[Federal Register Volume 89, Number 75 (Wednesday, April 17, 2024)]
[Notices]
[Pages 27440-27447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08133]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR 6449-N-01]


Methodology for Annual Inflationary Adjustments to Income 
Calculations in HUD Subsidized Housing Programs

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, Office of the Assistant Secretary for Housing--Federal 
Housing Commissioner, Office of the Assistant Secretary for Public and 
Indian Housing, HUD.

ACTION: Notice; request for comment.

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SUMMARY: The Department of Housing and Urban Development (HUD), through 
this notice, solicits comment on the Department's proposed methodology 
for deriving an Inflationary Factor from the Consumer Price Index for 
Urban Wage Earners and Clerical Workers (CPI-W). This factor will be 
used to adjust certain values pursuant to a requirement established in 
the Housing Opportunity Through Modernization Act of 2016 (HOTMA) that 
such values be adjusted annually by inflation.

DATES: Comment due date: May 17, 2024. If HUD receives adverse comment 
that leads to reconsideration of this proposed methodology, then HUD 
will notify the public via a revised notice following the close of the 
comment period.
    Applicability date: The terms of this notice are applicable to 
income determinations with an effective date on or after January 1, 
2025, unless HUD receives comment that would lead to the 
reconsideration of its proposed methodology. HUD will publish both the 
Inflationary Factor and the Revised Amounts in August of each year to 
be used for the following calendar year.

ADDRESSES: Interested persons are invited to submit comments on the 
proposed methodology. Communications must refer to the above docket 
number and title. There are two methods for submitting public comments:
    1. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
https://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the author maximum time to prepare and submit a comment, ensures 
timely receipt by HUD, and enables HUD to make such comments 
immediately available to the public. Comments submitted electronically 
through the https://www.regulations.gov website can be viewed by other 
submitters and interested members of the public. Commenters must follow 
instructions provided on that site to submit comments electronically.
    2. Submission of Comments by Mail. Members of the public may submit 
comments 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, HUD recommends that comments submitted by standard mail be 
submitted at least two weeks in advance of the deadline. HUD will make 
all comments received by mail available to the public at https://www.regulations.gov.

    Note:  To receive consideration as public comments, comments 
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. HUD does not accept facsimile (Fax) 
comments.
    Public Inspection of Public Comments. All comments and 
communications properly submitted to HUD will be available for public 
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above 
address. Due to security measures at the HUD Headquarters building, an 
advance appointment to review the public comments must be scheduled by 
calling the Regulations Division at (202) 708-3055 (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 or 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.
    Copies of all comments submitted are available for inspection and 
downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Virginia Sardone, Director, Office of 
Affordable Housing Programs, Office of Community Planning and 
Development (CPD), Room 7160, U.S. Department of Housing and Urban 
Development, 451 7th Street SW, Washington, DC 20410, (202) 708-2684. 
Rita Harcrow, Director, Office of HIV/AIDS Housing, Office of Community 
Planning and Development, Room 7248, U.S. Department of Housing and 
Urban Development, 451 7th Street SW, Washington, DC 20410, (202) 745-
4323. The email for CPD programs is [email protected]. Jennifer 
Lavorel, Director, Office of Asset Management and Portfolio Oversight 
Program Administration Office, Office of Multifamily Housing Programs, 
Room 6180, U.S. Department of Housing and Urban Development, 451 7th 
Street SW, Washington, DC 20410, (202) 402-2515. Kymian Ray, Director, 
Public Housing Management and Occupancy Division, Office of Public 
Housing and Voucher Programs, Room 4210, U.S. Department of Housing and 
Urban Development, 451 7th Street SW, Washington, DC 20410, (202) 402-
2065. Adam Bibler, Director, Program Parameters and Research Division, 
Office of Policy Development and Research, (202) 402-6057, for 
technical information regarding the development of the schedules or the 
methods used for calculating the inflation factors.
    The contact telephone numbers listed are not toll-free numbers. HUD 
welcomes and is prepared to receive calls from individuals who are deaf 
or hard of hearing, as well as individuals with speech or 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. Terminology and Definitions

    HUD defines the following terms for the purposes of this notice:
    Adjusted Item. The figure that is to be adjusted for inflation 
(e.g., the dependent deduction).

