[Federal Register Volume 72, Number 83 (Tuesday, May 1, 2007)]
[Proposed Rules]
[Pages 24080-24081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8135]



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Part V





Department of Housing and Urban Development





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24 CFR Part 983



Project-Based Voucher Rents for Units Receiving Low-Income Housing Tax 
Credits; Proposed Rule

  Federal Register / Vol. 72, No. 83 / Tuesday, May 1, 2007 / Proposed 
Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 983

[Docket No. FR-5034-P-01]
RIN 2577-AC62


Project-Based Voucher Rents for Units Receiving Low-Income 
Housing Tax Credits

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the low-income housing tax 
credit (LIHTC) rent provisions of HUD's final Project-Based Voucher 
(PBV) program rule, which was published on October 13, 2005, and took 
effect on November 14, 2005. The October 13, 2005, final rule capped 
the PBV rents at the LIHTC rent in buildings with LIHTC units, even in 
cases where HUD formerly permitted such units to receive the higher 
rents permitted under the PBV program. After giving the issue further 
consideration, HUD now proposes to revert to the regulations that 
address this specific issue and were in effect prior to issuance of the 
October 13, 2005, final rule. The regulations in effect prior to the 
October 13, 2005, final rule did not necessarily require public housing 
agencies (PHAs) to cap section 8 maximum rents at the tax credit rent. 
PHAs may not enter into assistance contracts until HUD or an 
independent entity approved by HUD has conducted the required subsidy 
layering review and determined that the assistance is in accordance 
with HUD requirements.

DATES: Comment Due Date: July 2, 2007.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 Seventh 
Street, SW., Room 10276, Washington, DC 20410-0500. Interested persons 
may also submit comments electronically through the federal electronic 
rulemaking portal at: http://www.regulations.gov. HUD strongly 
encourages commenters to submit their comments electronically through 
http://www.regulations.gov. The comments received through this portal 
are posted and can be easily viewed.
    Facsimile (FAX) comments are not acceptable. All communications 
must refer to the docket number and title. All comments and 
communications submitted will be available, without revision, 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 the public comments submitted 
electronically are also available for inspection and downloading at 
http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: David Vargas, Director, Office of 
Voucher Programs, Department of Housing and Urban Development, 451 
Seventh Street, SW., Room 4210, Washington, DC 20410; telephone (202) 
708-2815 (this is not a toll-free number). Persons with hearing or 
speech impairments may access these numbers via TTY by calling the 
Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    On October 13, 2005, HUD published a final rule that 
comprehensively revised the regulations for HUD's PBV program, found in 
24 CFR part 983. (See 70 FR 59892 et seq.) A detailed description of 
the legislative background and changes made to the program can be found 
in the preamble to the October 13, 2005, final rule.
    Prior to the November 14, 2005, effective date of the October 13, 
2005, final rule, PBV units with LIHTCs located outside of qualified 
census tracts could have rents set at the higher of 110 percent of the 
area fair market rent (FMR) or the LIHTC rent charged for comparable 
units in the same building that receive the tax credit and no other 
assistance. In other words, in areas where the tax credit rent was 
higher (i.e., in the relatively lower-market-rent areas), the units 
would receive the benefit of that higher rent, but in areas where the 
FMR was higher (i.e., in higher-market-rent areas), the units would not 
be capped at the tax credit rent and instead could receive the higher 
FMR-based rent.
    The October 13, 2005, final rule changed this practice, in place 
for several years, under section 8(o)(13)(H) of the 1937 Act (42 U.S.C. 
1437f(o)(13)(H)). The October 13, 2005, final rule provided, under 
Sec.  983.304(c)(1)(v) and Sec.  983.304(c)(2), that rent for units 
with tax credit may not exceed the tax credit rent in those cases where 
formerly, if the FMR-based rent were higher, that higher rent could be 
used.
    Since the publication of the October 13, 2005, final rule, HUD 
received additional comments from PHAs and housing industry 
representatives expressing concern that the policy change regarding 
LIHTC units would impede rather than promote HUD's goal of increasing 
and preserving affordable housing, and requesting that HUD return to 
its original policy and position regarding LIHTC units. Some PHA and 
housing industry representatives also advised that the policy change 
may make many projects relying on LIHTCs non-viable because it could 
inhibit the financing of new projects by reducing the potential project 
rent, and thereby reduce the supply of low-income housing using LIHTCs.
    After further consideration of this issue, HUD has determined that 
the policy change in the October 13, 2005, final rule concerning LIHTCs 
may not further HUD's mission to increase affordable housing as 
effectively as contemplated. While the change would cap federal 
subsidies, HUD hears the concerns that the change may inhibit the 
financing of new projects and possibly reduce, not increase, the supply 
of low-income housing using LIHTCs. HUD believes that concerns about 
excess federal subsidy may be adequately addressed using subsidy 
layering analysis. In this regard, HUD has determined that it would 
benefit by further public input on this issue.
    This rule therefore proposes to reinstate the former policy in 
Sec.  983.304(c) with respect to LIHTCs. In response to the public 
feedback received on the October 13, 2005, final rule, HUD has decided 
not to enforce Sec.  983.304(c) as revised by the October 13, 2005, 
final rule. Instead, HUD will await further comment on this issue, as 
provided by this proposed rule, and will implement the final rule that 
results from this proposed rulemaking. In the meantime, owners who 
received a written notification of owner selection subsequent to the 
effective date of the final rule (November 14, 2005) and have entered 
into a Housing Assistance Payment (HAP) contract may request a 
redetermination of initial rents in accordance with Sec.  983.301 of 
the final rule, if the initial rents were capped under the tax credit 
rent provision at Sec.  983.304(c)(1)(v).

