Notice2022-03237
Section 8 Housing Assistance Payments Program-Annual Adjustment Factors, Fiscal Year 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
February 16, 2022
Issuing agencies
Housing and Urban Development Department
Abstract
The United States Housing Act of 1937 requires that certain assistance contracts signed by owners participating in the Department's Section 8 housing assistance payment programs provide annual adjustments to monthly rentals for units covered by the contracts. The AAFs are applied at the anniversary of Housing Assistance Payment (HAP) contracts for which rents are to be adjusted using the AAF for those calendar months commencing after the effective date of this notice. This notice announces the FY2022 AAFs for adjustment of covered contract rents.
Full Text
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<title>Federal Register, Volume 87 Issue 32 (Wednesday, February 16, 2022)</title>
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[Federal Register Volume 87, Number 32 (Wednesday, February 16, 2022)]
[Notices]
[Pages 8862-8864]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-03237]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
FR-6304-N-01]
Section 8 Housing Assistance Payments Program--Annual Adjustment
Factors, Fiscal Year 2022
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of Fiscal Year (FY) 2022 Annual Adjustment Factors
(AAFs).
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SUMMARY: The United States Housing Act of 1937 requires that certain
assistance contracts signed by owners participating in the Department's
Section 8 housing assistance payment programs provide annual
adjustments to monthly rentals for units covered by the contracts. The
AAFs are applied at the anniversary of Housing Assistance Payment (HAP)
contracts for which rents are to be adjusted using the AAF for those
calendar months commencing after the effective date of this notice.
This notice announces the FY2022 AAFs for adjustment of covered
contract rents.
DATES: February 16, 2022.
FOR FURTHER INFORMATION CONTACT: Contact Ryan Jones, Director,
Management and Operations Division, Office of Housing Voucher Programs,
Office of Public and Indian Housing, 202-708-1380, for questions
relating to the Project-Based Certificate and Moderate Rehabilitation
programs (not the Single Room Occupancy program); Norman A. Suchar,
Director, Office of Special Needs Assistance Programs, Office of
Community Planning and Development, 202-402-5015, for questions
regarding the Single Room Occupancy (SRO) Moderate Rehabilitation
program; Katherine Nzive, Director, OAMPO Program Administration
Office, Office of Multifamily Housing, 202-402-3440, for questions
relating to all other Section 8 programs; and 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 for specific areas or the methods used for
calculating the AAFs. The mailing address for these individuals is:
Department of Housing and Urban Development, 451 7th Street SW,
Washington, DC 20410. Hearing- or speech-impaired persons may contact
the Federal Relay Service at 800-877-8339 (TTY). (Other than the
``800'' TTY number, the above-listed telephone numbers are not toll
free.)
SUPPLEMENTARY INFORMATION: Tables showing AAFs will be available
electronically from the HUD data information page at <a href="https://www.huduser.gov/portal/datasets/aaf.html">https://www.huduser.gov/portal/datasets/aaf.html</a>.
Background: This notice announces FY 2022 AAFs for adjustment of
contract rents based on a formula using residential rent and utility
cost changes from the most recent annual Bureau of Labor Statistics
(BLS) Consumer Price Index (CPI) survey. AAFs are distinct from, and do
not apply to the same properties as, Operating Cost Adjustment Factors
(OCAFs). OCAFs are annual factors used to adjust rents for project-
based rental assistance contracts issued under Section 8 of the United
States Housing Act of 1937 and renewed under section 515 or section 524
of the Multifamily Assisted Housing Reform and Affordability Act of
1997 (MAHRA). HUD published OCAFs for 2022 in the Federal Register on
October 4, 2021 (86 FR 54707). The AAFs are also distinct from Renewal
Funding Inflation Factors which help determine renewal funding for
public housing agencies operating the Housing Choice Voucher program. A
separate Federal Register notice, to be published following the passage
of FY 2022 HUD appropriations, will contain the 2022 Renewal Funding
Inflation Factors.
I. Applying AAFs to Various Section 8 Programs
AAFs established by this notice are used to adjust contract rents
for units assisted in certain Section 8 housing assistance payment
programs during the initial (i.e., pre-renewal) term of the HAP
contract. There are two categories of Section 8 programs that use the
AAFs:
Category 1: The Section 8 New Construction, Substantial
Rehabilitation, and Moderate Rehabilitation programs; and
Category 2: The Section 8 Loan Management (LM) and Property
Disposition (PD) programs.