[[Page 27441]]

    Inflation Index. The Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W).\1\ The CPI-W is published by the U.S. 
Bureau of Labor Statistics and is available on the following website: 
https://www.bls.gov/cpi/.
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    \1\ HUD established in the HOTMA Final Rule (88 FR 9600; Feb. 
14, 2023) that the Department will use the Consumer Price Index for 
Urban Wage Earners and Clerical Workers (CPI-W) for the Inflation 
Index. See the HOTMA Final Rule for a detailed discussion on why HUD 
chose the CPI-W. https://www.federalregister.gov/documents/2023/02/14/2023-01617/housing-opportunity-through-modernization-act-of-2016-implementation-of-sections-102-103-and-104#h-167.
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    Index Value. The number produced as the direct output of the CPI-W 
on a monthly basis. This number reflects the price of a market basket 
of consumer goods and services, relative to other points in time 
measured by the inflation index.
    Inflationary Factor. The number that reflects the percentage change 
in the index value from one year to the next.
    Revised Amount. The final value(s) published by HUD after the 
Inflationary Factor and rounding requirements are applied.
    Rounding Requirements. For the mandatory deduction for elderly and 
disabled families, the mandatory deduction for dependents, the 
threshold for exclusion of earned income of dependent full-time 
students, and the threshold for exclusion of adoption assistance 
payments, Revised Amounts will be rounded down to the next lowest 
multiple of $25. All other Revised Amounts will be rounded to the 
nearest dollar.
    Starting Value. The value of an Adjusted Item for the first year, 
prior to inflationary adjustment (e.g., in calendar year 2024, the 
dependent deduction was set at $480).
    Tracking Amount. An intermediate figure in the calculation after 
the Inflationary Factor is applied but prior to application of rounding 
requirements.

II. Applicability

    This notice applies to the following programs: \2\
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    \2\ When a grantee in CPD programs has a choice in applying a 
definition of annual income under their program regulations and the 
grantee chooses the definition in 24 CFR 5.609, then the grantee is 
subject to the applicable requirements in 24 CFR 5.609, 24 CFR 
5.611, and 24 CFR 5.618 as revised by the HOTMA final rule.

 Community Development Block Grant Program (CDBG)
 Continuum of Care Program (CoC)
 Emergency Solutions Grant Program (ESG)
 HOME Investment Partnerships Program (HOME)
 HOME Investment Partnerships Program-American Rescue Plan 
(HOME-ARP)
 Housing Choice Voucher
 Housing Opportunities for Persons With AIDS (HOPWA)
 Housing Trust Fund (HTF)
 Public Housing
 Section 8 Moderate Rehabilitation
 Section 8 Moderate Rehabilitation for Single Room Occupancy 
(SRO) Dwellings for Homeless Individuals
 Section 8 Project Based Rental Assistance (PBRA)
 Section 202 Project Rental Assistance Contract (PRAC)
 Section 202/162 Project Assistance Contract (PAC)
 Section 236 Non-Insured Projects Subject to Use Agreements 
(236)
 Section 811 Project Rental Assistance Contract (PRAC)
 Section 811 Project Rental Assistance Demonstration (811 PRA)
 Self-Help Homeownership Opportunity Program (SHOP)
 Senior Preservation Rental Assistance Contract (SPRAC)
 Supportive Housing Program (SHP)

III. Background

    Through the Housing Opportunity Through Modernization Act of 2016 
(HOTMA),\3\ HUD requires that several values adjust annually for 
inflation in accordance with an Inflation Index selected by the 
Secretary. The Revised Amounts will be used by Public Housing Agencies 
(PHAs), Multifamily Owners (MFH Owners), and CPD grantees during income 
reviews \4\ for program applicants and participants, except as 
otherwise noted below.
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    \3\ Public Law 114-201.
    \4\ Income reviews and their requirements are defined in HUD's 
program regulations found in 24 CFR 5.609; 891.105; 891.410; 
891.610; 960.257; 982.516; 92.203; and 93.151.
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Asset Limitation

    HOTMA establishes a limitation on the admission and continued 
program participation of families with assets that exceed $100,000. 
This amount is to be adjusted annually, rounded to the nearest dollar. 
(24 CFR 5.618(a)(1)(i), 574.310(f))
    Note: The asset limitation does not apply to the 202/811 PRAC, 236, 
811 PRA, CDBG, HOME, HOME-ARP, HTF, or SPRAC programs.
    Note: Pursuant to Notice PIH 2023-27/Notice H 2023-10,\5\ PHAs/MFH 
Owners have discretion with respect to the application of the asset 
limitation at annual and interim reexamination. PHAs/MFH Owners may 
adopt a written policy of total non-enforcement, full enforcement, or 
limited enforcement, and may also adopt exception policies. See Notice 
H 2023-10 for more details.
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    \5\ Notice PIH 2023-27/Notice H 2023-10, ``Implementation 
Guidance: Sections 102 and 104 of the Housing Opportunity Through 
Modernization Act of 2016 (HOTMA).'' Originally issued September 29, 
2023. Reissued February 2, 2024. These notices are substantively 
identical.
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Threshold for Calculating Imputed Returns on Assets

    HOTMA establishes that when the value of net family assets exceeds 
the threshold of $50,000, any imputed returns on such assets must be 
calculated when actual income cannot be calculated. This amount is to 
be adjusted annually, rounded to the nearest dollar. (24 CFR 
5.609(a)(2) and (b)(1)).

