[Federal Register Volume 84, Number 74 (Wednesday, April 17, 2019)]
[Notices]
[Pages 16032-16033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07679]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6147-N-01]


Section 8 Housing Assistance Payments Program--Fiscal Year 2019 
Inflation Factors for Public Housing Agency Renewal Funding

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

ACTION: Notice.

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SUMMARY: This notice establishes Renewal Funding Inflation Factors 
(RFIFs) to adjust Fiscal Year (FY) 2019 renewal funding for the Housing 
Choice Voucher (HCV) program of each public housing agency (PHA), as 
required by the Consolidated Appropriations Act, 2019. The notice 
apportions the expected percent change in national Per Unit Cost (PUC) 
for the HCV program, 4.00 percent, to each PHA based on the change in 
Fair Market Rents (FMRs) for their operating area to produce the FY 
2019 RFIFs. HUD's FY 2019 methodology is the same as that which was 
used in FY 2018.
    Applicable Date: April 17, 2019.

FOR FURTHER INFORMATION CONTACT: 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, Program Parameters and 
Research 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. Their address is: 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

    Division G, Title II of the Consolidated Appropriations Act, 2019 
requires that the HUD Secretary, for the calendar year 2019 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 announces the availability of the FY 2019 
inflation factors and describes the methodology for calculating them. 
Tables in PDF and Microsoft Excel formats showing Renewal Funding 
Inflation Factors (RFIFs) by HUD Fair Market Rent Area are available 
electronically from the HUD data information page at: https://www.huduser.gov/portal/datasets/rfif/rfif.html.

II. Methodology

    RFIFs are used to adjust the allocation of HCV program funds to 
PHAs for local changes in rents, utility costs, and tenant incomes. To 
calculate the RFIFs, HUD first forecasts a national inflation factor, 
which is the annual change in the national average Per Unit Cost (PUC). 
HUD then calculates individual area inflation factors, which are based 
on the annual changes in the two-bedroom Fair Market Rent (FMR) for 
each area. Finally, HUD adjusts the individual area inflation factors 
to be consistent with the national inflation factor.
    HUD's forecast of the national average PUC is based on forecasts of 
gross rent and tenant income. Each forecast is produced using 
historical and forecasted macroeconomic data as independent variables, 
where the forecasts are consistent with the Economic Assumptions of the 
Administration's FY 2019 Budget. The forecast of gross rent is itself 
based on forecasts of the Consumer Price Index (CPI) Rent of Primary 
Residence Index and the CPI Fuels and Utilities Index. Forecasted 
values of these series are applied to the FY 2019 national average two-
bedroom FMR to produce a CY 2019 value. A ``notional'' PUC is 
calculated as the difference between gross rent value and 30 percent of 
tenant income (the standard for tenant rent contribution in the voucher 
program). The change between the forecasted CY 2019 notional PUC and 
the CY 2018 notional PUC is the expected national change in PUC, or 
4.00 percent. HUD uses a notional PUC as opposed to the actual PUC to 
project costs that are consistent with PHAs leasing the same number and 
quality of units. For more information on HUD's forecast methodology, 
see 82 FR 26710.
    In cases where the FY 2019 FMR is not based on an ad hoc rent 
survey, the inflation factor for an individual geographic area is based 
on the annualized change in the area's FMR between FY 2018 and FY 2019. 
These changes in FMRs are then scaled such that the voucher-weighted 
average of all individual area inflation factors is equal to the 
national inflation factor, i.e., the expected annual change in national 
PUC from CY 2018 to CY 2019, and such that no area has a factor less 
than one. For PHAs operating in multiple FMR areas, HUD calculates a 
voucher-weighted average inflation factor based on the count of 
vouchers in each FMR area administered by the PHA as captured in HUD 
administrative data as of December 31, 2018.
    In 2018, HUD sought comment on potential alternatives to calculate 
renewal funding inflation factors for areas with an FMR that is based 
on an ad hoc rent survey (see FR-6099-N-01). In recent years, the use 
of surveys has resulted in large inflation factors in the first year an 
ad hoc survey is used in the FMR calculation, followed by much smaller 
inflation factors even as the underlying survey remains in effect. 
Commenters generally stressed the importance of including ad hoc 
surveys in the inflation factor calculation to ensure agencies that 
face higher per unit costs also receive higher funding. Therefore, HUD 
is continuing to use its existing methodology of incorporating ad hoc 
surveys in the calculation of inflation factors. HUD will also track 
and evaluate the impacts of very large increases in inflation factors.

III. The Use of Inflation Factors

    HUD subsequently applies the calculated individual area inflation 
factors to eligible renewal funding for each PHA based on VMS leasing 
and cost data for the prior calendar year.

IV. Geographic Areas and Area Definitions

    As explained above, inflation factors based on area FMR changes are 
produced for all FMR areas and applied to eligible renewal funding for 
each PHA. The tables showing the RFIFs, available electronically from 
the HUD data information page, list the inflation factors for each FMR 
area 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 2019 FMRs. PHAs should refer to the Area Definitions Table on the 
following web page to make certain that they are referencing the 
correct inflation factors: http://www.huduser.org/portal/datasets/rfif/FY2019/FY2019_RFIF_FMR_AREA_REPORT.pdf. The Area Definitions

[[Page 16033]]

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. 
HUD is also releasing the data in Microsoft Excel format to assist 
users who may wish to use these data in other calculations. The Excel 
file is available at https://www.huduser.gov/portal/datasets/rfif/rfif.html. Note that, as described earlier, the actual renewal funding 
inflation factor applied to agency funding will be the voucher-weighted 
average of the FMR area factors when the PHA operates in multiple 
areas.

VI. 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 12, 2019.
Todd Richardson,
General Deputy Assistant Secretary for Policy Development and Research.
[FR Doc. 2019-07679 Filed 4-16-19; 8:45 am]
 BILLING CODE 4210-67-P