[Federal Register Volume 87, Number 219 (Tuesday, November 15, 2022)]
[Notices]
[Pages 68513-68516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24845]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6360-N-01]
Notice of Certain Operating Cost Adjustment Factors for 2023
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice; request for comment.
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SUMMARY: This notice establishes operating cost adjustment factors
(OCAFs) for project-based assistance contracts issued under Section 8
of the United States Housing Act of 1937 and renewed under the
Multifamily Assisted Housing Reform and Affordability Act of 1997
(MAHRA) for eligible multifamily housing projects having an anniversary
date on or after February 11, 2023. OCAFs are annual factors used to
adjust Section 8 rents renewed under section 515 or section 524 of
MAHRA. Through this notice HUD also seeks public input on two proposed
technical changes to its OCAF calculation method.
DATES:
Comment due date: December 15, 2022.
Applicability date: February 11, 2023, unless HUD receives comment
that would lead to the reconsideration of these proposed changes, as
described below.
ADDRESSES: HUD invites interested persons to submit comments regarding
changes to the OCAF calculation method. Communications must refer to
the above docket number and title and should contain the information
specified in the ``Request for Public Comments and FMR Reevaluations''
section. There are two methods for submitting public comments:
1. Electronic Submission of Comments. Interested persons may submit
comments or reevaluation requests electronically through the Federal
eRulemaking Portal at https://www.regulations.gov. HUD strongly
encourages commenters to submit comments or reevaluation requests
electronically. Electronic submission of comments or reevaluation
requests allows the author maximum time to prepare and submit a comment
or reevaluation request, ensures timely receipt by HUD, and enables HUD
to make them immediately available to the public. Comments or
reevaluation requests submitted electronically through the https://www.regulations.gov website can be viewed by other submitters and
interested members of the public. Commenters or reevaluation
[[Page 68514]]
requestors should follow instructions provided on that site to submit
comments or reevaluation requests electronically.
2. Submission of Comments by Mail. Members of the public may submit
comments or requests for reevaluation by mail to the Regulations
Division, Office of General Counsel, Department of Housing and Urban
Development, 451 7th Street SW, Room 10276, Washington, DC 20410-0500.
Due to security measures at all federal agencies, however, submission
of comments by standard mail often results in delayed delivery. To
ensure timely receipt of comments or reevaluation requests, HUD
recommends that comments or requests submitted by standard mail be
submitted at least two weeks in advance of the deadline. HUD will make
all comments or reevaluation requests received by mail available to the
public at https://www.regulations.gov.
Note: To receive consideration as public comments or
reevaluation requests, comments or requests must be submitted
through one of the two methods specified above. Again, all
submissions must refer to the docket number and title of the notice.
No Facsimile Comments or Reevaluation Requests. HUD does not accept
facsimile (FAX) comments or requests.
FOR FURTHER INFORMATION CONTACT: Jennifer Lavorel, Director, Office of
Asset Management and Portfolio Oversight Program Administration Office,
Department of Housing and Urban Development, 451 7th Street SW,
Washington, DC 20410; telephone number 202-402-2515 (this is not a
toll-free number). HUD welcomes and is prepared to receive calls from
individuals who are deaf or hard of hearing, as well as individuals
with speech and communication disabilities. To learn more about how to
make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
SUPPLEMENTARY INFORMATION:
I. Background
Section 514(e)(2) and section 524(c)(1) of the Multifamily Assisted
Housing Reform and Affordability Act of 1997 (MAHRA) (42 U.S.C. 1437f
note), as amended, require HUD to establish guidelines for the
development of operating cost adjustment factors (OCAFs) for rent
adjustments. Similar language is found in sections 524(a)(4)(C)(i),
524(b)(1)(A), and 524(b)(3)(A) of MAHRA, all of which prescribe the use
of the OCAF in the calculation of renewal rents. MAHRA gives HUD broad
discretion in setting OCAFs, referring, for example, in sections
524(a)(4)(C)(i), 524(b)(1)(A), 524(b)(3)(A), and 524(c)(1), to simply
``an operating cost adjustment factor established by the Secretary.''
HUD uses a single methodology for establishing OCAFs. The sole
limitation to this grant of authority is a specific requirement in each
of the foregoing provisions that application of an OCAF ``shall not
result in a negative adjustment.''
OCAFs vary among states and territories. Contract rents are
adjusted by applying the OCAF for the state or territory in which the
subject project is located to that portion of the rent attributable to
operating expenses exclusive of debt service.
The OCAFs provided in this notice are applicable to eligible
projects having a contract anniversary date on or after February 11,
2023.
II. Proposed Changes to OCAF Methodology
HUD seeks public input on the following proposed technical changes
to its OCAF calculation methodology.
Vintage of data. To calculate the inflation factor for each of the
nine cost components that comprise the OCAF, HUD uses year-over-year
data, pulling data as of May of each year. Beginning with the 2024
OCAFs, HUD will begin to pull data in August of each year, to reduce
the time lag between when OCAFs are calculated and when they go into
effect.