Threshold for Inclusion of Non-Necessary Personal Property in Assets

    As implemented by HUD, HOTMA establishes that when the combined 
value of all of a family's non-necessary items of personal property 
does not exceed $50,000, the combined value of all items of non-
necessary personal property is excluded from net family assets. This 
amount is to be adjusted annually, rounded to the nearest dollar. (24 
CFR 5.603(b)).

Threshold for Acceptance of Self-Certification of Assets

    HOTMA establishes that a PHA/MFH Owner/CPD Grantee may accept a 
family's self-certification of net assets when net family assets are 
equal to or less than $50,000. This amount is to be adjusted annually, 
rounded to the nearest dollar. (24 CFR 5.618(b)(1), 5.659(e), 
92.203(e); 93.151(e); 574.310(e)(3)(ii); 960.259(c)(2), and 
982.516(a)(3)).

Threshold for Exclusion of Earned Income of Dependent Full-Time Student

    As implemented by HUD, HOTMA establishes an income exclusion of 
amounts more than $480 for the earned income of a dependent, full-time 
student. This amount is to be adjusted annually, rounded to the next 
lowest multiple of $25. (24 CFR 5.609(b)(14)).

Threshold for Exclusion of Adoption Assistance Payments

    As implemented by HUD, HOTMA establishes an income exclusion of 
amounts more than $480 for adoption assistance payments. This amount is 
to be adjusted annually, rounded to the next lowest multiple of $25. 
(24 CFR 5.609(b)(15)).

[[Page 27442]]

Mandatory Deductions for Elderly and Disabled Families and for 
Dependents

    HOTMA establishes a $525 mandatory deduction from income for 
elderly and disabled families. This amount is to be adjusted annually, 
rounded to the next lowest multiple of $25. (24 CFR 5.611(a)(2)).
    HOTMA establishes a $480 mandatory deduction from income for 
dependents. This amount is to be adjusted annually, rounded to the next 
lowest multiple of $25. (24 CFR 5.611(a)(1))
    Note: Mandatory deductions do not apply to the HTF program unless 
the unit is subject to HUD's regulations found in 24 CFR 93.151(a)(1)-
(3) and (f).
    HUD will publish both the Inflationary Factor and the Revised 
Amounts in August of each year on the HUD User website at https://www.huduser.gov/portal/datasets/inflationary-adjustments-notifications.html. Throughout calendar year 2024, these amounts will 
be the Starting Value determined by the HOTMA statute. As explained in 
Notice PIH 2023-27/H 2023-10 and a publication in the Federal 
Register,\6\ PHAs, MFH Owners, and CPD Grantees may delay compliance 
with HOTMA and may pick a compliance date as early as January 1, 2024, 
but no later than January 1, 2025. If a PHA, MFH Owner, or CPD Grantee 
begins complying with the HOTMA income and assets rule for transactions 
in 2024, they will use calendar year 2024 Starting Values as described 
in this Notice. HUD will publish Revised Amounts to be used for all 
income determinations with an effective date on or after January 1, 
2025.
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    \6\ https://www.federalregister.gov/documents/2023/12/08/2023-27026/housing-opportunity-through-modernization-act-implementation-of-sections-102-103-and-104-extension.

------------------------------------------------------------------------
                                                             Starting
                      Adjusted item                       value, CY 2024
------------------------------------------------------------------------
The amount for the eligibility restriction on net family        $100,000
 assets.................................................
The amount for the value of net family assets above               50,000
 which imputed returns may be calculated................
The amount of the combined value of all non-necessary             50,000
 personal property that is excluded from net family
 assets, if the combined total value does not exceed
 this amount............................................
The amount of net assets for which the PHA/MFH Owner/CPD          50,000
 Grantee may accept self-certification by the family....
Income exclusion for earned income of dependent full-                480
 time students..........................................
Income exclusion for adoption assistance payments.......             480
The amount of the mandatory deduction for elderly and                525
 disabled families......................................
The amount of the mandatory deduction for a dependent...             480
------------------------------------------------------------------------

