher utility bills for 
air conditioning during hot summers (e.g., in projects that were 
``master-metered'' in which the cost of running air conditioning could 
not be assigned to the tenant) wanted an adjustment in their PFS 
payments to account for the increased utility consumption.
    Consistent with the explicit policy stated in the statute, the 
proposed rule contained a literal implementation of the statutory 
language. However, the Department was concerned that its implementation 
of this provision raised some basic questions and could create some 
major distortions in the funding system. Because of this, it was 
determined appropriate to open a discussion of policy alternatives in 
the Notice of Proposed Rulemaking published in the Federal Register on 
October 1, 1993 (58 FR 51261) and to invite public comment on the 
issues surrounding implementation of this statutory provision.
    Because of the potential importance of this change, and because the 
Department was aware that there are additional factors to consider in 
calculating cooling load and cost other than ambient temperatures, the 
Preamble to the proposed rule described three alternate scenarios for 
addressing the issue of heating and cooling degree day adjustments in 
the PFS formula:
    1. Implement cooling degree day adjustment exactly like the heating 
degree day adjustment.
    2. Isolate the consumption of the meter estimated to be used for 
heating or cooling by tracking the monthly consumption, and perform a 
cooling and heating degree days adjustment to the portion of utilities 
estimated to be used for heating or cooling.
    3. Drop all degree day adjustments in the PFS. We invited public 
comment on these alternate approaches or suggestions of additional 
alternatives.

III. Response to Public Comments

    There were fifteen public comments on the proposed rule. The 
fifteen commenters included 13 Housing Agencies (HAs), one taxpayer, 
and the Council of Large Public Housing Authorities. Fourteen of the 
fifteen commenters recommended that the Department adopt the third 
option.
    Only one commenter did not recommend the third option. Instead this 
commenter presented options that combined elements of options 2 and 3:
    (A) Establish areas to receive cooling allowances by geographical 
zones rather than cooling degree days. A twenty year temperature 
history could be the basis for the allowance. This would include 
seasonal starting and stopping dates as well as intensity of energy 
requirements.
    (B) Develop formulae that allow less energies for well insulated 
housing as well as additional energies for housing with high solar 
gain. This could be done on a plus or minus percentage basis. An energy 
audit would be helpful in establishing the anticipated energy use of 
each unit.
    (C) Collect energy use data from a variety of unit types, family 
types, and samples of several existing housing units in the specified 
zone. This data could be used as the basis for a fixed allowance for 
cooling purposes during the zone area's cooling season.
    The other fourteen commenters recommended Option 3 because they 
found the benefit in reduced paperwork and administrative burden 
outweighs the benefit of an adjustment for temperature variations. As 
one stated, ``Although theoretically, it appears prudent to adjust the 
utility consumption figures for weather conditions, practically, it is 
very difficult to do so with any degree of reliability.'' Another 
commenter summed up the benefits of Option 3 in one sentence, ``It 
would simplify the system, allow timely post year adjustments and would 
average out over time.''
    In response to this level of agreement, the Department is adopting 
the third option and dropping all heating and cooling degree day 
adjustments. This approach will greatly simplify the PFS. The rolling 
base used to estimate utility consumption in the PFS will reflect the 
HA's recent history of utility consumption including the impact of 
local heating and cooling requirements. This rule will eliminate the 
need to separately track the consumption of each meter used to supply 
heating or air conditioning. This will reduce paperwork and the 
administrative burden on the Department and the Housing Agencies. It 
will eliminate the need to wait for publication of the degree day 
factors before adjustments can be made. This three month delay also 
affects the ability to develop ratings under the Public Housing 
Management Assessment Program (PHMAP). On the negative side, HAs will 
get only a 50 percent adjustment for consumption, without further 
adjustment to reflect weather conditions. Assuming that weather 
averages out over time, there will be no long term penalty or bonus.

IV. Timing of Implementation

    By law, the PFS regulation remains in effect for the duration of a 
HA's fiscal year without change. The revisions of this rule will affect 
a particular HA's year end adjustments to its fiscal year beginning in 
Calendar Year 1995. HAs will apply heating degree day adjustments to 
their fiscal years which began during FFY 1994 and end in 12/94, 3/95, 
6/95, and 9/95. The first years that will not be adjusted will be 
fiscal years ending 12/95, 3/96, 6/96, and 9/96.

