[Federal Register Volume 75, Number 27 (Wednesday, February 10, 2010)]
[Notices]
[Pages 6688-6689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-2990]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5391-N-02]


Section 8 Housing Assistance Payments Program--Renewal Funding 
Annual Adjustment Factors, Fiscal Year 2010

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of Renewal Funding Annual Adjustment Factors (AAFs).

-----------------------------------------------------------------------

SUMMARY: The Consolidated Appropriations Act, 2010 (Pub. L. 111-117), 
directs HUD's Office of Public and Indian Housing (PIH) to ``provide 
renewal funding for each Public Housing Agency (PHA) based on Voucher 
Management System (VMS) leasing and cost data for the most recent 
Federal fiscal year and by applying the most recent Annual Adjustment 
Factors as established by the Secretary''. This notice announces 
Renewal Funding AAFs in response to that directive. Consumer Price 
Index (CPI) data, similar to those used for ``Contract Rent AAFs'', are 
used, but semi-annual CPI data replaces annual CPI data. This makes the 
Renewal Funding AAFs six months more current than the CPI data used to 
derive Contract Rent AAFs. These CPI data are more current data and 
better reflect the economic circumstances most relevant to the Housing 
Choice Voucher (HCV) program in 2010 and the assumptions of the 2010 
budget. Like the Contract Rent AAFs, these factors are based on a 
formula using residential rent and utility cost changes. Contract Rent 
AAFs were published in a separate notice which can be viewed at: http://www.huduser.org/portal/datasets/aaf.html/FY2010_CF_table.pdf.

DATES: Effective Date: February 10, 2010.

FOR FURTHER INFORMATION CONTACT: Contact David Vargas, Associate Deputy 
Assistant Secretary for Office of Public Housing and Voucher Programs, 
Office of Public and Indian Housing, 202-708-2815; and Marie L. Lihn, 
Economist, Economic and Market Analysis Division, Office of Policy 
Development and Research, 202-708-0590, for technical information 
regarding the development of the schedules for specific areas or the 
methods used for calculating the AAFs. Mailing address for the above 
persons: Department of Housing and Urban Development, 451 7th Street, 
SW., Washington, DC 20410. Hearing- or speech-impaired persons may 
contact the Federal Information Relay Service at 800-877-8339 (TTY). 
(Other than the ``800'' TTY number, the above-listed telephone numbers 
are not toll free.)

SUPPLEMENTARY INFORMATION: The table showing Renewal Funding AAFs will 
be available electronically from the HUD data information page at 
http://www.huduser.org/portal/datasets/aaf.html/FY2010_RF_table.pdf. 
Renewal Funding AAFs include utility costs and only one set of AAFs is 
published for this purpose.

I. Methodology

    Renewal Funding AAFs are derived from rent inflation factors to 
account for relative differences in rent inflation among different 
parts of the country. Two types of rent inflation factors are typically 
calculated for AAFs: Gross rent factors and shelter rent factors; 
however, only the gross rent inflation factor is used for Renewal 
Funding AAFs. The gross rent factor accounts for inflation in the cost 
of both the rent of the residence and the utilities used by the unit.
    Renewal Funding AAFs are calculated using CPI data on ``rent of 
primary

[[Page 6689]]

residence'' and ``fuels and utilities''.\1\ The CPI inflation index for 
rent of primary residence measures the inflation of all surveyed units 
regardless of whether utilities are included in the rent of the unit or 
not. In other words, it measures the inflation of the ``contract rent'' 
which includes units with all utilities included in the rent, units 
with some utilities included in the rent and units with no utilities 
included in the rent. In producing a gross rent inflation factor, HUD 
decomposes the contract rent CPI inflation factor into parts to 
represent the gross rent change and the shelter rent change. This is 
done by applying the percentage of renters who pay for heat (a proxy 
for the percentage of renters who pay shelter rent) from the Consumer 
Expenditure Survey (CEX) and American Community Survey (ACS) data on 
the ratio of utilities to rents.\2\ The CEX data used to decompose the 
contract rent inflation factor into gross rent and shelter rent 
inflation factors come from a special tabulation of 2007 CEX survey 
data produced for HUD for the purpose of computing Renewal Funding 
AAFs. The utility-to-rent ratio used in the formula comes from 2007 ACS 
median rent and utility costs.
---------------------------------------------------------------------------

    \1\ CPI indexes CUUSA103SEHA and CUSR0000SAH2 respectively.
    \2\ The formulas used to produce these factors can be found in 
the Annual Adjustment Factors overview and in the FMR documentation 
at http://www.HUDUSER.org.
---------------------------------------------------------------------------

    In this publication, the rent and utility inflation factors for 
large metropolitan areas and Census regions are based on changes in the 
rent of primary residence and fuels and utilities CPI indices from the 
first half of 2008 to the first half of 2009, the most recent data 
available at the time of the development of final budget projections 
for fiscal year (FY) 2010. Typically, CPI indexes averaged over a 12-
month period have been used to measure the change in gross rents from 
year to year. The semi-annual indexes used for Renewal Funding AAFs 
average data over six months as opposed to 12 months; the Renewal 
Funding AAFs use change over the course of two semi-annual index cycles 
to derive a 12-month adjustment.

