Notice2021-21511
Notice of Certain Operating Cost Adjustment Factors for 2022
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 4, 2021
Issuing agencies
Housing and Urban Development Department
Abstract
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, 2022. OCAFs are annual factors used to adjust Section 8 rents renewed under section 515 or section 524 of MAHRA.
Full Text
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<title>Federal Register, Volume 86 Issue 189 (Monday, October 4, 2021)</title>
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[Federal Register Volume 86, Number 189 (Monday, October 4, 2021)]
[Notices]
[Pages 54707-54709]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-21511]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6288-N-01]
Notice of Certain Operating Cost Adjustment Factors for 2022
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
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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, 2022. OCAFs are annual factors used to
adjust Section 8 rents renewed under section 515 or section 524 of
MAHRA.
DATES: Applicability Date: February 11, 2022.
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 202-402-4633 (this is not a
toll-free number). Hearing- or speech-impaired individuals may access
this number through TTY by calling the toll-free Federal Relay Service
at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. OCAFs
Section 514(e)(2) and section 524(c)(1) of MAHRA (42 U.S.C. 1437f
note) require HUD to establish guidelines for the development of OCAFs
for rent adjustments. 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, contain similar language. HUD has
therefore used a single methodology for establishing OCAFs, which vary
among states and territories.
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.'' 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.''
Contract rents are adjusted by applying the OCAF 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 of February 11, 2022, or
after and were calculated using the same method as those published in
HUD's 2021 OCAF notice published on November 27, 2020 (85 FR 76088).
Specifically, OCAFs are calculated as the sum of weighted component
cost changes for wages, employee benefits, property taxes, insurance,
supplies and equipment, fuel oil, electricity, natural gas, 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. These weights are calculated in the same manner as in the
November 27, 2020, notice. Average expense proportions were calculated
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 very stable over time but using three years of
data increases their stability. The nine cost component weights were
calculated at the state level, which is the lowest level of
geographical aggregation with enough projects to permit statistical
analysis. These data were not available for the Western Pacific
Islands, so data for Hawaii were used as the best available indicator
of OCAFs for these areas.
The best current price data sources for the nine cost categories
were used in calculating annual change factors. State-level data for
fuel oil, electricity, 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
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selected nine cost indicators are as follows:
<bullet> Electricity: Energy Information Agency, February 2021
``Electric Power Monthly'' report, Table 5.6.B. <a href="https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_06_b">https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_06_b</a>.
<bullet> Employee benefits/employee wages: First quarter, 2021
Bureau of Labor Statistics (BLS) ECI, Private Industry Wages and
Salaries, All Workers (Series ID CIU2020000000000I) at the national
level and Private Industry Benefits, All Workers (Series ID
CIU2030000000000I) at the national level.
<bullet> Fuel Oil: October 2020-March 2021 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, 2020, through the week of March 29, 2021, are compared to the
average from October 7, 2019, through the week of March 30, 2020. 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. <a href="https://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPD2F_PRS_dpgal_w.htm">https://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPD2F_PRS_dpgal_w.htm</a>.
<bullet> Goods, Supplies, Equipment: May 2020 to May 2021 Bureau of
Labor Statistics (BLS) Consumer Price Index, All Items Less Food,
Energy and Shelter (Series ID CUUR0000SA0L12E) at the national level.
<bullet> Insurance: May 2020 to May 2021 Bureau of Labor Statistic
(BLS) Consumer Price Index, Tenants and Household Insurance Index
(Series ID CUUR0000SEHD) at the national level.
<bullet> Natural Gas: Energy Information Agency, Natural Gas,
Residential Energy Price, 2019-2020 annual prices in dollars per 1,000
cubic feet at the state level. Due to EIA data quality standards
several states were missing data for one or two months in 2020; in
these cases, data for these missing months were estimated using data
from the surrounding months in 2020 and the relationship between that
same month and the surrounding months in 2019. <a href="http://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_a.htm">http://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_a.htm</a>.
<bullet> Property Taxes: Census Quarterly Summary of State and
Local Government Tax Revenue--Table 1: <a href="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=">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=</a>.