IV. The Consumer Price Index for Urban Wage Earners and Clerical 
Workers (CPI-W)

    The Consumer Price Index for Urban Wage Earners and Clerical 
Workers (CPI-W), published monthly by the Bureau of Labor Statistics 
(BLS), tracks the average change in prices paid by urban wage earners 
for consumer goods and services. Monthly Index Values are available for 
the U.S. City Average or national average, for various geographic areas 
(regions and metropolitan areas), for national population size classes 
or urban areas, and for cross-classifications or regions and size 
classes.
    In the final rule implementing Sections 102, 103, and 104 of HOTMA 
(FR-6057-F-03; February 14, 2023), HUD specified that it would use the 
CPI-W because of public comments, HUD's belief that it is an accurate 
measure of inflation to use in making income and asset determinations, 
and the fact that it would be familiar to many since it is used for the 
Social Security Administration's (SSA) Cost-of-Living Adjustment.\7\
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    \7\ See 42 U.S.C. 415 for the SSA Cost-of-Living Adjustment 
formula.
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    CPI-W Index Values can be seasonally adjusted. Seasonal adjustment 
is a statistical technique that attempts to measure and remove the 
influences of predictable seasonal patterns from time series data. 
Seasonally adjusted data are most useful when making current or short-
term analyses, to filter out the impact of predictable seasonal 
variation. In addition, seasonally adjusted data are subject to 
revision for up to five years.
    HUD proposes to use non-seasonally adjusted Index Values to 
calculate the Inflationary Factor. Unadjusted index values are often 
used for escalation purposes and measure the change in the actual 
prices consumers pay for goods and services. Since HUD will be using 
the same three months from one year to the next, non-seasonally 
adjusted values can better estimate longer term price movements. The 
SSA Cost-of-Living Adjustment also uses seasonally unadjusted data from 
the CPI-W.
    HUD proposes to compare an average of three months of CPI-W index 
values from one year to the next, to calculate the Inflationary Factor. 
The SSA Cost-of-Living Adjustment also uses three months of CPI-W data, 
so following suit will make HUD's method more familiar and accessible. 
An average of three months of data is more likely than a one-month 
snapshot to represent durable trends, and it is more likely than a 
longer average to reflect current economic circumstances.
    HUD proposes to calculate one national Inflationary Factor. Use of 
a national average is preferred in light of administrative difficulties 
that would arise from having a variety of different regional 
inflationary factors. Again, the SSA Cost-of-Living Adjustment uses 
national CPI-W data, which will make HUD's inflationary adjustments 
methods more familiar and accessible.
    HUD proposes to make no adjustment but to hold the Revised Amounts 
fixed when the percentage change in the CPI-W from one year to the next 
shows no increase or a decrease. This aligns with the SSA Cost-of-
Living Adjustment. It also ensures that assisted families are not 
harmed by increases in rents or a lower asset limitation during an 
economic downturn. As the SSA does, HUD would subsequently restart 
upward adjustments only when the CPI-W has recovered fully, to avoid 
adjustments that would outpace inflation generally over the long term. 
(See sample calculation #3 in section VI.)

V. Methodology for Calculating the Inflationary Factor and Revised 
Amounts

Calculating the Inflationary Factor

    HUD proposes to determine the annual Inflationary Factor for the 
coming calendar year by calculating the change (if any) in the CPI-W 
from the average for the second quarter (April, May, and June) of the 
prior year to the average for the second quarter in the current year. 
The average in the CPI-W

[[Page 27443]]

for the second quarter of each year will be calculated by averaging the 
monthly unadjusted CPI-W index values for that year. Data from the 
second quarter of the year will be used so that HUD can publish Revised 
Amounts before PHAs, MFH owners, and CPD grantees need to use such 
Revised Amounts for income calculations that will have effective dates 
in the next calendar year.
    Step 1: Average unrounded CPI-W Index Values for April, May, and 
June of current year.

Current Year Average Index Value = (April Index Value + May Index Value 
+ June Index Value)/3

    Step 2: Average unrounded CPI-W Index Values for April, May, and 
June of prior year.

Prior Year Average Index Value = (April Index Value + May Index Value + 
June Index Value)/3

    Step 3: Subtract the prior three-month average Index Value from the 
current three-month average Index Value and divide by the prior year 
average Index Value x 100 to find the Inflationary Factor (percentage).

