[Federal Register Volume 74, Number 184 (Thursday, September 24, 2009)]
[Rules and Regulations]
[Pages 48657-48659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23022]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 36

RIN 2900-AN26


Loan Guaranty: Assistance to Eligible Individuals in Acquiring 
Specially Adapted Housing; Cost-of-Construction Index

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs' 
(VA's) Loan Guaranty regulations concerning assistance to eligible 
individuals in acquiring specially adapted housing. This final rule 
implements provisions of the Housing and Economic Recovery Act of 2008, 
which authorized VA to provide for automatic annual increases in the 
dollar amounts available to certain Specially Adapted Housing grant 
recipients.

DATES: Effective Date: October 26, 2009.

FOR FURTHER INFORMATION CONTACT: Katherine Faliski, Assistant Director 
for Loan Policy and Valuation, Loan Guaranty Service (26), Veterans 
Benefits

[[Page 48658]]

Administration, Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Washington, DC 20420, (202) 461-9527. (This is not a toll-free 
telephone number.)

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register on May 12, 2009 (74 FR 22145), VA proposed to amend the 
Specially Adapted Housing (SAH) regulations (38 CFR part 36, subpart C) 
to implement provisions of Public Law 110-289, the Housing and Economic 
Recovery Act of 2008. Section 2605 of the law directed the Secretary of 
Veterans Affairs to establish a residential home cost-of-construction 
index for the purpose of increasing certain SAH grant amounts. It also 
authorized the Secretary to ``use an index developed in the private 
sector that the Secretary determines is appropriate for [this 
purpose].''
    The comment period ended June 11, 2009, and VA received only one 
response, which was from an association representing homebuilders. This 
commenter indicated its support for the proposed rule with regard to 
VA's plan to implement ``much needed increases in grant amounts that 
are provided to severely disabled Veterans'' through the SAH program. 
However, the commenter disagreed with VA's choice of index.
    VA proposed the Turner Building Cost Index (TBCI) for increasing 
the amounts of SAH grant assistance available. We based the choice 
mainly on the fact that the TBCI emphasizes the costs of labor and 
materials, rather than property values or sales prices. Since property 
values do not necessarily reflect the expense a Veteran or 
servicemember might have to incur when adapting a home, we believed the 
TBCI to be the best-suited index for the SAH program.
    The commenter pointed out that, in its opinion, the TBCI is not 
appropriate, because the TBCI measures primarily non-residential 
building construction costs. Instead, the commenter recommended that VA 
adopt an index like the U.S. Census Bureau's Price Deflator Index of 
New One-Family Houses Under Construction (``Fisher Index''). The 
commenter stated that the Census Bureau's Index is preferable to the 
TBCI because it tracks new homes under construction as opposed to non-
residential buildings. It also pointed out that the Fisher Index is 
developed by a Government organization whose methodology is readily 
available.
    Due to the commenter's position, VA further researched the 
methodologies used to develop the various indices. VA discussed with 
representatives from Turner and the U.S. Census Bureau the strengths 
and weaknesses of applying each of their respective indices (the TBCI, 
the Fisher Index, and the Laspeyres Price Index) to the SAH program and 
determined that, at this time, the TBCI is the most appropriate for 
calculating the annual SAH increases. VA concurs with the commenter's 
preference for a cost index that is maintained by a Government 
organization. However, VA points out that the indices produced by the 
U.S. Census Bureau are primarily value-driven, as they are derived by 
subtracting the cost of land and ``other costs not related to 
construction'' from the value of the home.
    VA believes that, for the purposes of the SAH program, an index 
based on actual cost of materials and labor is more suitable than one 
based on the value of homes. The SAH authorizing statutes expressly 
require payment of SAH assistance based on ``costs'' to the individual. 
Section 2605 of the Housing and Economic Recovery Act of 2008 also 
refers expressly to costs, not value. Additionally, VA has determined 
that, at least for the first year of implementation, the TBCI will 
afford Veterans more purchasing power when constructing or adapting a 
home than the Fisher or Laspeyres indices.
    Admittedly, the TBCI is not perfectly tailored for the SAH program. 
The commenter is correct in that the TBCI is mainly driven by 
commercial construction costs and that the statute refers to a 
residential index.
    VA has determined, however, that although the TBCI may not be 
intended for estimating residential construction costs in general, it 
is a reliable indicator for the types of residential costs unique to 
the SAH program. For instance, many Veterans need SAH assistance to 
reinforce their homes with steel piers, purchase wheelchair lifts, and 
pay engineering fees--all types of expenses not generally associated 
with residential construction, yet very relevant to Veterans who 
participate in the SAH program. Furthermore, VA analyzed data from the 
last forty years and saw that, had SAH assistance been tied to the TBCI 
during that time, today's grant amount would be about $6,000 higher 
than had it been tied to the Fisher or Laspeyres. Given that the TBCI 
is cost-based; the types of adaptations in the SAH program are not 
``typical'' residential costs; the difference in the indices over four 
decades is relatively small; and the advantages of the TBCI weigh in a 
Veteran's favor, we have decided to adopt the TBCI as the cost-of-
construction index for determining fiscal year 2010 grant amounts.
    For the above reasons, we will not make any changes to the proposed 
rule based upon the comment we received. However, we will monitor the 
cost indices available in the marketplace and propose changes to VA's 
Loan Guaranty regulations if we determine that increases in SAH grant 
amounts should be based upon an alternative cost-of-construction index.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any year. This final rule would have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This document contains no provisions constituting collections of 
information.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a regulatory action as a ``significant regulatory 
action,'' requiring review by the Office of Management and Budget (OMB) 
unless OMB waives such a review, if it is a regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this final rule have been examined, and it has been 
determined