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. 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: <a href="https://www.census.gov/housing/hvs/data/histtab8.xlsx">https://www.census.gov/housing/hvs/data/histtab8.xlsx</a>.
<bullet> Water and Sewer: May 2020 to May 2021 Consumer Price
Index, All Urban Consumers, Water and Sewer and Trash Collection
Services (Series ID CUUR00 00SEHG) at the national level.
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 2020 to 2021, the wage
increase component of the Virginia OCAF for 2022 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 2022 OCAF for
Virginia. For states where the calculated OCAF is less than zero, the
OCAF is floored at zero. The OCAFs for 2022 are included as an Appendix
to this Notice.
II. MAHRA OCAF Procedures
Sections 514 and 515 of MAHRA, as amended, created the Mark-to-
Market program to reduce the cost of federal housing assistance, to
enhance HUD's administration of such assistance, and to ensure the
continued affordability of units in certain multifamily housing
projects. Section 524 of MAHRA authorizes renewal of Section 8 project-
based assistance contracts for projects without restructuring plans
under the Mark-to-Market program, including projects that are not
eligible for a restructuring plan and those for which the owner does
not request such a plan. Renewals must be at rents not exceeding
comparable market rents except for certain projects. As an example, for
Section 8 Moderate Rehabilitation projects, other than single room
occupancy projects (SROs) under the McKinney-Vento Homeless Assistance
Act (42 U.S.C. 11301 et seq.), that are eligible for renewal under
section 524(b)(3) of MAHRA, the renewal rents are required to be set at
the lesser of: (1) The existing rents under the expiring contract, as
adjusted by the OCAF; (2) fair market rents (less any amounts allowed
for tenant-purchased utilities); or (3) comparable market rents for the
market area.
III. 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).
IV. 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.
V. Catalog of Federal Domestic Assistance Number
The Catalog of Federal Domestic Assistance Number for this program
is 14.195.
Lopa P. Kolluri,
Principal Deputy Assistant, Secretary for Housing.
Appendix
Operating Cost Adjustment Factors for 2022
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Alabama........................................................ 3.1
Alaska......................................................... 2.5
Arizona........................................................ 3.0
Arkansas....................................................... 3.4
California..................................................... 3.5
Colorado....................................................... 3.0
Connecticut.................................................... 2.9
Delaware....................................................... 3.4
District of Columbia........................................... 2.9
Florida........................................................ 2.9
Georgia........................................................ 3.1
Hawaii......................................................... 1.8
Idaho.......................................................... 3.2
Illinois....................................................... 3.0
Indiana........................................................ 3.1
Iowa........................................................... 3.2
Kansas......................................................... 3.0
Kentucky....................................................... 3.0
Louisiana...................................................... 2.8
Maine.......................................................... 2.0
Maryland....................................................... 3.1
Massachusetts.................................................. 2.9
Michigan....................................................... 3.3
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Minnesota...................................................... 3.2
Mississippi.................................................... 3.1
Missouri....................................................... 2.8
Montana........................................................ 3.3
Nebraska....................................................... 3.2
Nevada......................................................... 3.1
New Hampshire.................................................. 2.4
New Jersey..................................................... 3.0
New Mexico..................................................... 3.4
New York....................................................... 2.9
North Carolina................................................. 3.2
North Dakota................................................... 3.0
Ohio........................................................... 2.8
Oklahoma....................................................... 2.8
Oregon......................................................... 3.2
Pacific Islands................................................ 1.8
Pennsylvania................................................... 2.8
Puerto Rico.................................................... 2.9
Rhode Island................................................... 2.7
South Carolina................................................. 3.0
South Dakota................................................... 3.1
Tennessee...................................................... 3.0
Texas.......................................................... 3.3
Utah........................................................... 3.3
Vermont........................................................ 3.0
Virgin Islands................................................. 2.6
Virginia....................................................... 3.2
Washington..................................................... 3.2
West Virginia.................................................. 3.3
Wisconsin...................................................... 3.3
Wyoming........................................................ 3.1
United States.................................................. 3.1
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[FR Doc. 2021-21511 Filed 10-1-21; 8:45 am]
BILLING CODE 4210-67-P
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</html>Indexed from Federal Register on October 4, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.