[Federal Register Volume 77, Number 78 (Monday, April 23, 2012)]
[Pages 24215-24216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9692]



[Docket No. FR-5618-N-01]

Section 8 Housing Assistance Payments Program--Fiscal Year (FY) 
2012 Inflation Factors for Public Housing Agency (PHA) Renewal Funding

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

ACTION: Notice.


SUMMARY: The FY 2012 HUD Appropriations Act requires that HUD apply 
``an inflation factor as established by the Secretary, by notice 
published in the Federal Register'' to adjust FY 2012 renewal funding 
for the tenant-based rental assistance voucher program or housing 
choice voucher (HCV) program of each PHA. For FY 2011 and FY 2010, 
renewal funding was based on annual adjustment factors (AAFs) and HUD 
published separate Renewal Funding AAFs for this purpose. The Renewal 
Funding AAFs, based only on Consumer Price Index (CPI) data for rents 
and utilities, have been replaced by inflation factors that incorporate 
additional economic indices to measure the expected change in the per 
unit cost (PUC) for the HCV program.

DATES: Effective Date: April 23, 2012.

FOR FURTHER INFORMATION CONTACT: Michael S. Dennis, Director, Housing 
Voucher Programs, Office of Public Housing and Voucher Programs, Office 
of Public and Indian Housing, telephone number 202-708-1380; or 
Geoffrey Newton, Economist, Economic and Market Analysis Division, 
Office of Policy Development and Research, telephone number 202-402-
6058, 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.)


I. Background

    Tables showing Renewal Funding Inflation Factors will be available 
electronically from the HUD data information page at: http://www.huduser.org/huduser/datasets/rfif/FY2012/FY2012_IF_Table.pdf.
    In prior years, the Department of Housing and Urban Development has 
been using Renewal Funding AAFs based on Consumer Price Index data 
published by the Bureau of Labor Statistics on ``rent of primary 
residence'' and ``fuels and utilities'' as the inflation factor to 
calculate the renewal funding for each PHA. During this period, HUD has 
undertaken several projects to better understand the drivers of the 
annual change in housing subsidy costs for the tenant-based voucher 
program. The Consolidated and Further Continuing Appropriations Act, 
2012 (Title II, of Division C, Public Law 112-55, approved November 18, 
2011) provides that the HUD Secretary shall, for the calendar year 2012 
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 inflation factors (that were 
announced to PHAs on March, 1, 2012) and describes the methodology for 
calculating them.

II. Methodology

    The Department has focused on measuring the change in average 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 
several 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) and 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 FY 2011 to FY 2012 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 2012 Mid-
Session Review.
    The inflation factor for an individual geographic area is based on 
the change in the area's Fair Market Rent (FMR) between FY 2011 and FY 
2012. 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 FY 2011 to FY 2012, and 
also such that no area has a negative factor. 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. For the CY 2012 PHA HCV allocation that was announced on 
March, 1, 2012, HUD used 1.71 percent as the annual change in PUC. When 
calculated using more recent VMS data through December of 2011 and 
actual performance of economic indices through the December of 2011, 
HUD expects this annual change in PUC to be lower.

III. The Use of Inflation Factors

    The inflation factors have been developed to account for relative 
differences in the PUC of vouchers so that HCV funds can be allocated 
among PHAs. HUD will continue to update the current model with 
available data in order to assess the expected annual change in PUC and 
intends to update

[[Page 24216]]

the methodology for future funding estimates. HUD is also continuing to 
review and refine the methodology, especially for area differences in 
the factors, which will be described in future inflation factor 

IV. Geographic Areas

    Inflation factors based on PUC forecasts 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 
inflation factor 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 tables showing the Renewal Funding Inflation Factors available 
electronically from the HUD data information page list the inflation 
factors for the four Census Regions first, followed by an alphabetical 
listing of each metropolitan area, beginning with Akron, OH, MSA. The 
inflation factors use the same OMB metropolitan area definitions, as 
revised by HUD, that are used in the FY 2012 FMRs.

V. Area Definitions

    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/huduser/datasets/rfif/FY2012/FY2012_AreaDef.pdf. The Area Definitions Table lists areas in 
alphabetical order by state, and the associated Census Region is shown 
next to each state name. If the area where a unit is located is not 
separately listed, the inflation factor for the Census Region that 
includes that area is used. In the six New England states, the listings 
are for counties or parts of counties as defined by towns or cities. 
Any location in these states that are not specifically listed should 
use the Northeast Census Region inflation factor.
    Puerto Rico and the Virgin Islands use the South Region inflation 
factors. All areas in Hawaii use the Renewal Funding inflation factors 
listed next ``Hawaii,'' in Appendix A which is based on the CPI survey 
for the Honolulu metropolitan area. The Pacific Islands use the West 
Region Renewal Funding inflation factor.

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 13, 2012.
Raphael W. Bostic,
Assistant Secretary for Policy Development and Research.
[FR Doc. 2012-9692 Filed 4-20-12; 8:45 am]