V. Findings and Certifications

A. Environmental Review

    A Finding of No Significant Impact (FONSI) with respect to the 
environment was made on the proposed rule in accordance with HUD 
regulations in 24 CFR Part 50 which implements Section 102(2)(C) of the 
National Environmental Policy Act of 1969, 42 U.S.C. 4332. That Finding 
is available for public inspection during regular business hours in the 
Office of the General Counsel, Rules Docket Clerk, at the above 
address. Since the provisions of this final rule were anticipated as an 
option stated in the proposed rule, that FONSI remains valid.

B. Regulatory Review

    This rule was reviewed by the Office of Management and Budget under 
Executive Order 12866, Regulatory Planning and Review. Any changes made 
to the rule as a result of that review are clearly identified in the 
docket file, which is available for public inspection in the office of 
the Department's Rules Docket Clerk, room 10276, 451 Seventh Street, 
SW, Washington, DC.

C. Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this rule before publication and by 
approving it certifies that this rule would not have a significant 
economic impact on a substantial number of small entities. The rule may 
result in changes in the level of operating subsidy eligibility for 
certain public housing agencies, but we have no reason to believe that 
it would have disproportionate effect on small HAs.

D. Federalism Impact

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule would not have federalism implications and, 
thus, are not subject to review under the Order. The rule refines an 
established formula under which HUD calculates operating subsidies for 
low-income housing developments, but contains no requirement for 
explicit action by local officials and will not interfere with State or 
local governmental functions.

E. Impact on the Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule would not have 
potential significant impact on family formation, maintenance, and 
general well-being, and, thus, is not subject to review under the 
Order.

F. Regulatory Agenda

    This rule is listed as item 1705 under the Office of Public and 
Indian Housing in the Department's semiannual agenda of regulations 
published on April 25, 1994 (59 FR 20424, 20474), under Executive Order 
12866 and the Regulatory Flexibility Act.

G. Catalog

    The Catalog of Federal Domestic Assistance Program numbers for this 
rule are 14.146 and 14.147.

List of Subjects

24 CFR Part 905

    Aged, Energy conservation, Grant programs--housing and community 
development, Grant programs--Indians, Indians, Homeownership, 
Individuals with disabilities, Lead poisoning, Loan programs--housing 
and community development, Loan programs--Indians, Low and moderate 
income housing, Public housing, Reporting and recordkeeping 
requirements.

24 CFR Part 990

    Grant programs--housing and community development, Public housing, 
Reporting and recordkeeping requirements.

    Accordingly, 24 CFR Parts 905 and 990 are amended as follows:

PART 905--INDIAN HOUSING PROGRAMS

    1. The authority citation for part 905 is revised to read as 
follows:

    Authority: 25 U.S.C. 450e(b); 42 U.S.C. 1437a, 1437aa, 1437bb, 
1437cc, 1437ee, and 3535(d).


Sec. 905.102  [Amended]

    2. Section 905.102 is amended by removing the second sentence of 
the definition of ``Allowable utilities consumption level (AUCL)'', and 
by removing the definitions of ``Change factor'' and ``Heating degree 
days (HDD)''.


Sec. 905.715  [Amended]

    3. Section 905.715 is amended by:
    a. Removing the last sentence of paragraph (a);
    b. Removing from paragraph (b)(2), the phrase ``paragraph (f)'', 
and adding in its place the phrase ``paragraph (e)'';
    c. Removing from the introductory text of paragraph (c), the phrase 
``paragraph (g)(1)'', and adding in its place the phrase ``paragraph 
(f)(1)'';
    d. Removing from paragraph (c)(2)(iii), the phrase ``paragraph 
(e)'', and adding in its place the phrase ``paragraph (d)'', and by 
removing from the end of paragraph (c)(2)(iii), the phrase ``and no 
change factor shall be applied'';
    e. Removing from paragraph (c)(4)(i), in two places, the phrase 
``paragraph (g)'', and adding in its place the phrase ``paragraph 
(f)'';
    f. Removing paragraph (c)(4)(ii), and by redesignating paragraph 
(c)(4)(iii) as paragraph (c)(4)(ii);
    g. Removing paragraph (d);
    h. Redesignating paragraph (e) as paragraph (d), and by removing 
from the last sentence of the paragraph the phrase, ``No change factor 
shall be applied to actual per-unit per-month utility expenses, and'', 
and by capitalizing the next word ``Subsequent'';
    i. Redesignating paragraph (f) as paragraph (e), and by removing 
the phrase ``(after adjustment for heating degree days in accordance 
with paragraph (d) of this section)''; and
    j. Redesignating paragraph (g) as paragraph (f).