II. This Proposed Rule

    For the reasons provided in Section I of this preamble, this 
proposed rule would remove the requirement added to Sec.  983.304(c) by 
the October 13, 2005, final rule that PHAs in qualified census tracts 
have their rents limited by the tax credit rent. Therefore, PHAs would 
not

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be required to reduce the PBV rent to the owner for LIHTC units merely 
because of the existence of LIHTCs. HUD or its designee would, however, 
conduct a subsidy layering review (consistent with longstanding HUD 
practice), which could result in rent reductions for projects with 
LIHTCs and PBV assistance. This review would be consistent with the 
prior policy. HUD is not proposing to revise or remove any other 
provision of the October 13, 2005, final rule.

III. Findings and Certifications

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this proposed 
rule under Executive Order 12866 (entitled ``Regulatory Planning and 
Review''). OMB determined that this rule is a ``significant regulatory 
action,'' as defined in section 3(f) of the Executive Order (although 
not economically significant, as provided in section 3(f)(1) of the 
Executive Order). The docket file is available for public inspection 
between the hours of 8 a.m. and 5 p.m. in the Regulations Division, 
Office of General Counsel, Department of Housing and Urban Development, 
451 Seventh Street, SW., Room 10276, Washington, DC 20410-0500. 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).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule, as with the prior rulemaking that led to the 
October 13, 2005, final rule, remains exclusively concerned with PHAs 
that have chosen to ``project-base'' 20 percent of their Housing Choice 
Voucher program assistance. Under the definition of ``Small 
governmental jurisdiction'' in section 601(5) of the RFA, the 
provisions of the RFA are applicable only to those few PHAs that are 
part of a political jurisdiction with a population of under 50,000 
persons. There are very few small PHAs in that category. In addition, 
this rule would cover only an even smaller category of PHAs--those with 
PBV HAP contracts for units also receiving LIHTCs. The number of 
entities potentially affected by this rule is therefore not 
substantial.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
by this preamble.

Environmental Impact

    This interim rule involves establishment of external administrative 
or fiscal requirements related to 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 interim rule is categorically excluded 
from environmental review under the National Environmental Policy Act 
of 1969 (42 U.S.C. 4321 et seq.).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. This proposed 
rule does not have federalism implications and does not impose 
substantial direct compliance costs on state and local governments or 
preempt state law within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for federal 
agencies to assess the effects of their regulatory actions on state, 
local, and tribal governments, and on the private sector. This proposed 
rule does not impose any federal mandates on any state, local, or 
tribal governments, or on the private sector, within the meaning of the 
UMRA.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number applicable to the 
program affected by this proposed rule is 14.871.

List of Subjects in 24 CFR Part 983

    Grant programs--housing and community development, Housing, Low- 
and moderate-income housing, Rent subsidies, Reporting and 
recordkeeping requirements.
    For the reasons stated in the preamble, HUD proposes to amend 24 
CFR part 983 to read as follows:

PART 983--PROJECT-BASED VOUCHER (PBV) PROGRAM

    1. The authority citation for part 983 continues to read as 
follows:

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

    2. Revise Sec.  983.304(c) to read as follows:


Sec.  983.304  Other subsidy: effect on rent to owner.

* * * * *
    (c) Subsidized projects. (1) This paragraph (c) applies to any 
contract units in any of the following types of federally subsidized 
project:
    (i) An insured or non-insured Section 236 project;
    (ii) A formerly insured or non-insured Section 236 project that 
continues to receive Interest Reduction Payment following a decoupling 
action;
    (iii) A Section 221(d)(3) below market interest rate (BMIR) 
project;
    (iv) A Section 515 project of the Rural Housing Service;
    (v) Any other type of federally subsidized project specified by 
HUD.
    (2) The rent to owner may not exceed the subsidized rent (basic 
rent) as determined in accordance with requirements for the applicable 
federal program listed in paragraph (c)(1) of this section.
* * * * *

    Dated: March 23, 2007.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
 [FR Doc. E7-8135 Filed 4-30-07; 8:45 am]
BILLING CODE 4210-67-P