24080 Federal Register / Vol. 72, No. 83 / Tuesday, May 1, 2007 / Proposed Rules 

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. 

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 lowermarket-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 §

983.304(c)(1)(v) and § 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 §

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 § 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 § 983.301 of the final 

rule, if the initial rents were capped 

under the tax credit rent provision at §

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 

§ 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 


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Federal Register / Vol. 72, No. 83 / Tuesday, May 1, 2007 / Proposed Rules 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 § 983.304(c) to read as 

follows: 

§ 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 


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