Sec. 905.730  [Amended]

    4. Section 905.730 is amended by:
    a. Removing from paragraph (c)(2)(i), the phrase ``(adjusted for 
heating degree days in accordance with Sec. 905.715(d),''; and
    b. Amending paragraph (c)(2)(ii), by removing the phrase 
``Sec. 905.715(g)(1)'', and adding in its place the phrase 
``Sec. 905.715(f)(1)''; by removing from the second sentence, the 
phrase ``using a heating degree day adjustment for space heating 
utilities and''; and by removing the third and fourth sentences, ``The 
heating degree day experience during the frozen rolling base period 
will be used instead of the degree days in the year being adjusted. The 
documentation on the degree days shall be supplied by the IHA and is 
subject to HUD approval.''

PART 990--ANNUAL CONTRIBUTIONS FOR OPERATING SUBSIDY

    5. The authority citation for part 990 continues to read as 
follows:

    Authority: 42 U.S.C. 1437(g) and 3535(d).


Sec. 990.102  [Amended]

    6. In Sec. 990.102, the second sentence of the definition of 
``Allowable Utilities Consumption Level (AUCL)'' is removed, and the 
definitions of ``Change Factor'' and ``Heating Degree Days (HDD)'' are 
removed.


Sec. 990.107  [Amended]

    7. Section 990.107 is amended by:
    a. Removing the last sentence of paragraph (a);
    b. Removing from paragraph (b)(2), the phrase ``paragraph (f)'' and 
adding in its place the phrase ``paragraph (e)'';
    c. Removing from the introductory text of paragraph (c), the phrase 
``paragraph (g)(1)'', and adding in its place the phrase ``paragraph 
(f)(1)'';
    d. Removing from paragraph (c)(2)(iii), the phrase ``paragraph 
(e)'', and adding in its place the phrase ``paragraph (d)'', and by 
removing the phrase ``and no Change Factor shall be applied'';
    e. Removing from paragraph (c)(4)(i), in two places, the phrase 
``paragraph (g)'', and adding in their place the phrase ``paragraph 
(f)'';
    f. Removing paragraph (c)(4)(ii), and by redesignating paragraph 
(c)(4)(iii) as paragraph (c)(4)(ii);
    g. Removing paragraph (d);
    h. Redesignating paragraph (e) as paragraph (d), and amending the 
newly redesignated paragraph (d) by removing the phrase, ``No Change 
Factor shall be applied to actual PUM utility expenses, and'', and by 
capitalizing the next word ``Subsequent'';
    i. Redesignating paragraph (f) as paragraph (e), and amending by 
removing the phrase ``(after adjustment for heating degree days in 
accordance with paragraph (d) of this section)''; and
    j. Redesignating paragraph (g) as paragraph (f).


Sec. 990.110  [Amended]

    8. Section 990.110 is amended by:
    a. Removing from paragraph (c)(2)(i), the phrase ``(adjusted for 
Heating Degree Days in accordance with Sec. 990.107(d),''; and
    b. Amending paragraph (c)(2)(ii), by removing the phrase 
``Sec. 990.107(g)(1)'' and adding in its place the phrase 
``Sec. 990.107(f)(1)'', by removing the phrase ``using a heating degree 
day adjustment for space heating utilities and'', and by removing the 
sentences ``The heating degree day experience during the frozen rolling 
base period will be used instead of the degree days in the year being 
adjusted. The documentation on the degree days must be supplied by the 
PHA and is subject to HUD approval.''

    Dated: October 5, 1994.
Michael B. Janis,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 94-25391 Filed 10-12-94; 8:45 am]
BILLING CODE 4210-33-P