DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Statement of Regulatory Priorities
The Regulatory Plan for the Department of Housing and Urban Development (HUD) for Fiscal Year (FY) 2014 highlights some of the most significant regulatory initiatives that HUD seeks to complete during the upcoming fiscal year. As the Federal agency that serves as the nation's housing agency, committed to addressing the housing needs of Americans, promoting economic and community development, and enforcing the nation's fair housing laws, HUD plays a significant role in the lives of families and communities throughout America. Through its programs, HUD works to strengthen the housing market and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.
The rules highlighted in the Regulatory Plan for FY 2014 focus on the following elements of establishing sustainable communities: promoting energy efficiency in construction and rehabilitation of housing assisted with HUD funds, and planning for and implementing pre-disaster and adaptative mitigation strategies to establish disaster-resilient communities. The focus on energy efficiency is consistent with President Obama's call, in his State of the Union Address, for Federal, State and local Governments and the American public to focus on investments in energy efficiency.
Promoting Energy Efficiency. Given the scale and scope of HUD's expenditures on utilities, at a time of shrinking Federal budgets, this is a critical fiscal issue as well as one that has significant implications for housing affordability and the financial security of the HUD-assisted housing market. The level of expenditures on energy-related rental costs by HUD is substantial, both in relation to HUD's annual budget and total energy-related expenditures by the Federal Government. In the marketplace, energy costs are also a significant cost burden for lower-income families. This burden, especially when added to housing and transportation costs, can create difficulties for these families in covering other household expenses. Energy costs can also affect the financial stability of multifamily housing. Secretary Donovan's direction that energy efficiency be prioritized in HUD programs and this Regulatory Plan is consistent with these realities.
Establishing Disaster-Resilient Communities. The devastation caused by Hurricane Sandy reminded the nation of the importance of establishing building codes to help ensure that housing is located and built to withstand the impacts of existing risks and those associated with future climate change, in hard hit regions and across the country. HUD's strategic plan focuses on promoting the use of climate-resilient and disaster resistant development patterns, building siting, design, and construction. Such focus should help facilitate the establishment of disaster-resilient and sustainable communities.
Priority: Promoting Energy Efficiency while Maintaining Affordability
Much of HUD's portfolio of public and assisted housing was built before the advent of modern energy codes, creating both environmental and affordability challenges for building owners, residents, and the Federal Government. Toward that end, HUD has been reviewing energy-efficiency standards across the Department to work toward standardizing energy efficiency and green goals and establishing uniform tracking and reporting systems. One of the concerns in applying energy efficiency standards to HUD's public and assisted housing or to new HUD-assisted housing construction or rehabilitation is that it could potentially affect the affordability of such housing. In the regulatory action described herein, HUD (together with the U.S. Department of Agriculture (USDA)) proposes to bring HUD programs into compliance with the most recent energy efficiency codes required by the Energy Independence and Security Act of 2007 (EISA) and to present an analysis that the compliance with the updated codes would not negatively affect the availability or affordability of new construction of single and multifamily housing covered by EISA.
Regulatory Action: HUD-USDA Joint Notice on Affordability Determination - Energy Efficiency Standards
The Energy Independence and Security Act of 2007 (EISA) establishes procedures for HUD and the USDA to adopt revisions to the 2006 International Energy Conservation Code (IECC) and ASHRAE 90.1-2004, subject to (1) a determination that the revised codes do not negatively affect the availability or affordability of new construction of single and multifamily housing covered by the Act, and (2) a determination by the Secretary of Energy that the revised codes "would improve energy efficiency." This action would announce HUD's and USDA's preliminary determination that the 2009 IECC and (with the exception of Hawaii) ASHRAE 90.1-2007 will not negatively affect the affordability and availability of housing covered by the Act.
As required by the Energy Conservation and Production Act, the Department of Energy (DOE) has published Final Determinations that the 2009 IECC and ASHRAE 90.1-2007 standards would improve energy efficiency. This Notice therefore announces the results of HUD and USDA's analysis of housing impacted by the 2009 IECC and ASHRAE 90.1-2007.
In this notice, HUD submits that "affordability" is a measure of whether a home built to the updated energy code is affordable to potential home buyers or renters and "availability" of housing is a measure associated with whether builders will make such housing available to consumers at the higher code level - i.e., whether the higher cost per unit as a result of complying with the revised code will impact whether that unit is likely to be built or not.