[[Page 48659]]

not to be a significant regulatory action under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that the adoption of the final rule 
will not have a significant economic impact on a substantial number of 
small entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq. This final rule will directly affect only 
individuals and will not directly affect small entities. Therefore, 
pursuant to 5 U.S.C. 605(b), the rule is exempt from the initial and 
final regulatory flexibility analysis requirements of sections 603 and 
604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.106, Specially Adapted 
Housing for Disabled Veterans; and 64.118, Veterans Housing--Direct 
Loans for Certain Disabled Veterans.

Lists of Subjects in 38 CFR Part 36

    Condominiums, Housing, Indians, Individuals with disabilities, Loan 
programs--housing and community development, Loan programs--Indians, 
Loan programs--veterans, Manufactured homes, Mortgage insurance, 
Reporting and recordkeeping requirements, Veterans.

    Approved: September 15, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.


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For the reasons set out in the preamble, VA amends 38 CFR part 36 
(Subpart C) as set forth below.

PART 36--LOAN GUARANTY

0
1. The authority citation for part 36 continues to read as follows:

    Authority:  38 U.S.C. 501 and as otherwise noted.

Subpart C--Assistance to Certain Disabled Veterans in Acquiring 
Specially Adapted Housing

0
2. Add Sec.  36.4412 to read as follows:


Sec.  36.4412  Annual adjustments to the aggregate amount of assistance 
available.

    (a) On October 1 of each year, the Secretary will increase the 
aggregate amounts of assistance available for grants authorized under 
38 U.S.C. 2101(a) and 2101(b). Such increase will be equal to the 
percentage by which the Turner Building Cost Index for the most recent 
calendar year exceeds that of the next preceding calendar year.
    (b) Notwithstanding paragraph (a) of this section, if the Turner 
Building Cost Index for the most recent full calendar year is equal to 
or less than the next preceding calendar year, the percentage increase 
will be zero.
    (c) No later than September 30 of each year, the Secretary will 
publish in the Federal Register the aggregate amounts of assistance 
available for the upcoming fiscal year.

(Authority: 38 U.S.C. 2102(e))


[FR Doc. E9-23022 Filed 9-23-09; 8:45 am]
BILLING CODE 8320-01-P