Each Section 8 program category uses the AAFs differently. The
specific application of the AAFs is determined by the law, the HAP
contract, and appropriate program regulations or requirements.
AAFs are not used in the following cases:
Renewal Rents. AAFs are not used to determine renewal rents after
expiration of the original Section 8 HAP contract (either for projects
where the Section 8 HAP contract is renewed under a restructuring plan
adopted under 24 CFR part 401; or renewed without restructuring under
24 CFR part 402). In
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general, renewal rents are established in accordance with the statutory
provision in MAHRA, as amended, under which the HAP is renewed. After
renewal, annual rent adjustments will be provided in accordance with
MAHRA.
Budget-based Rents. AAFs are not used for budget-based rent
adjustments. For projects receiving Section 8 subsidies under the LM
program (24 CFR part 886, subpart A) and for projects receiving Section
8 subsidies under the PD program (24 CFR part 886, subpart C), contract
rents are adjusted, at HUD's option, either by applying the AAFs or by
budget-based adjustments in accordance with 24 CFR 886.112(b) and 24
CFR 886.312(b). Budget-based adjustments are used for most Section 8/
202 projects.
Housing Choice Voucher Program. AAFs are not used to adjust rents
in the Tenant-Based or the Project-Based Voucher programs.
II. Adjustment Procedures
This section of the notice provides a broad description of
procedures for adjusting the contract rent. Technical details and
requirements are described in HUD notices H 2002-10 (Section 8 New
Construction and Substantial Rehabilitation, Loan Management, and
Property Disposition) and PIH 97-57 (Moderate Rehabilitation and
Project-Based Certificates). HUD publishes two separate AAF Tables,
Table 1 and Table 2. The difference between Table 1 and Table 2 is that
each AAF in Table 2 is 0.01 less than the corresponding AAF in Table 1.
Where an AAF in Table 1 would otherwise be less than 1.0, it is set at
1.0, as required by statute; the corresponding AAF in Table 2 will also
be set at 1.0, as required by statute. Because of statutory and
structural distinctions among the various Section 8 programs, there are
separate rent adjustment procedures for the two program categories:
Category 1: Section 8 New Construction, Substantial Rehabilitation, and
Moderate Rehabilitation Programs
In the Section 8 New Construction and Substantial Rehabilitation
programs, the published AAF factor is applied to the pre-adjustment
contract rent. In the Section 8 Moderate Rehabilitation program (both
the regular program and the single room occupancy program) the
published AAF is applied to the pre-adjustment base rent.
For Category 1 programs, the Table 1 AAF factor is applied before
determining comparability (rent reasonableness). Comparability applies
if the pre-adjustment gross rent (pre-adjustment contract rent plus any
allowance for tenant-paid utilities) is above the published Fair Market
Rent (FMR).
If the comparable rent level (plus any initial difference) is lower
than the contract rent as adjusted by application of the Table 1 AAF,
the comparable rent level (plus any initial difference) will be the new
contract rent. However, the pre-adjustment contract rent will not be
decreased by application of comparability.
In all other cases (i.e., unless the contract rent is reduced by
comparability):
<bullet> Table 1 AAF is used for a unit occupied by a new family
since the last annual contract anniversary.
<bullet> Table 2 AAF is used for a unit occupied by the same family
as at the time of the last annual contract anniversary.
Category 2: Section 8 Loan Management Program (24 CFR Part 886, Subpart
A) and Property Disposition Program (24 CFR Part 886, Subpart C)
Category 2 programs are not currently subject to comparability.
Comparability will again apply if HUD establishes regulations for
conducting comparability studies under 42 U.S.C. 1437f(c)(2)(C).
The applicable AAF is determined as follows:
<bullet> Table 1 AAF is used for a unit occupied by a new family
since the last annual contract anniversary.
<bullet> Table 2 AAF is used for a unit occupied by the same family
as at the time of the last annual contract anniversary.
III. When To Use Reduced AAFs (From AAF Table 2)
In accordance with Section 8(c)(2)(A) of the United States Housing
Act of 1937 (42 U.S.C. 1437f(c)(2)(A)), the AAF is reduced by 0.01:
In Section 8 programs, for a unit occupied by the same family at
the time of the last annual rent adjustment (and where the rent is not
reduced by application of comparability (rent reasonableness)).