Based on DOE findings on improvements in energy efficiency and energy savings, and HUD and USDA determinations on housing affordability and availability presented in the notice, HUD and USDA submit for comment that HUD and USDA have determined that adoption of the codes will not adversely impact the affordability or the availability of the covered housing.
Priority: Assessing Energy and Physical Needs of Public Housing
HUD's energy strategy is designed to address the issue of residential energy costs, an aging public and assisted housing stock, and growing fiscal demands on HUD's budget to cover household and rental property utility costs. HUD also hopes to address the disproportionate energy cost burden on low- and moderate-income families, and improve the health and quality of HUD-assisted housing for building residents. Toward that end, through the Recovery Act Management and Performance System, work has begun to enable the collection of energy-efficient unit data and establish a baseline for tracking energy investments made through the Public Housing Capital Fund grant program.
Regulatory Action: Public Housing Energy Audits and Physical Needs Assessments
This final rule updates and enhances HUD's requirements for energy audits and physical needs assessments (PNA's) conducted by housing authorities in order to assess the energy needs and physical needs of their projects. The revisions to the energy audit requires the performance of substantially more useful energy audits than the current regulation and lays the foundation for potential future incentives or other tools for implementing energy conservation measures or green measures. Also, the rule facilitates greater synchronization between the energy audit and the PNA, so that energy audit data can be better integrated into the PNA and allow for future capital planning activities which take into consideration possible energy savings. By requiring greater coordination between the PNA and the energy audit, the rule ensures that energy-saving recommendations from the energy audit may result in work items to address physical needs.
Priority: Building for Resiliency While Maintaining Affordability
As communities begin to recover from the devastating effects of Hurricane Sandy, HUD has determined that it is important to recognize lessons learned and employ mitigation actions that ensure that structures located in floodplains are built or rebuilt stronger, safer, and less vulnerable to future flooding events.
Regulatory Action: Floodplain Management and Protection of Wetlands; Building at Base Flood Elevations Plus 1
This proposed rule would require that new construction and substantial improvements to structures in a floodplain be elevated or flood-proofed to a base flood elevation of best available data of the Federal Emergency Management Agency (FEMA) plus one foot. HUD's experience in the wake of Hurricane Sandy indicates that unless structures in floodplains are properly designed, constructed and elevated, they may not withstand future severe flooding events. Building to FEMA's best available data plus one foot will reduce property damage, economic loss, and loss of life, and will also benefit homeowners by reducing flood insurance rates. The best available data plus one foot standard proposed by this rule was made after considering the last ten years of FEMA flood mitigation efforts and provides, in HUD's view, the best assessment of risk. This higher elevation provides an extra buffer of one foot above the best available data to ensure the long term resilience of communities. It also takes into account projected sea level rise, which is not considered in current FEMA maps and flood insurance costs. Building to this standard will, consistent with the executive order, reduce the risk of flood loss, minimize the impact of floods on human safety, health, and welfare, and promote sound, sustainable, long-term planning informed by a more accurate evaluation of risk and take into account possible sea level rise.
Aggregate Costs and Benefits
Executive Order 12866, as amended, requires the agency to provide its best estimate of the combined aggregate costs and benefits of all regulations included in the agency's Regulatory Plan that will be made effective in calendar year 2014. HUD expects that the neither the total economic costs nor the total efficiency gains will exceed $100 million.