II. The Use of Renewal Funding AAFs

    The Renewal Funding AAFs differ from past AAFs and the FY2010 
Contract Rent AAFs in that they make use of more recent semi-annual CPI 
indexes in place of average annual CPI indexes. The Renewal Funding 
AAFs have been developed to account for relative differences in the 
recent inflation of rents among different areas and are used to 
allocate HCV funds among PHAs. HUD is reviewing and updating the 
methodologies for all program parameters, including Fair Market Rents 
(FMRs), AAFs and other inflation indices. The publication of these 
separate Renewal Funding AAFs for allocation of voucher funds is an 
interim step toward more complete reforms including using more recent 
data in HUD's estimations for various program parameters, including 
FMRs, as published in the Federal Register on September 30, 2009 (74 FR 
50552).

III. Geographic Areas

    Renewal Funding AAFs are produced for all Class A CPI cities (CPI 
cities with a population of 1.5 million or more) and for the four 
Census Regions. They are applied to core-based statistical areas 
(CBSAs), as defined by the Office of Management and Budget (OMB), 
according to how much of the CBSA is covered by the CPI city-survey. If 
more than 75 percent of the CBSA is covered by the CPI city-survey, the 
Renewal Funding AAF that is based on that CPI survey is applied to the 
whole CBSA and to any HUD-defined metropolitan area, called ``HUD Metro 
FMR Area'' (HMFA), within that CBSA. If the CBSA is not covered by a 
CPI city-survey, the CBSA is assigned the relevant regional CPI factor. 
Almost all non-metropolitan counties are assigned regional CPI factors. 
For areas assigned the Census Region CPI factor, both metropolitan and 
non-metropolitan areas receive the same factor.
    The Renewal Funding AAF tables list the four Census Regions first, 
followed by an alphabetical listing of each metropolitan area, 
beginning with Akron, OH, MSA. Renewal Funding AAFs are provided:
     For separate metropolitan areas, including HMFAs and 
counties that are currently designated as non-metropolitan, but are 
part of the metropolitan area defined in the local CPI survey, and
     For the four Census Regions for those metropolitan and 
non-metropolitan areas that are not covered by a CPI city-survey.
    Renewal Funding AAFs use the same OMB metropolitan area 
definitions, as revised by HUD, that are used in the FY 2010 FMRs.

IV. Area Definitions

    To make certain that they are referencing the correct Renewal 
Funding AAFs, PHAs should refer to the Area Definitions Table at http://www.huduser.org/portal/datasets/aaf.html/FY2010_AreaDef.pdf. For 
units located in metropolitan areas with a local CPI survey, Renewal 
Funding AAFs are listed separately. For units located in areas without 
a local CPI survey, the metropolitan or non-metropolitan counties 
receive the regional CPI for that Census Region.
    The Area Definitions Table for Renewal Funding AAFs, shown at 
http://www.huduser.org/portal/datasets/aaf.html/FY2010_AreaDef.pdf, 
lists areas in alphabetical order by state. The associated CPI region 
is shown next to each state name. Areas whose Renewal Funding AAFs are 
determined by local CPI surveys are listed first. All metropolitan 
areas with local CPI surveys have separate Renewal Funding AAF 
schedules and are shown with their corresponding county definitions or 
as metropolitan counties. In the six New England states, the listings 
are for counties or parts of counties as defined by towns or cities. 
The remaining counties use the CPI for the Census Region and are not 
specifically listed on the Area Definitions Table.
    Puerto Rico and the Virgin Islands use the South Region Renewal 
Funding AAFs. All areas in Hawaii use the Renewal Funding AAFs 
identified in the Table as ``STATE: Hawaii,'' which are based on the 
CPI survey for the Honolulu metropolitan area. The Pacific Islands use 
the West Region Renewal Funding AAFs.
    Accordingly, HUD publishes these Renewal Funding Annual Adjustment 
Factors as set forth in the Renewal Funding AAF Table posted at http://www.huduser.org/portal/datasets/aaf.html/FY2010_RF_table.pdf.

    Dated: February 4, 2010.
Raphael W. Bostic,
Assistant Secretary for Policy Development and Research.
[FR Doc. 2010-2990 Filed 2-9-10; 8:45 am]
BILLING CODE 4210-67-P