[Federal Register Volume 72, Number 222 (Monday, November 19, 2007)]
[Rules and Regulations]
[Pages 65206-65207]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22526]



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Part IV





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; Final Rule

  Federal Register / Vol. 72, No. 222 / Monday, November 19, 2007 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 983

[Docket No. FR-5034-F-02]
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: Final rule.

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SUMMARY: This rule revises the low-income housing tax credit (LIHTC) 
rent provisions of HUD's Project-Based Voucher (PBV) program 
regulations. This rule reinstates the regulatory provision where the 
LIHTC rent does not serve as a cap on rents in PBV projects receiving 
LIHTCs. The rule also re-emphasizes that public housing authorities 
(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. This final rule follows a May 1, 2007, proposed 
rule and takes into consideration public comments received on the 
proposed rule. HUD carefully considered the public comments, but adopts 
the proposed rule without change.

DATES: Effective Date: December 19, 2007.

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 number 
(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 May 1, 2007, HUD published a proposed rule titled ``Project-
Based Voucher Rents for Units Receiving Low-Income Housing Tax 
Credits'' (72 FR 24080-24081). This publication proposed to remove a 
regulatory cap on rents in PBV projects with units receiving LIHTCs. 
The regulatory cap limited the rent to owners on all units in projects 
receiving LIHTCs to the allowed LIHTC rent, which, in high fair market 
rent areas, could be less than the allowed project-based Section 8 
program rents. This cap had been instituted in a comprehensive revision 
of the project-based Section 8 program regulations by a final rule 
published on October 13, 2005 (70 FR 59892 et seq.).
    Once the cap was established by the October 2005 final rule, HUD 
received additional comments from PHAs and housing industry 
representatives expressing concern that this change would impede rather 
than promote HUD's goal of increasing and preserving affordable housing 
(see 72 FR 24080). HUD determined, therefore, that the cap would reduce 
the supply of needed low-income housing and issued the May 1, 2007, 
proposed rule to remedy the situation.

II. Public Comments

    The public comment period for the proposed rule closed on July 2, 
2007. HUD received 13 public comments from individuals, industry trade 
groups, PHAs, and low-income tenant interest groups. All of the 
comments supported the change that the May 2007 rule proposed to make 
to the PBV program regulations. A few commenters made suggestions for 
additional provisions to be added to the rule or for clarification to 
the regulatory text proposed by HUD in the May 2007 rule.
    Comment: One commenter expressed concern that merely removing the 
reference to LIHTC from the list of program rent caps in Sec.  
983.304(c)(1) would still leave open the possibility, which the 
commenter thought remote, to restore the cap at some future time 
through application of Sec.  983.304(c)(1)(v). Therefore, the commenter 
suggested that Sec.  983.304(c)(1)(v) be revised to read ``Any other 
type of federally subsidized project specified by HUD, except for 
projects receiving low-income housing tax credits.''
    Response: HUD has considered this suggestion, but declines to adopt 
it because, while HUD does not plan to re-institute the LIHTC program 
caps in the foreseeable future, the suggested language would 
excessively limit HUD's discretion to respond to changing economic and 
programmatic conditions in the future.
    Comment: Some commenters suggested that HUD delegate subsidy 
layering review to local government agencies.
    Response: While changes to subsidy layering review, which extends 
to programs beyond LIHTC and Section 8 housing, are beyond the scope of 
this rulemaking, HUD will consider this suggestion for a future 
issuance.

III. This Final Rule

    For the reasons provided in Section I of this preamble, this final 
rule adopts the proposed rule without change. This final rule revises 
Sec.  983.304(c) to eliminate the requirement that the PBV rent to 
owner is capped at the tax-credit rent in projects receiving LIHTCs. 
The rule re-emphasizes that these projects are subject to HUD's subsidy 
layering review requirements, which ensure that excess subsidy is not 
provided.

IV. Findings and Certifications

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 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 Housing 
Assistance Payments contracts for units also receiving LIHTCs. The 
number of entities potentially affected by this rule is, therefore, not 
substantial.

Environmental Impact

    This final 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 final 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

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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 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 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.

0
For the reasons stated in the preamble, HUD amends 24 CFR part 983 as 
follows.

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

0
1. The authority citation for part 983 continues to read as follows:

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


0
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: November 6, 2007.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
 [FR Doc. E7-22526 Filed 11-16-07; 8:45 am]
BILLING CODE 4210-67-P