The law provides that:
Except for assistance under the certificate program, for any
unit occupied by the same family at the time of the last annual
rental adjustment, where the assistance contract provides for the
adjustment of the maximum monthly rent by applying an annual
adjustment factor and where the rent for a unit is otherwise
eligible for an adjustment based on the full amount of the factor,
0.01 shall be subtracted from the amount of the factor, except that
the factor shall not be reduced to less than 1.0. In the case of
assistance under the certificate program, 0.01 shall be subtracted
from the amount of the annual adjustment factor (except that the
factor shall not be reduced to less than 1.0), and the adjusted rent
shall not exceed the rent for a comparable unassisted unit of
similar quality, type and age in the market area. 42 U.S.C.
1437f(c)(2)(A).
Legislative history for this statutory provision states that ``the
rationale [for lower AAFs for non-turnover units is] that operating
costs are less if tenant turnover is less . . . '' (see Department of
Veteran Affairs and Housing and Urban Development, and Independent
Agencies Appropriations for 1995, Hearings Before a Subcommittee of the
Committee on Appropriations 103d Cong., 2d Sess. 591 (1994)). The
Congressional Record also states the following:
Because the cost to owners of turnover-related vacancies,
maintenance, and marketing are lower for long-term stable tenants,
these tenants are typically charged less than recent movers in the
unassisted market. Since HUD pays the full amount of any rent
increases for assisted tenants in section 8 projects and under the
Certificate program, HUD should expect to benefit from this `tenure
discount.' Turnover is lower in assisted properties than in the
unassisted market, so the effect of the current inconsistency with
market-based rent increases is exacerbated. (140 Cong. Rec. 8659,
8693 (1994)).
IV. How To Find the AAF
AAF Table 1 and Table 2 are posted on the HUD User website at
<a href="http://www.huduser.gov/portal/datasets/aaf.html">http://www.huduser.gov/portal/datasets/aaf.html</a>. There are two numeric
columns in each AAF table. The first column is used to adjust contract
rent for rental units where the highest cost utility is included in the
contract rent, i.e., where the owner pays for the highest cost utility.
The second column is used where the highest cost utility is not
included in the contract rent, i.e., where the tenant pays for the
highest cost utility.
The applicable AAF is selected as follows:
<bullet> Determine whether Table 1 or Table 2 is applicable. In
Table 1 or Table 2, locate the AAF for the geographic area where the
contract unit is located.
<bullet> Determine whether the highest cost utility is or is not
included in contract rent for the contract unit.
<bullet> If highest cost utility is included, select the AAF from
the column for ``Highest Cost Utility Included.'' If highest cost
utility is not included, select the AAF from the column for ``Highest
Cost Utility Excluded.''
V. Methodology
AAFs are rent inflation factors. Two types of rent inflation
factors are
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calculated for AAFs: Gross rent factors and shelter rent factors. The
gross rent factor accounts for inflation in the cost of both the rent
of the residence and the utilities used by the unit; the shelter rent
factor accounts for the inflation in the rent of the residence but does
not reflect any change in the cost of utilities. The gross rent
inflation factor is designated as ``Highest Cost Utility Included'' and
the shelter rent inflation factor is designated as ``Highest Cost
Utility Excluded.''
AAFs are calculated using CPI data on ``rent of primary residence''
and ``fuels and utilities.'' \1\ The CPI inflation index for rent of
primary residence measures the inflation of all surveyed units
regardless of whether utilities are included in the rent of the unit or
not. In other words, it measures the inflation of the ``contract rent''
which includes units with all utilities included in the rent, units
with some utilities included in the rent, and units with no utilities
included in the rent. In producing a gross rent inflation factor and a
shelter rent inflation factor, HUD decomposes the contract rent CPI
inflation factor into parts to represent the gross rent change and the
shelter rent change. This is done by applying data from the Consumer
Expenditure Survey (CEX) on the percentage of renters who pay for heat
(a proxy for the percentage of renters who pay shelter rent) and, also,
American Community Survey (ACS) data on the ratio of utilities to
rents.\2\ The BLS does not produce local inflation estimates for Puerto
Rico. Therefore, HUD uses analogous estimates from the Puerto Rico
Department of Labor and Human Resources (DTRH), Bureau of Statistics.