Priority Regulations in HUD's FY 2014 Regulatory Plan
HUD -- Office of the Secretary
PROPOSED RULE STAGE
Affordability Determination - Energy Efficiency Standards
Priority: Significant
Legal Authority: 42 USC 12709; 42 USC 6833; 42 USC 3535(d)
CFR Citation: 24 CFR Chapter 1
Legal Deadline: None
Abstract: The Energy Independence and Security Act of 2007 (EISA) establishes procedures for the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) to adopt revisions to the 2006 International Energy Conservation Code (IECC) and ASHRAE 90.1-2004, subject to (1) a determination that the revised codes do not negatively affect the availability or affordability of new construction of single and multifamily housing covered by the Act, and (2) a determination by the Secretary of Energy that the revised codes "would improve energy efficiency."[1] This Notice announces HUD and USDA's preliminary determination that the 2009 IECC and (with the exception of Hawaii) ASHRAE 90.1-2007 will not negatively affect the affordability and availability of housing covered by the Act. As of July 2013, 32 States plus the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam have already adopted the 2009 IECC, its equivalent or a higher standard for single family homes, and 38 States plus the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and Guam have adopted ASHRAE 90.1-2007, its equivalent or a higher standard for multifamily buildings. The remaining States committed to adopting these codes under provisions of the American Recovery and Reinvestment Act (ARRA) of 2009. For those States that have not yet adopted either of these standards, this Notice relies on several studies that show that these codes are overwhelmingly cost effective, in that the incremental cost of the 2009 IECC code is typically less than 0.5% of total construction costs, and those costs pay for themselves very quickly through energy savings. According to one study, simple paybacks for the 2009 IECC average 3.45 years, and "mortgage paybacks" on these additional investments are typically less than 1 year (on average 10.25 months).
Statement of Need: Section 481 of the Energy Independence and Security Act of 2007 (EISA) amends the energy code provisions contained in Section 109 of Cranston-Gonzalez National Affordable Housing Act of 1990 (Cranston-Gonzalez). Section 109(a) of Cranston Gonzalez, as amended by EISA, allowed for HUD and USDA to collaborate and develop their own energy efficiency building standards for statutorily specified HUD and USDA programs if the agencies developed standards met or exceeded the 2006 IECC or ASHRAE 90.1-2004. However, if the two agencies did not act on this option, EISA specifies that the 2006 IECC and ASHRAE 90.1-2004 would apply.
The two agencies did not develop independent energy efficiency building standards, and therefore the 2006 IECC or ASHRAE 90.1-2004 currently apply to covered HUD and USDA programs. Section 109(d) of Cranston-Gonzalez establishes procedures for updating agency standards following revisions to the 2006 IECC and ASHRAE 90.1-2004 code standards. Section 109(d) provides that revisions to the IECC or ASHRAE codes will apply to HUD and/or USDA's programs if (1) either agency "make(s) a determination that the revised codes do not negatively affect the availability or affordability" of new construction housing covered by the Act, and (2) the Secretary of the Department of Energy (DOE) has made a determination under section 304 of the Energy Conservation and Production Act (42 U.S.C. 6833) that the revised codes would improve energy efficiency (see 42 U.S.C. 12709(d)). Since DOE has made its determination of improved efficiency, HUD and USDA must assess the impact of the more recent codes on the affordability and availability of HUD- and USDA-funded new construction is currently being assessed by the two agencies. This notice presents that assessment.
Summary of Legal Basis: In the absence of HUD and USDA developing their own energy efficiency codes, EISA provides for the automatic application of 2006 IECC and ASHRAE 90.1-2004. As revised IECC and ASHRAE codes are produced, under EISA, HUD and USDA must, following DOE's determination of revised codes improving energy efficiency (if that is in fact DOE's determination), provide an assessment of the impact of the revised codes on the affordability and availability of housing under the covered programs. If HUD and USDA determine no negative impact, the revised codes then become the applicable codes.
Alternatives: The alternative provided to HUD and USDA under EISA was to develop their own energy efficiency codes. HUD and USDA did not exercise that option. IECC and ASHRAE are familiar energy codes, revised codes, as required by statute, are reviewed by DOE as a measure to determine improved or enhanced energy efficiency. A new energy efficiency code developed by HUD and USDA would have introduced a new code with which builders would have to comply. As the joint HUD-USDA notice states, well over 30 States have adopted IECC and ASHRAE as governing building codes.
Anticipated Cost and Benefits:
In its assessment of improved efficiency, which includes a cost-benefit analysis, for each of the 35 States and the District of Columbia examined by DOE, DOE identified every building element that would change as a result of adopting the 2009 IECC in that State. Assuming a standard reference house, DOE used a computer model to assess building energy savings that would be achieved under the new code. DOE's model assumed a 2,400 square foot house with regional modifications to foundation systems that reflect local building practices. After analyzing the impact for each state, DOE found that, on a national basis, compliance with the 2009 IECC will yield an annual median cost savings of $243.37, ranging from a high of $468 in Kansas to a low of $200.50 in Massachusetts.
