[Federal Register Volume 72, Number 83 (Tuesday, May 1, 2007)]
[Proposed Rules]
[Pages 24080-24081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8135]
[[Page 24079]]
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Part V
Department of Housing and Urban Development
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24 CFR Part 983
Project-Based Voucher Rents for Units Receiving Low-Income Housing Tax
Credits; Proposed Rule
Federal Register / Vol. 72, No. 83 / Tuesday, May 1, 2007 / Proposed
Rules
[[Page 24080]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 983
[Docket No. FR-5034-P-01]
RIN 2577-AC62
Project-Based Voucher Rents for Units Receiving Low-Income
Housing Tax Credits
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the low-income housing tax
credit (LIHTC) rent provisions of HUD's final Project-Based Voucher
(PBV) program rule, which was published on October 13, 2005, and took
effect on November 14, 2005. The October 13, 2005, final rule capped
the PBV rents at the LIHTC rent in buildings with LIHTC units, even in
cases where HUD formerly permitted such units to receive the higher
rents permitted under the PBV program. After giving the issue further
consideration, HUD now proposes to revert to the regulations that
address this specific issue and were in effect prior to issuance of the
October 13, 2005, final rule. The regulations in effect prior to the
October 13, 2005, final rule did not necessarily require public housing
agencies (PHAs) to cap section 8 maximum rents at the tax credit rent.
PHAs may not enter into assistance contracts until HUD or an
independent entity approved by HUD has conducted the required subsidy
layering review and determined that the assistance is in accordance
with HUD requirements.
DATES: Comment Due Date: July 2, 2007.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 Seventh
Street, SW., Room 10276, Washington, DC 20410-0500. Interested persons
may also submit comments electronically through the federal electronic
rulemaking portal at: http://www.regulations.gov. HUD strongly
encourages commenters to submit their comments electronically through
http://www.regulations.gov. The comments received through this portal
are posted and can be easily viewed.
Facsimile (FAX) comments are not acceptable. All communications
must refer to the docket number and title. All comments and
communications submitted will be available, without revision, 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). Copies of the public comments submitted
electronically are also available for inspection and downloading at
http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: David Vargas, Director, Office of
Voucher Programs, Department of Housing and Urban Development, 451
Seventh Street, SW., Room 4210, Washington, DC 20410; telephone (202)
708-2815 (this is not a toll-free number). Persons with hearing or
speech impairments may access these numbers via TTY by calling the
Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On October 13, 2005, HUD published a final rule that
comprehensively revised the regulations for HUD's PBV program, found in
24 CFR part 983. (See 70 FR 59892 et seq.) A detailed description of
the legislative background and changes made to the program can be found
in the preamble to the October 13, 2005, final rule.
Prior to the November 14, 2005, effective date of the October 13,
2005, final rule, PBV units with LIHTCs located outside of qualified
census tracts could have rents set at the higher of 110 percent of the
area fair market rent (FMR) or the LIHTC rent charged for comparable
units in the same building that receive the tax credit and no other
assistance. In other words, in areas where the tax credit rent was
higher (i.e., in the relatively lower-market-rent areas), the units
would receive the benefit of that higher rent, but in areas where the
FMR was higher (i.e., in higher-market-rent areas), the units would not
be capped at the tax credit rent and instead could receive the higher
FMR-based rent.
The October 13, 2005, final rule changed this practice, in place
for several years, under section 8(o)(13)(H) of the 1937 Act (42 U.S.C.
1437f(o)(13)(H)). The October 13, 2005, final rule provided, under
Sec. 983.304(c)(1)(v) and Sec. 983.304(c)(2), that rent for units
with tax credit may not exceed the tax credit rent in those cases where
formerly, if the FMR-based rent were higher, that higher rent could be
used.
Since the publication of the October 13, 2005, final rule, HUD
received additional comments from PHAs and housing industry
representatives expressing concern that the policy change regarding
LIHTC units would impede rather than promote HUD's goal of increasing
and preserving affordable housing, and requesting that HUD return to
its original policy and position regarding LIHTC units. Some PHA and
housing industry representatives also advised that the policy change
may make many projects relying on LIHTCs non-viable because it could
inhibit the financing of new projects by reducing the potential project
rent, and thereby reduce the supply of low-income housing using LIHTCs.
After further consideration of this issue, HUD has determined that
the policy change in the October 13, 2005, final rule concerning LIHTCs
may not further HUD's mission to increase affordable housing as
effectively as contemplated. While the change would cap federal
subsidies, HUD hears the concerns that the change may inhibit the
financing of new projects and possibly reduce, not increase, the supply
of low-income housing using LIHTCs. HUD believes that concerns about
excess federal subsidy may be adequately addressed using subsidy
layering analysis. In this regard, HUD has determined that it would
benefit by further public input on this issue.
