E9-11079. Loan Guaranty: Assistance to Eligible Individuals in Acquiring Specially Adapted Housing; Cost-of-Construction Index

AGENCY:

Department of Veterans Affairs.

ACTION:

Proposed rule.

SUMMARY:

This document proposes to amend the Department of Veterans Affairs' (VA's) Loan Guaranty regulations concerning assistance to eligible individuals in acquiring specially adapted housing. The proposed change would implement 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:

Comments must be received on or before June 11, 2009.

ADDRESSES:

Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to Director, Regulations Management (02REG), Department of Veterans Affairs, 810 Vermont Ave., NW., Room 1068, Washington, DC 20420; or by fax to [phone]. Comments should indicate that they are submitted in response to “RIN 2900-AN26—Loan Guaranty: Assistance to Eligible Individuals in Acquiring Specially Adapted Housing; Cost-of-Construction Index.” Copies of comments received will be available for public inspection in the Office of Regulation Policy and Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except holidays). Please call [phone] (this is not a toll-free number) for an appointment. In addition, during the comment period, comments may be viewed online through the Federal Docket Management System (FDMS) at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Katherine Faliski, Assistant Director for Loan Policy and Valuation, Loan Guaranty Service (26), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, [phone]. (This is not a toll-free telephone number.)

SUPPLEMENTARY INFORMATION:

The Housing and Economic Recovery Act of 2008, Public Law 110-289, directed the Secretary of Veterans Affairs to establish a residential home cost-of-construction index for the purpose of increasing certain Specially Adapted Housing (SAH) grant amounts. The law left it to the Secretary's discretion to determine whether to develop a new index or to select one from the private sector. It required that any index selected, however, must reflect a uniform, national average change in the cost of residential home construction, determined on a calendar-year basis. This proposed rule identifies the index the Secretary plans to select, explains how the increase would be calculated, and requires the Secretary to publish annually in the Federal Register the aggregate amounts of assistance available.

Selection of a Cost-of-Construction Index

The Department of Veterans Affairs (VA) believes that an existing private sector index is appropriate for the purposes of 38 U.S.C. 2102(d). VA believes this is preferable to establishing a VA-specific index because VA does not have the necessary resources and expertise to continuously monitor the costs of construction nationwide.

This proposed rule identifies the Turner Building Cost Index (TBCI) as the index the Secretary plans to adopt. The TBCI has been prepared for more than 80 years. It tracks building costs and price trends nationwide. The factors considered in calculating the index include labor rates, productivity, material prices, and market conditions. As a result of TBCI's emphasis on the costs of labor and materials, rather than property values or sales prices, it is best suited to reflect the cost of acquiring the adaptations needed by the veterans and servicemembers served by the SAH program.

VA considered a number of alternatives to the TBCI. These alternatives included three indices computed by the United States Census Bureau: (1) The Laspeyres Price Index, which tracks increases in the sales price of homes while keeping housing quality constant; (2) the Paasche Index, which also measures changes in sales prices over time; and (3) the Fisher Ideal Index, which is a geometric average of the Laspeyres and Paasche Indices. Because all three Census Bureau indices track home sales prices, rather than construction costs, VA does not believe that they are as well suited for use with the SAH program as the TBCI. Home sales prices have little bearing on the cost of making adaptations to an eligible individual's home. Although SAH grants may be used to acquire a suitably adapted home, they are more often used to adapt an existing home.

VA also considered the Residential Cost Index published by Whitestone Research. The Whitestone Research Residential Cost Index (WRRCI) is based on multiple cost factors. Because the WRRCI tracks many cost factors that are not related to the labor and materials costs of making adaptations to an eligible individual's home, VA does not believe the WRRCI is as well suited to the SAH program as the TBCI.

Calculating the Aggregate Amounts of Assistance Available

On October 1 of each year, beginning with 2009, the Secretary must increase the aggregate amounts of assistance available for SAH grants authorized under 38 U.S.C. 2101(a) and (b). In accordance with 38 U.S.C. 2101(e), the increase will equal the percentage by which the cost-of-construction index increased between the two preceding calendar years. In other words, for the adjustment effective October 1, 2009, the Secretary must calculate the percentage by which the TBCI increased between calendar years 2007 and 2008. On October 1, the Secretary must increase the grant amounts by that amount. If, in any given calendar year, the TBCI remains flat or decreases, the aggregate amounts of assistance available will not change.

Publication in the Federal Register

Section 2102(e) of title 38, U.S.C., requires that the annual increase in the aggregate amounts of assistance available occur on October 1 of each year. The proposed rule would require that the Secretary publish the resulting figures in the Federal Register by September 30. VA believes that this would provide adequate notice to the public of the new aggregate amounts of assistance available each year. (Note: After publication, the figures also would be available on the Loan Guaranty Web site at http://www.homeloans.va.gov/​sah.htm.)

Administrative Procedure Act

The Secretary has determined that there is good cause to limit the public comment period on this rule to 30 days. This proposed rule is necessary to implement Congress' directive to establish a cost-of-construction index to implement statutorily mandated increases by October 1, 2009. Therefore, in order to comply with this statute, the Secretary has provided a 30-day comment period for this rule.

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 proposed 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 proposed rule have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866.

Regulatory Flexibility Act

The Secretary hereby certifies that this proposed rule would 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 proposed rule will directly affect only individuals and will not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this proposed 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: April 17, 2009.

John R. Gingrich,

Chief of Staff, Department of Veterans Affairs.

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

PART 36—LOAN GUARANTY

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

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

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

2. Add § 36.4412 to read as follows:

§ 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))