With respect to costs, and based on studies that DOE relied upon it was determined that the weighted average incremental cost of complying with the 2009 IECC over existing state codes would be $840.77, yielding a median annual energy cost savings of $243.37, for a simple payback of 3.45 years. This weighted average incremental cost of $840.77 represents less than 0.32 percent of the average cost of a new home estimated by BCAP in 2009 ($267,451).
Risks: This rule poses no risk to public health, safety, or the environment.
Timetable:
Action Date FR Cite
NPRM 11/00/13
NPRM Comment Period End
Final Action
Regulatory Flexibility Analysis Required: No
Small Entities Affected: No
Government Levels Affected: No.
Agency Contact:
Michael Freedberg
Office of Sustainable Housing and Communities
U.S. Department of Housing and Urban Development
Phone: 202-402-4366
RIN: 2501-ZA01
BILLING CODE
HUD -- Office of Public and Indian Housing
FINAL RULE STAGE
Public Housing Energy Audits and Physical Needs Assessments
Priority: Significant
Legal Authority: 42 USC 1437g, 42 U.S.C. 1437z-2, 42 USC 1437z-7, and 3535(d).
CFR Citation: 24 CFR Parts 905, 965
Legal Deadline: None
Abstract: This final rule revises: (1) HUD's energy audit requirements applicable to HUD's public housing program for the purpose of clarifying such requirements, as well as identifying energy conservation measures (ECMs) that need to be addressed in the audit and procedures for improved coordination with physical needs assessments; and (2) HUD's existing codified regulations governing a physical needs assessment (PNA) undertaken by a public housing agency (PHA). A PNA identifies all of the work that a PHA would need to undertake to bring each of its projects up to the applicable modernization and energy conservation standards.
With respect to the energy audit requirements, the final rule distinguishes between "core ECMs" that must be addressed and "advanced ECMs" that may be addressed. The rule establishes minimum requirements for energy auditors. With respect to the PNA, this rule would require PHAs to project the current modernization and life-cycle replacement repair needs of its projects over a 20-year period, rather than a 5-year period, because the 20-year period coincides better with the useful life of individual properties and their building components and systems to ensure the long-term viability of the property. Additionally, this rule provides for integration of the performance of the PNA with the performance of an energy audit, and basic qualifications for PNA providers.
Statement of Need: In an environment of competing priorities, managers need tools to prioritize needs and to model alternative strategies. A PNA an energy audit are essential tools to a long term strategy for the proactive management of property to move away from inefficient and reactionary management that contributes to property deterioration and obsolescence. Strategies to reduce energy costs are key to HUDs mission of providing long term affordable housing to those most in need--funds spent on utilities are not spent on property improvements and reduce the proportion of tenant rent payments that are used more usefully for physical maintenance and improvement. Energy audits reveal strategies for saving limited resources that can be recycled into more improvements than would otherwise occur.
Summary of Legal Basis: The Energy Policy Act of 2005, Pub. L. 109-58 (Approved August 8, 2005), amended section 9(d)(1) of the U. S. Housing Act of 1937, 42 U.S.C. 1437g(d)(1), to add at subparagraphs (K) and (L), as two of the capital and management activities under the capital fund, improvement of energy use and water efficiency, and "integrated utility management and capital planning to maximize energy conservation and efficiency measures." This rule provides for the integrated utility management and capital planning necessary to fulfill this mandate.
Alternatives: HUD determined that its primary alternative was to not revise its regulations concerning physical needs assessment and energy audits. Other than inaction, there is not an alternative to: extending the requirement to perform a physical needs assessment to all PHAs to provide the data needed for better management of the Capital Fund; to changing the current 5-year term of the required PNA to a 20-year term to create a useful strategic planning tool for authorities, and to provide HUD with longer term visibility of needs in the housing portfolio; or to implementing provisions of the Energy Policy Act of 2005 requiring "integrated utility management and capital planning to maximize energy conservation and efficiency measures." However, the current lack of integration between energy audits and the PNA, as well as the overly short life-cycle planning period, make inaction a non-viable approach when it comes to assuring that HUD's requirements for the capital fund are in compliance with the Energy Policy Act of 2005, that the PHA's capital needs will be met, and that actions taken to meet those needs will be integrated with necessary energy improvements.