Inflationary Factor = ((Current Year Average-Prior Year Average)/Prior 
Year Average) x 100

Example Calculation of the Inflationary Factor

   Total and Average Year-Over-Year CPI-W Index Values for the Second
                                 Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                                            index value     index value
                  Month                     (all items,     (all items,
                                            unadjusted)     unadjusted)
------------------------------------------------------------------------
April...................................         261.237         284.575
May.....................................         263.612         288.022
June....................................         266.412         292.542
3-month total...........................         791.261         865.139
3-month Average.........................         263.754         288.380
------------------------------------------------------------------------

((288.380-263.754)/263.754) x 100 = 9.3

    In this example calculation, there has been a 9.3 percent increase. 
(An inflationary factor could be presented as 1.093. When that 
inflationary factor is multiplied by the value that needs to be 
adjusted, the product will reflect that 9.3 percent increase. For ease 
of calculation, the percentage change will be converted back to decimal 
form, and added to or subtracted from 1, to provide the Inflationary 
Factor for the formulas below.)

Calculating the Tracking and Revised Amounts

    Once the Inflationary Factor is determined, the Revised Amounts for 
the coming calendar year are determined in two steps. First, the 
Inflationary Factor is applied to the figure to be adjusted. Second, 
the appropriate rounding requirements are applied to determine the new 
Revised Amount.
    In 2024, the first year an inflationary adjustment will be 
calculated, HUD will take the starting values for all inflation-
adjusted figures (as determined by statute, see Section III) and 
multiply by the Inflationary Factor determined by the CPI-W. The 
product is the Tracking Amount, an intermediate step in the 
calculation. Next, the relevant rounding requirements are applied to 
the Tracking Amount, to determine the Revised Amount that must be used 
for the coming calendar year. All figures to be adjusted will be 
rounded to the nearest dollar, except the dependent deduction (24 CFR 
5.611(a)(1)), the elderly or disabled family deduction (24 CFR 
5.611(a)(2)), and the income exclusions described in 24 CFR 
5.609(b)(14) and (15), which will be rounded down to the next lowest 
multiple of $25, as required by statute.

Step 1: Starting Value x (1 + Inflationary Factor) = Tracking Amount
Step 2: Rounding Requirement Applied to Tracking Amount = Revised 
Amount

    HUD proposes to use the following formula for calculating Tracking 
and Revised Amounts for all years after the first year of adjustment:

Step 1: Prior-Year Tracking Amount x (1 + Inflationary Factor) = 
Current Tracking Amount
Step 2: Rounding Requirement Applied to Current Tracking Amount = 
Revised Amount

    HUD has determined that this method will track inflation over time 
better than available alternatives. At Step 1, HUD will multiply the 
Tracking Amount from the prior year by the Inflationary Factor 
determined by the CPI-W, to determine the current Tracking Amount. A 
method that instead started from the Prior-Year Revised Amount in Step 
1 could inadvertently prevent any inflationary increases for the 
dependent deduction, the elderly or disabled family deduction, or the 
income exclusions tied to the dependent deduction level, even after 
years of persistent high inflation. This is partly because this 
alternative method would round the deductions and other figures more 
than is necessary, preventing all but the most extraordinary 
inflationary increases. (See sample calculation #5 in Section VI for 
further discussion.) Next, the relevant rounding requirements are 
applied to the current Tracking Amount, to determine the Revised Amount 
that must be used for the coming calendar year.

VI. Sample Calculations for the Inflationary Factor and Revised Amounts

    Below is a series of sample calculations to illustrate HUD's 
proposed methodology, including calculating both the Inflationary 
Factor and the Revised Amounts. The sample series is intended to 
illustrate how HUD proposes to calculate the Revised Amounts under 
different circumstances, including positive, negligible, and negative 
changes in prices year-over-year.

Sample 1: Calculating the Revised Amount for the Elderly/Disabled 
Family Deduction in 24 CFR 5.611(a)(2): Positive Percentage Change in 
Average Year-Over-Year Index Values

[[Page 27444]]



   Total and Average Year-Over-Year CPI-W Index Values for the Second
                                 Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         261.237         284.575
May.....................................         263.612         288.022
June....................................         266.412         292.542
3-month total...........................         791.261         865.139
3-month Average.........................         263.754         288.380
------------------------------------------------------------------------

    In this sample, the Elderly/Disabled Family Deduction has yet to be 
adjusted for inflation, so at the outset it is set at the starting 
value of $525.
    Step 1--Calculate Inflationary Factor:

((288.380-263.754)/263.754) x 100 = 9.3 percent or 1.093

    Step 2--Determine the Tracking Amount for the Elderly/Disabled 
Family Deduction:

$525 x (1 + 0.093) = $573.83

    Step 3--Apply rounding requirement to the Tracking Amount to 
determine the new Revised Amount:
    HOTMA requires that the elderly/disabled family deduction be 
rounded down to the next lowest multiple of $25. Rounding to the next 
lowest multiple of $25 from $573.83 requires rounding to $550. The 
Elderly/Disabled Family Deduction is adjusted from $525 to $550. Here 
is how the inflationary factor of 9.3 percent would be applied to all 
other figures that required adjustment that year:

----------------------------------------------------------------------------------------------------------------
                                                 Inflationary      Tracking         Rounding
         Adjusted item          Starting value      factor          amount         requirement    Revised amount
----------------------------------------------------------------------------------------------------------------
The amount for the eligibility        $100,000           1.093        $109,300  To the nearest          $109,300
 restriction on net family                                                       dollar.
 assets.
The amount for the value of             50,000           1.093          54,650  To the nearest            54,650
 net family assets above which                                                   dollar.
 imputed returns may be
 calculated; The amount of the
 combined value of all non-
 necessary personal property
 that is excluded from net
 family assets, if the
 combined total value does not
 exceed this amount; The
 amount of net assets for
 which the PHA/MFH Owner/CPD
 Grantee may accept self-
 certification by the family.
The amount of the mandatory                480           1.093          524.64  To the next                  500
 deduction for a dependent;                                                      lowest multiple
 Income exclusion for earned                                                     of $25.
 income of dependent full-time
 students; Income exclusion
 for adoption assistance
 payments.
----------------------------------------------------------------------------------------------------------------

Sample 2: Calculating the Revised Amount for the Elderly/Disabled 
Family Deduction in 24 CFR 5.611(a)(2): Insufficient Positive 
Percentage Change in Average Year-Over-Year Index Values

   Total and Average Year-Over-Year CPI-W Index Values for the Second
                                 Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         261.237         266.462
May.....................................         263.612         268.884
June....................................         266.412         271.740
3-month total...........................         791.261         807.086
3-month Average.........................         263.754         269.029
------------------------------------------------------------------------

    In this sample, the Elderly/Disabled Family Deduction has yet to be 
adjusted for inflation, so at the outset it is set at the starting 
value of $525.
    Step 1--Calculate Inflationary Factor:

((269.029-263.754)/263.754) x 100 = 2.0 percent or 1.02

    Step 2--Determine the Tracking Amount for the Elderly/Disabled 
Family Deduction:

$525 x (1 + 0.02) = $535.50

    Step 3--Apply rounding requirement to the Tracking Amount to 
determine the new Revised Amount:
    HOTMA requires that the elderly/disabled family deduction be 
rounded to the next lowest multiple of $25. Rounding to the next lowest 
multiple of $25 from $535.50 requires rounding to $525. The Elderly/
Disabled Family Deduction remains at $525.
    Note that while the 2 percent inflationary factor is not sufficient 
to increase the Elderly/Disabled Family Deduction in this year, because 
of the relevant rounding rules requiring the figure will be rounded to 
the next lowest multiple of $25, other inflation-adjusted figures will 
be increased. For

[[Page 27445]]

example, if the amount for the eligibility restriction on net family 
assets had been $100,000, it would be increased to $102,000.

----------------------------------------------------------------------------------------------------------------
                                                 Inflationary      Tracking         Rounding
         Adjusted item          Starting value      factor          amount         requirement    Revised amount
----------------------------------------------------------------------------------------------------------------
The amount for the eligibility        $100,000            1.02        $102,000  To the nearest          $102,000
 restriction on net family                                                       dollar.
 assets.
The amount for the value of             50,000            1.02          51,000  To the nearest            51,000
 net family assets above which                                                   dollar.
 imputed returns may be
 calculated; The amount of the
 combined value of all non-
 necessary personal property
 that is excluded from net
 family assets, if the
 combined total value does not
 exceed this amount; The
 amount of net assets for
 which the PHA/MFH Owner/CPD
 Grantee may accept self-
 certification by the family.
The amount of the mandatory                480            1.02          489.60  To the next              480 (no
 deduction for a dependent;                                                      lowest multiple    adjustment).
 Income exclusion for earned                                                     of $25.
 income of dependent full-time
 students; Income exclusion
 for adoption assistance
 payments.
----------------------------------------------------------------------------------------------------------------

Sample 3: Calculating Revised Amount for the Elderly/Disabled Family 
Deduction in 24 CFR 5.611(a)(2): Negative Percentage Change in Average 
Year-Over-Year Index Values

