[Federal Register Volume 81, Number 73 (Friday, April 15, 2016)]
[Notices]
[Pages 22296-22297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08780]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5939-N-01]


Section 8 Housing Assistance Payments Program--Fiscal Year (FY) 
2016 Inflation Factors for Public Housing Agency (PHA) Renewal Funding

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

ACTION: Notice.

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SUMMARY: The Consolidated Appropriations Act, 2016 requires that HUD 
apply ``an inflation factor as established by the Secretary, by notice 
published in the Federal Register'' to adjust FY 2016 renewal funding 
for the Tenant-based Rental Assistance Program or Housing Choice 
Voucher (HCV) Program of each PHA. HUD began using Renewal Funding 
Inflation Factors in FY 2012. These Renewal Funding Inflation Factors 
incorporate economic indices to measure the expected change in per unit 
costs (PUC) for the HCV program. The methodology for FY 2016 is 
modified from what was used in FY 2015.

DATES: Effective date: April 15, 2016.

FOR FURTHER INFORMATION CONTACT: Miguel A. Fontanez, Director, Housing 
Voucher Financial Division, Office of Public Housing and Voucher 
Programs, Office of Public and Indian Housing, telephone number 202-
402-4212; or Peter B. Kahn, Director, Economic and Market Analysis 
Division, Office of Policy Development and Research, telephone number 
202-402-2409, for technical information regarding the development of 
the schedules for specific areas or the methods used for calculating 
the inflation factors, 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:

I. Background

    Tables showing Renewal Funding Inflation Factors will be available 
electronically from the HUD data information page at: http://www.huduser.gov/portal/datasets/rfif/FY2016/FY2016_RFIF_FMR_AREA_REPORT.pdf.
    Division L, Title II, Consolidated Appropriations Act, 2016 
requires that the HUD Secretary, for the calendar year 2016 funding 
cycle, provide renewal funding for each public housing agency (PHA) 
based on validated voucher management system (VMS) leasing and cost 
data for the prior calendar year and by applying an inflation factor as 
established by the Secretary, by notice published in the Federal 
Register. This notice provides the FY 2016 inflation factors and 
describes the methodology for calculating them.

II. Methodology

    The Department has focused on measuring the change in average per 
unit cost (PUC) as captured in HUD's administrative data in VMS. In 
order to predict the likely path of PUC over time, HUD has implemented 
a model that uses three economic indices that capture key components of 
the economic climate and assist in explaining the changes in PUC. These 
economic components are the seasonally-adjusted unemployment rate 
(lagged twelve months), the Consumer Price Index from the Bureau of 
Labor Statistics, and the ``wages and salaries'' component of personal 
income from the National Income and Product Accounts from the Bureau of 
Economic Analysis. This model subsequently forecasts the expected 
annual change in average PUC from Calendar Year (CY) 2015 to CY 2016 
for the voucher program on a national basis by incorporating comparable 
economic variables from the Administration's economic assumptions. For 
reference, these economic assumptions are described in the FY 2016 
Budget. The inflation factor for an individual geographic area is based 
on the annualized change in the area's Fair Market Rent (FMR) between 
FY 2014 and FY 2016. These changes in FMR are then scaled such that the 
voucher-weighted average of all individual area inflation factors is 
equal to the expected annual change in national PUC from 2015 to 2016, 
and also such that no area has a factor less than one. HUD subsequently 
applies these calculated individual area inflation factors to eligible 
renewal funding for each PHA based on VMS leasing and cost data for the 
prior calendar year. The CY 2016 PHA HCV allocation uses 0.8 percent as 
the annual change in PUC. This figure was calculated by using VMS data 
through December of 2015 and actual performance of economic indices 
through December of 2015.

III. The Use of Inflation Factors

    The inflation factors have been developed to account for relative 
differences in the changes of local rents so that HCV funds can be 
allocated among PHAs. In response to comments provided to HUD as 
requested in the 2015 Renewal Funding Inflation Factor notice, HUD has 
used the annualized change in FMRs measured between FY 2014 and FY 2016 
in the apportionment of the national inflation rate to account for both 
the current change in rents but also the changes in rents experienced 
last year when the predicted inflation rate was negative. HUD 
anticipates that in 2017, the national inflation rate will be based on 
a new model of Per Unit Cost HUD is developing in response to comments 
that is based on independent forecasts of gross rents and tenant 
incomes without relying on historical values of Per Unit Cost, and will 
apportion this change based on the change in individual areas FMRs 
between FY 2016 and FY 2017.

IV. Geographic Areas and Area Definitions

    Inflation factors based on renewal funding and area FMR changes are

[[Page 22297]]

produced for all FMR areas. The tables showing the Renewal Funding 
Inflation Factors available electronically from the HUD data 
information page list the inflation factors for each FMR area and are 
created on a state by state basis. The inflation factors use the same 
OMB metropolitan area definitions, as revised by HUD, that are used in 
the FY 2016 FMRs. To make certain that they are referencing the correct 
inflation factors, PHAs should refer to the Area Definitions Table on 
the following Web page: http://www.huduser.org/portal/datasets/rfif/FY2016/FY2016_RFIF_FMR_AREA_REPORT.pdf. The Area Definitions Table 
lists areas in alphabetical order by state, and the counties associated 
with each area. In the six New England states, the listings are for 
counties or parts of counties as defined by towns or cities.

V. Environmental Impact

    This notice involves a statutorily required establishment of 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 notice is 
categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

    Dated: April 8, 2016.
Katherine M. O'Regan,
Assistant Secretary for Policy, Development and Research.
[FR Doc. 2016-08780 Filed 4-14-16; 8:45 am]
 BILLING CODE 4210-67-P