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\1\ CPI indexes SEHA and SAH2 respectively.
\2\ The formulas used to produce these factors can be found in
the Annual Adjustment Factors overview and in the FMR documentation
at <a href="http://www.HUDUSER.gov">www.HUDUSER.gov</a>.
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Survey Data Used To Produce AAFs
The rent inflation factor and fuel and utilities inflation factor
for each large metropolitan area and Census region are based,
respectively, on changes in the CPI index for rent of primary residence
and the CPI index for fuels and utilities from 2019 to 2020. The CEX
data used to decompose the contract rent inflation factor into gross
rent and shelter rent inflation factors come from a special tabulation
of 2020 CEX survey data produced for HUD. The utility-to-rent ratio
used to produce AAFs comes from 2019 ACS median rent and utility costs.
Geographic Areas
Beginning with the data collection for 2018, BLS revised the sample
for the CPI to be based on Core Based Statistical Areas (CBSAs).
Previously the sample was based on Metropolitan Statistical Areas
(MSAs) as defined in 1998. In addition, the population required to be
designated a Class A CPI city was increased from 1.5 million to 2.5
million. The following major metropolitan areas were eliminated under
the new sample design: Pittsburgh PA, Cincinnati-Hamilton OH-KY-IN,
Cleveland-Akron OH, Milwaukee-Racine WI, Kansas City MO-KS, and
Portland-Salem OR-WA. With the change in metropolitan area definitions
and the designation of Class A cities, the number of CPI cities
declined from 28 metropolitan areas to 23 metropolitan areas
(Riverside-San Bernardino has been split off from the Los Angeles
survey area). This decline has resulted in fewer metropolitan component
areas receiving local CPI adjustments. The 2018 CPI data with new
metropolitan area definitions was first used with the FY 2020 AAFs.
This change did not impact Puerto Rico which applies an island-wide CPI
to all metropolitan and nonmetropolitan areas.
Each metropolitan area that uses a local CPI update factor is
listed alphabetically in the tables and each HUD Metro FMR Area (HMFA)
is listed alphabetically within its respective CBSA. Each AAF applies
to a specific geographic area and to units of all bedroom sizes. AAFs
are provided:
<bullet> For metropolitan areas at the MSA or HMFA level, and
counties that are currently designated as nonmetropolitan, but are part
of the metropolitan area defined in the local CPI survey.
<bullet> For the four Census Regions (to be used for those
metropolitan areas that are not covered by a CPI metropolitan survey,
and non-metropolitan areas).
AAFs use the same Office of Management and Budget (OMB)
metropolitan area definitions, as revised by HUD, that are used for the
FY 2022 FMRs.
Area Definitions
To make certain that they are using the correct AAFs, users should
refer to the Area Definitions Table section at <a href="http://www.huduser.gov/portal/datasets/aaf.html">http://www.huduser.gov/portal/datasets/aaf.html</a>. The Area Definitions Table lists CPI areas in
alphabetical order by state, and the associated Census region is shown
next to each state name. Areas whose AAFs are determined by local CPI
surveys are listed first. All metropolitan areas with local CPI survey
areas have separate AAF schedules and are shown with their
corresponding county definitions or as metropolitan counties. In the
six New England states, the listings are for counties or parts of
counties as defined by towns or cities. The remaining counties use the
CPI for the Census Region and are not separately listed in the Area
Definitions Table at <a href="http://www.huduser.gov/portal/datasets/aaf.html">http://www.huduser.gov/portal/datasets/aaf.html</a>.
As a result of the implementation of the OMB metropolitan area
definitions contained in OMB Bulletin--18-04 with FY 2022 FMRs, Madison
County, VA now uses the AAF for the Washington-Arlington-Alexandria,
DC-VA-MD-WV MSA.
Puerto Rico uses its own AAFs calculated from the inflation
estimates from the Puerto Rico Department of Labor and Human Resources
(DTRH), Bureau of Statistics, and adjusted by the ACS. The Virgin
Islands uses the South Region AAFs, and the Pacific Islands use the
West Region AAFs.
Todd M. Richardson,
General Deputy Assistant Secretary for Policy Development and Research.
[FR Doc. 2022-03237 Filed 2-15-22; 8:45 am]
BILLING CODE 4210-67-P
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</html>Indexed from Federal Register on February 16, 2022.
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