   Total and Average Year-Over-Year CPI-W Index Values for the Second
                                 Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         284.575         278.884
May.....................................         288.022         282.262
June....................................         292.542         286.691
3-month total...........................         865.139         847.837
3-month average.........................         288.380         282.613
------------------------------------------------------------------------

    In this sample, the Elderly/Disabled Family Deduction has yet to be 
adjusted for inflation, so at the outset it is set at the starting 
value of $525.
    Step 1--Calculate Inflationary Factor:

((282.613-288.380)/288.380) x 100 = -2.0 percent or 0.98

    Step 2--No Adjustment Made:
    Because this would result in a decrease, HUD will not make an 
adjustment and will publish the Revised Amount as unchanged from the 
prior year. The Revised Amount for the coming year will be $525. HUD 
will hold the Revised Amount constant until the CPI-W average exceeds 
its previous high, to ensure that subsequent increases to Revised 
Amounts do not outpace inflation in recovery years.

----------------------------------------------------------------------------------------------------------------
                                                Inflationary                         Rounding
        Adjusted item          Starting value      factor       Tracking amount    requirement    Revised amount
----------------------------------------------------------------------------------------------------------------
The amount for the                   $100,000            0.98  No adjustment...  To the nearest         $100,000
 eligibility restriction on                                                       dollar.
 net family assets.
The amount for the value of            50,000            0.98  No adjustment...  To the nearest           50,000
 net family assets above                                                          dollar.
 which imputed returns may be
 calculated; The amount of
 the combined value of all
 non-necessary personal
 property that is excluded
 from net family assets, if
 the combined total value
 does not exceed this amount;
 The amount of net assets for
 which the PHA/MFH Owner/CPD
 Grantee may accept self-
 certification by the family.
The amount of the mandatory               480            0.98  No adjustment...  To the next                 480
 deduction for a dependent;                                                       lowest
 Income exclusion for earned                                                      multiple of
 income of dependent full-                                                        $25.
 time students; Income
 exclusion for adoption
 assistance payments.
----------------------------------------------------------------------------------------------------------------


[[Page 27446]]

Sample 4: Calculating Revised Amounts for Net Family Assets in 24 CFR 
5.609 (Value Cap for Imputing Net Family Assets, Value Cap for 
Exclusion of Non-Necessary Personal Property) and 24 CFR 5.618 (Value 
Cap for Self-Certification of Net Family Assets): Positive Percentage 
Change in Average Year-Over-Year Index Values

 Total and Average Year-Over-Year CPI-W Index Values for Second Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         285.121         289.641
May.....................................         285.002         288.991
June....................................         272.542         289.564
3-month total...........................         842.665         868.196
3-month average.........................         280.888         289.399
------------------------------------------------------------------------

    In this sample, the amount for the value of net family assets above 
which imputed returns may be calculated, the value of the combined 
total non-necessary personal property that may be excluded from net 
family assets, and the amount of net assets for which the PHA/MFH 
Owner/CPD Grantee may accept self-certification by the family have yet 
to be adjusted for inflation, so at the outset all are set at the 
starting value of $50,000.
    Step 1--Calculate Inflationary Factor:

((289.399-280.888)/280.888) x 100 = 3.0 percent or 1.03

    Step 2--Determine the Tracking Amounts for the Value Cap for 
Imputing Net Family Assets, Value Cap for Exclusion of Non-Necessary 
Personal Property, and the Value Cap for Self-Certification of Net 
Family Assets:

$50,000 x 1.03 = $51,500

    Step 3--Apply rounding requirement to determine the new Revised 
Amount:
    HOTMA requires that the value caps for imputing net family assets, 
the exclusion of non-necessary personal property, and self-
certification of net family assets must be rounded to the nearest 
dollar. The new Revised Amounts would increase from $50,000 to $51,500.

----------------------------------------------------------------------------------------------------------------
                                                Inflationary      Tracking         Rounding
        Adjusted item          Starting value      factor          amount         requirement     Revised amount
----------------------------------------------------------------------------------------------------------------
The amount for the                   $100,000            1.03        $103,000  To the nearest    $103,000.
 eligibility restriction on                                                     dollar.
 net family assets.
The amount of the mandatory               525            1.03          540.75  To the next       $525 (no
 deduction for elderly and                                                      lowest multiple   adjustment).
 disabled families.                                                             of $25.
The amount of the mandatory               480            1.03          494.40  To the next       $480 (no
 deduction for a dependent;                                                     lowest multiple   adjustment).
 Income exclusion for earned                                                    of $25.
 income of dependent full-
 time students; Income
 exclusion for adoption
 assistance payments.
----------------------------------------------------------------------------------------------------------------