Note: To provide for OCAFs that are relatively generous in 2023,
given historically high inflation levels, HUD calculated the cost
component inflation factor for most of the cost components using a
time period that exceeds 1 year. HUD used the most recent available
data at the time of calculation for the numerator. For the
denominator, HUD used the figure for the time period that was used
in the calculation of the 2022 OCAFs. Going forward, HUD will revert
to using year-over-year data for each component, subject to data
availability.
Insurance component data source. To calculate the inflation factor
for the insurance component, HUD has used the Bureau of Labor
Statistics Consumer Price Index, Tenants and Household Insurance Index.
Beginning with the 2023 OCAFs, HUD instead uses the industry data for
Direct property and casualty insurers-Commercial multiple peril
insurance series from the Bureau of Labor Statistics, Producer Price
Index, as it is the best metric for insurance costs for properties of
leased rental housing.
With respect to these proposed changes to OCAF methodology, HUD
will consider all comments submitted not later than 30 days from the
date of publication of this notice. Unless HUD receives comment that
would lead to the reconsideration of these proposed changes, the
changes will become effective on February 11, 2023. If HUD receives
adverse comment that leads to reconsideration, HUD will notify the
public via a revised notice issued immediately following the close of
the comment period.
III. OCAF Data Sources
OCAFs are calculated as the sum of weighted component cost changes
for electricity, employee benefits/employee wages, fuel oil, goods/
supplies/equipment, insurance, natural gas, property taxes, and water/
sewer/trash, using publicly available indices. The weights used in the
OCAF calculations for each of the nine cost component groupings are set
using current percentages attributable to each of the nine expense
categories. HUD calculates weights using three years of audited Annual
Financial Statements from projects covered by OCAFs. The expenditure
percentages for these nine categories have been found to be stable over
time, and using three years of data increases their stability. The nine
cost component weights are calculated at the state level, which is the
lowest level of geographical aggregation with enough projects to permit
statistical analysis. These data are not available for the Western
Pacific Islands, so data for Hawaii are used as the best available
indicator of OCAFs for these areas.
HUD uses the best current price data sources for the nine cost
categories in calculating annual change factors. State-level data for
electricity, fuel oil, and natural gas from Department of Energy
surveys are relatively current and continue to be used. Data on changes
in employee benefits/employee wages, goods/supplies/equipment,
insurance, property taxes, and water/sewer/trash costs are available
only at the national level.
The data sources used for the selected nine cost indicators are as
follows:
Electricity: Energy Information Agency (EIA), May 2022
``Electric Power Monthly'' report, Table 5.6.B. HUD compares the
estimate for January 2022 through May 2022 to the estimate for January
2020 to December 2020. https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_06_b.
Employee benefits: Bureau of Labor Statistics (BLS) ECI,
Private Industry Benefits, All Workers (Series ID CIU2030000000000I),
at the national level. HUD compares the second quarter 2022 to the
first quarter of 2021. https://data.bls.gov/timeseries/CIU2030000000000I.
[[Page 68515]]
Employee wages: Bureau of Labor Statistics (BLS) ECI,
Private Industry Wages and Salaries, All Workers (Series ID
CIU2020000000000I), at the national level. HUD compares the second
quarter 2022 to the first quarter of 2021. https://data.bls.gov/timeseries/CIU2020000000000I.
Fuel Oil: EIA U.S. Weekly Heating Oil and Propane Prices
report. Average weekly residential heating oil prices in cents per
gallon excluding taxes for the period from October 5, 2021, through the
week of March 29, 2022, are compared to the average from October 5,
2020, through the week of March 29, 2021. For the States with
insufficient fuel oil consumption to have separate estimates, the
relevant regional Petroleum Administration for Defense Districts (PADD)
change between these two periods is used; if there is no regional PADD
estimate, the U.S. change between these two periods is used. https://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPD2F_PRS_dpgal_w.htm.
Goods/Supplies/Equipment: Bureau of Labor Statistics (BLS)
Consumer Price Index, All Items Less Food, Energy and Shelter (Series
ID CUUR0000SA0L12E) at the national level. HUD compares the July 2022
estimate to the estimate for May 2021. https://data.bls.gov/timeseries/CUUR0000SA0L12E.
Insurance: Bureau of Labor Statistic (BLS) Producer Price
Index, industry data for Direct property and casualty insurers-
Commercial multiple peril insurance (Series ID PCU5241265241265) at the
national level. HUD compares the estimate for July 2022 to the estimate
for May 2021. https://data.bls.gov/timeseries/PCU5241265241265.
Natural Gas: Energy Information Agency, Natural Gas,
Residential Energy Price, monthly prices in dollars per 1,000 cubic
feet at the state level. HUD compares the estimate for January 2021
through May 2022 to the estimate for January 2020 through December
2020. Due to EIA data quality standards, several states were missing
data for one or two months in 2021 and 2022; in these cases, data for
these missing months were estimated using data from the surrounding
months in that year and the relationship between that same month and
the surrounding months in 2020. http://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_a.htm.