This rule therefore proposes to reinstate the former policy in
Sec. 983.304(c) with respect to LIHTCs. In response to the public
feedback received on the October 13, 2005, final rule, HUD has decided
not to enforce Sec. 983.304(c) as revised by the October 13, 2005,
final rule. Instead, HUD will await further comment on this issue, as
provided by this proposed rule, and will implement the final rule that
results from this proposed rulemaking. In the meantime, owners who
received a written notification of owner selection subsequent to the
effective date of the final rule (November 14, 2005) and have entered
into a Housing Assistance Payment (HAP) contract may request a
redetermination of initial rents in accordance with Sec. 983.301 of
the final rule, if the initial rents were capped under the tax credit
rent provision at Sec. 983.304(c)(1)(v).
II. This Proposed Rule
For the reasons provided in Section I of this preamble, this
proposed rule would remove the requirement added to Sec. 983.304(c) by
the October 13, 2005, final rule that PHAs in qualified census tracts
have their rents limited by the tax credit rent. Therefore, PHAs would
not
[[Page 24081]]
be required to reduce the PBV rent to the owner for LIHTC units merely
because of the existence of LIHTCs. HUD or its designee would, however,
conduct a subsidy layering review (consistent with longstanding HUD
practice), which could result in rent reductions for projects with
LIHTCs and PBV assistance. This review would be consistent with the
prior policy. HUD is not proposing to revise or remove any other
provision of the October 13, 2005, final rule.
III. Findings and Certifications
Executive Order 12866, Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this proposed
rule under Executive Order 12866 (entitled ``Regulatory Planning and
Review''). OMB determined that this rule is a ``significant regulatory
action,'' as defined in section 3(f) of the Executive Order (although
not economically significant, as provided in section 3(f)(1) of the
Executive Order). The docket file is available for public inspection
between the hours of 8 a.m. and 5 p.m. in the Regulations Division,
Office of General Counsel, Department of Housing and Urban Development,
451 Seventh Street, SW., Room 10276, Washington, DC 20410-0500. 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).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements, unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
This proposed rule, as with the prior rulemaking that led to the
October 13, 2005, final rule, remains exclusively concerned with PHAs
that have chosen to ``project-base'' 20 percent of their Housing Choice
Voucher program assistance. Under the definition of ``Small
governmental jurisdiction'' in section 601(5) of the RFA, the
provisions of the RFA are applicable only to those few PHAs that are
part of a political jurisdiction with a population of under 50,000
persons. There are very few small PHAs in that category. In addition,
this rule would cover only an even smaller category of PHAs--those with
PBV HAP contracts for units also receiving LIHTCs. The number of
entities potentially affected by this rule is therefore not
substantial.
Notwithstanding HUD's determination that this rule will not have a
significant economic impact on a substantial number of small entities,
HUD specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
by this preamble.
Environmental Impact
This interim rule involves establishment of external administrative
or fiscal requirements related to 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 interim rule is categorically excluded
from environmental review under the National Environmental Policy Act
of 1969 (42 U.S.C. 4321 et seq.).
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits, to the
extent practicable and permitted by law, an agency from promulgating a
regulation that has federalism implications and either imposes
substantial direct compliance costs on state and local governments and
is not required by statute, or preempts state law, unless the relevant
requirements of section 6 of the Executive Order are met. This proposed
rule does not have federalism implications and does not impose
substantial direct compliance costs on state and local governments or
preempt state law within the meaning of the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for federal
agencies to assess the effects of their regulatory actions on state,
local, and tribal governments, and on the private sector. This proposed
rule does not impose any federal mandates on any state, local, or
tribal governments, or on the private sector, within the meaning of the
UMRA.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance number applicable to the
program affected by this proposed rule is 14.871.
List of Subjects in 24 CFR Part 983
Grant programs--housing and community development, Housing, Low-
and moderate-income housing, Rent subsidies, Reporting and
recordkeeping requirements.
For the reasons stated in the preamble, HUD proposes to amend 24
CFR part 983 to read as follows:
PART 983--PROJECT-BASED VOUCHER (PBV) PROGRAM
1. The authority citation for part 983 continues to read as
follows:
Authority: 42 U.S.C. 1437f and 3535(d).
2. Revise Sec. 983.304(c) to read as follows:
Sec. 983.304 Other subsidy: effect on rent to owner.
* * * * *
(c) Subsidized projects. (1) This paragraph (c) applies to any
contract units in any of the following types of federally subsidized
project:
(i) An insured or non-insured Section 236 project;
(ii) A formerly insured or non-insured Section 236 project that
continues to receive Interest Reduction Payment following a decoupling
action;
(iii) A Section 221(d)(3) below market interest rate (BMIR)
project;
(iv) A Section 515 project of the Rural Housing Service;
(v) Any other type of federally subsidized project specified by
HUD.
(2) The rent to owner may not exceed the subsidized rent (basic
rent) as determined in accordance with requirements for the applicable
federal program listed in paragraph (c)(1) of this section.
* * * * *
Dated: March 23, 2007.
Orlando J. Cabrera,
Assistant Secretary for Public and Indian Housing.
[FR Doc. E7-8135 Filed 4-30-07; 8:45 am]
BILLING CODE 4210-67-P