Sample 5: Calculating Revised Amounts for Dependent Deduction in 24 CFR 
5.611(a)(1): Subsequent Years of Inflationary Adjustments

    This sample compares how calculations are made in the first year 
with how calculations are made in subsequent years of inflationary 
adjustment. It demonstrates three consecutive calculations of 
inflationary adjustment for the dependent deduction. In the first year, 
there is an inflationary factor of 4 percent; in the second year, there 
is a factor of 3.5 percent; and in the third year, there is a factor of 
3.9 percent.
    First Year:

 Total and Average Year-Over-Year CPI-W Index Values for Second Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         280.111         291.315
May.....................................         280.557         291.779
June....................................         281.672         292.939
3-month total...........................         842.340         876.033
3-month average.........................         280.780         292.011
------------------------------------------------------------------------

    In the first year of calculation, the Dependent Deduction has yet 
to be adjusted for inflation, so at the outset it is set at the 
starting value of $480.
    Step 1--Calculate Inflationary Factor:

((292.011-280.780)/280.780) x 100 = 4.0 percent or 1.04


[[Page 27447]]


    Step 2--Determine the Tracking Amount for the Dependent Deduction:

$480 x 1.04 = $499.20

    Step 3--Apply rounding requirement to determine the new Revised 
Amount:
    HOTMA requires that the dependent deduction must be rounded to the 
next lowest multiple of $25. Because $499.20 would round to $475, which 
is lower than the current level of $480, HUD would make no adjustment 
to the dependent deduction. The Revised Amount for the coming calendar 
year would remain $480.
    Second Year:

 Total and Average Year-Over-Year CPI-W Index Values for Second Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         291.315         301.511
May.....................................         291.779         301.991
June....................................         292.939         303.192
3-month total...........................         876.033         906.694
3-month average.........................         292.011         302.231
------------------------------------------------------------------------

    Step 1--Calculate Inflationary Factor:

((302.231-292.011)/292.011) x 100 = 3.5 percent or 1.035

    Step 2--Determine the Tracking Amount for the Dependent Deduction:
    In the second year of calculation, HUD will start with the Tracking 
Amount from the prior year ($499.20), which is equivalent to the 
product of the starting value and all inflationary factors determined 
to date.

$499.20 x 1.035 = $516.67

    Step 3--Apply rounding requirement to determine the new Revised 
Amount:
    HOTMA requires that the dependent deduction must be rounded to the 
next lowest multiple of $25. $516.67 must be rounded down to $500. The 
Revised Amount for the coming calendar year is increased from $480 to 
$500.
    Third Year:

 Total and Average Year-Over-Year CPI-W Index Values for Second Quarter
------------------------------------------------------------------------
                                            Prior year     Current year
                  Month                     index value     index value
------------------------------------------------------------------------
April...................................         301.511         313.270
May.....................................         301.991         313.769
June....................................         303.192         315.016
3-month total...........................         906.694         942.055
3-month average.........................         302.231         314.018
------------------------------------------------------------------------

    Step 1--Calculate Inflationary Factor:

((314.018-302.231)/302.231) x 100 = 3.9 percent or 1.039

    Step 2--Determine the Tracking Amount for the Dependent Deduction:
    In the third year of calculation, HUD will start with the Tracking 
Amount from the prior year ($516.67), which is equivalent to the 
product of the starting value and all inflationary factors determined 
to date.

$516.67 x 1.039 = $536.82

    Step 3--Apply rounding requirement to determine the new Revised 
Amount:
    HOTMA requires that the dependent deduction must be rounded to the 
next lowest multiple of $25. $536.82 must be rounded down to $525. The 
Revised Amount for the coming calendar year is increased from $500 to 
$525.
    During this hypothetical four-year period, there has been an 11.8 
percent increase in the average CPI-W index value (from 280.780 to 
314.018). Likewise, there has been an 11.8 percent increase in the 
Tracking Amount (from $480 to $536.82). In that time, the dependent 
deduction has increased by 9.4 percent (from $480 to $525). If instead 
of this method, HUD were to begin the second- and third-year 
calculations with the rounded Revised Amount from the previous year, 
the dependent deduction would not increase at all.

VII. 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 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).

VIII. 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.

Damon Y. Smith,
General Counsel.
[FR Doc. 2024-08133 Filed 4-16-24; 8:45 am]
BILLING CODE 4210-67-P