Property Taxes: Census Quarterly Summary of State and
Local Government Tax Revenue--Table 1 https://www.census.gov/econ/currentdata/dbsearch?program=QTAX&startYear=2019&endYear=2021&categories=QTAXCAT1&dataType=T01&geoLevel=US¬Adjusted=1&submit=GET+DATA&releaseScheduleId=.
Twelve-month property taxes are computed as the total of four quarters
of tax receipts for the period from April through March. Total 12-month
taxes are then divided by the number of occupied housing units to
arrive at average 12-month tax per housing unit. HUD compares the
estimate for April 2021 through March 2022 to the estimate for April
2020 through March 2021.The number of occupied housing units is taken
from U.S. Census Bureau's Current Population Survey/Housing Vacancy
Survey (CPS/HVS) housing inventory estimates the estimates, Table 8:
https://www.census.gov/housing/hvs/data/histtab8.xlsx.
Water/Sewer/Trash: Consumer Price Index, All Urban
Consumers, Water and Sewer and Trash Collection Services (Series ID
CUUR00 00SEHG) at the national level. HUD compares the estimate for
July 2022 to the estimate for May 2021. https://data.bls.gov/timeseries/CUUR0000SEHG.
The sum of the nine cost component percentage weights equals 100
percent of operating costs for purposes of OCAF calculations. To
calculate the OCAFs, state-level cost component weights developed from
AFS data are multiplied by the selected inflation factors. For
instance, if wages in Virginia comprised 50 percent of total operating
cost expenses and increased by 4 percent from 2021 to 2022, the wage
increase component of the Virginia OCAF for 2023 would be 2.0 percent
(50% * 4%). This 2.0 percent would then be added to the increases for
the other eight expense categories to calculate the 2023 OCAF for
Virginia. For states where the calculated OCAF is less than zero, the
OCAF is floored at zero. The OCAFs for 2023 are included as an Appendix
to this notice.
IV. Findings and Certifications Environmental Impact
This notice sets forth rate determinations and related external
administrative requirements and procedures that do not constitute a
development decision affecting the physical condition of specific
project areas or building sites. Accordingly, under 24 Code of Federal
Regulations 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).
V. Paperwork Reduction Act
This notice does not impact the information collection requirements
already submitted to the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In
accordance with the Paperwork Reduction Act, an agency may not conduct
or sponsor, and a person is not required to respond to, a collection of
information unless the collection displays a currently valid OMB
control number. The OMB control number associated with this collection
is 2502-0587.
VI. Catalog of Federal Domestic Assistance Number
The Catalog of Federal Domestic Assistance Number for this program
is 14.195.
Julia R. Gordon,
Office of the Assistant Secretary for Housing, Federal Housing
Administration Commissioner.
Appendix
Operating Cost Adjustment Factors for 2023
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Alabama........................................................ 5.8
Alaska......................................................... 6.0
Arizona........................................................ 5.7
Arkansas....................................................... 5.9
California..................................................... 7.1
Colorado....................................................... 5.9
Connecticut.................................................... 6.1
Delaware....................................................... 5.8
District of Columbia........................................... 5.8
Florida........................................................ 6.1
Georgia........................................................ 5.6
Hawaii......................................................... 7.3
Idaho.......................................................... 5.1
Illinois....................................................... 7.3
Indiana........................................................ 6.4
Iowa........................................................... 5.0
Kansas......................................................... 5.5
Kentucky....................................................... 6.4
Louisiana...................................................... 5.9
Maine.......................................................... 8.3
Maryland....................................................... 6.6
Massachusetts.................................................. 6.1
Michigan....................................................... 5.5
Minnesota...................................................... 7.3
Mississippi.................................................... 6.2
Missouri....................................................... 5.2
Montana........................................................ 5.4
Nebraska....................................................... 5.9
Nevada......................................................... 6.2
New Hampshire.................................................. 5.7
New Jersey..................................................... 5.3
New Mexico..................................................... 6.0
New York....................................................... 7.6
North Carolina................................................. 5.7
North Dakota................................................... 6.0
Ohio........................................................... 6.2
Oklahoma....................................................... 4.9
Oregon......................................................... 5.6
Pacific Islands................................................ 7.3
Pennsylvania................................................... 5.8
Puerto Rico.................................................... 6.3
Rhode Island................................................... 5.3
South Carolina................................................. 5.6
South Dakota................................................... 4.8
Tennessee...................................................... 5.7
Texas.......................................................... 5.7
Utah........................................................... 5.6
Vermont........................................................ 6.0
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Virgin Islands................................................. 5.8
Virginia....................................................... 6.0
Washington..................................................... 5.9
West Virginia.................................................. 6.6
Wisconsin...................................................... 6.6
Wyoming........................................................ 5.6
United States.................................................. 6.1
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[FR Doc. 2022-24845 Filed 11-14-22; 8:45 am]
BILLING CODE 4210-67-P