[Federal Register Volume 76, Number 90 (Tuesday, May 10, 2011)]
[Notices]
[Pages 27084-27085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11263]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5489-N-02]


Section 8 Housing Assistance Payments Program--Renewal Funding 
Annual Adjustment Factors, Fiscal Year 2011

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

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

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SUMMARY: The Consolidated Appropriations Act, 2010, directs Public and 
Indian Housing 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.'' The 
Department of Defense and Full-Year Continuing Appropriations Act, 
2011, continues this requirement. This Notice announces Renewal Funding 
AAFs in response to that directive which was first applicable when 
FY2010 Renewal Funding AAFs were published. 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 are the most current data available and 
reflect the economic circumstances most relevant to the Housing Choice 
Voucher (HCV) program in 2011 and the assumptions of the 2011 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 the Federal Register on March 16, 2011, and can be viewed 
at: http://www.huduser.org/portal/datasets/aaf/FY2011_CR_AAF_Preamble.pdf.

DATES: Effective Date: May 10, 2011.

FOR FURTHER INFORMATION CONTACT: Contact Danielle Bastarache, Director, 
Housing Voucher Management, Office of Public Housing and Voucher 
Programs, Office of Public and Indian Housing, 202-708-5264; 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 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 Consolidated Appropriations Act, 2010 
(Pub. L 111-117, approved, December 16, 2009), provides that:

    * * * the Secretary for the calendar year 2010 funding cycle 
shall provide renewal funding for each public housing agency 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 Factor as established by the Secretary * * *

Under the Department of Defense and Full-Year Continuing Appropriations 
Act, 2011 (Pub. L 112-10, approved April 15, 2011), this requirement 
continues to apply. This Notice announces Renewal Funding AAFs in 
response to that directive which was first applicable when FY2010 
Renewal Funding AAFs were published.
    HUD will make the table establishing Renewal Funding AAFs available 
electronically from the HUD data information page at http://www.huduser.org/portal/datasets/aaf/FY2011_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 residence'' and ``fuels and utilities''.\1\

[[Page 27085]]

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 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 
2008 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 2008 ACS median rent and utility costs.
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    \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.
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    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 2009 to the first half of 2010, the most recent data 
available at the time of the development of final budget projections 
for fiscal year (FY) 2011. Typically, CPI indexes averaged over a 12-
month period have been used to measure the change 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 use the same methodology as the FY2010 
Renewal Funding AAFs but differ from historical AAFs and the FY2011 
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 October 4, 2010 (75 FR 
61254).

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 uses the relevant regional CPI factor. Almost 
all non-metropolitan counties use 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 2011 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/FY2011_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 nonmetropolitan 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/FY2011_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/FY2011_RF_table.pdf.

    Dated: May 2, 2011.
Raphael W. Bostic,
Assistant Secretary for Policy Development and Research.
[FR Doc. 2011-11263 Filed 5-9-11; 8:45 am]
BILLING CODE 4210-67-P