Anticipated Cost and Benefits: With respect to the energy audit, there are minor costs to the extent that the requirements for the energy audit in this rule exceed the current requirements. HUD's analysis suggests that using conservative assumptions, the economic burden of energy audits to PHAs would be $39,864,536 ($32.86 X 1,213,163) every 5 years, or $7,972,907 annually. A mitigating adjustment of 50 percent to account for the existing burden is not an unreasonable assumption. Such an adjustment would reduce the 5-year and annual additional burden to $19,932,268 and $3,986,453, respectively.
With respect to PNAs, HUD estimates that full compliance with the rule will cost PHAs, collectively, up to $29 million once every 5 years or an average of $5.9 million annually. The rule will not have any budgetary impact to the Federal Government, as costs to implement the PNA will be accommodated within HUD's existing budget authority.
There are also benefits to this rule. With respect to energy audits, for example, if this rule resulted in a 10 percent increase in efficiency, that would translate into significant savings for PHAs, which often pay for utilities in the form of a utility allowance for residents. With respect to PNAs, benefits include identifying capital expenses far enough in advance to allow for consideration of the most efficient method of payment; identifying synergies in the timing and intensity of capital improvements, and avoiding duplicative or wasteful expenditures; making possible a preventive maintenance strategy to maximize the useful life of property components; encouraging the implementation of energy efficiency measures; and increased occupancy and enhanced health and safety as a result of more habitable units.
Risks: This rule poses no risk to public health, safety, or the environment.
Timetable:
Action Date FR Cite
NPRM 11/17/11
NPRM Comment Period End 1/18/12
Final Action 3/00/14
Regulatory Flexibility Analysis Required: No
Small Entities Affected: No
Government Levels Affected: No.
Agency Contact:
Jeffrey Riddel,
Director, Office of Capital Improvements,
Office of Public and Indian Housing,
U.S. Department of Housing and Urban Development
Phone: 202-402-7378
RIN: RIN 2577-AC84
RIN-2577-AC81
BILLING CODE
HUD -- Office of Community Planning and Development
PROPOSED RULE STAGE
Floodplain Management and Protection of Wetlands; Building at Base Flood Elevations Plus 1
Priority: Significant
Legal Authority: 42 U.S.C. 3535(d) and 4332; and Executive Order 11991, 3 CFR, 1977 Comp., p.123.
CFR Citation: 24 CFR Parts 50 and 55
Legal Deadline: None
Abstract: As communities begin to recover from the devastating effects of Hurricane Sandy, HUD has determined that it is important to recognize lessons learned to employ mitigation actions that ensure that structures located in floodplains are built or rebuilt stronger, safer, and less vulnerable to future flooding events. As a result, this proposed rule would require that new construction and substantial improvements to structures in a floodplain be elevated or flood-proofed to the base flood elevation of the best available data of the Federal Emergency Management Agency (FEMA) plus one foot. For non-residential structures that are not critical actions,, HUD is also proposing that grantees may, as an alternative to designing and building at base flood elevation plus one foot, design and construct projects such that below the flood level, using the best available flood data plus one foot, the structure is flood-proofed. HUD would, except for changing "base flood level" to "base flood elevation plus one foot," adopt the Federal Emergency Management Agency's definition of flood-proofing. Building to this standard will, consistent with Executive Order 11988 (Floodplain Management), reduce the risk of flood loss, minimize the impact of floods on human safety, health, and welfare, and promote sound, sustainable, long-term planning informed by a more accurate evaluation of risk and take into account possible sea level rise.
Statement of Need: HUD's experience in the wake of Hurricane Sandy is that unless structures in floodplains are properly designed, constructed and elevated, they may not withstand future severe flooding events. Building to FEMA's best available data plus one foot will reduce property damage, economic loss, and loss of life, and will also benefit homeowners by reducing flood insurance rates. The best available data plus one foot standard proposed by this rule was made after considering the last ten years of FEMA flood mitigation efforts and provides, in HUD's view, the best assessment of risk. This higher elevation provides an extra buffer of one foot above the best available data to ensure the long term resilience of communities. It also takes into account projected sea level rise, which is not considered in current FEMA maps and flood insurance costs.
Summary of Legal Basis: Executive Order 11988 (E.O. 11988) entitled, "Floodplain Management" issued May 24, 1977 (published on May 25, 1977 at 42 FR 26951) requires Federal agencies to avoid to the extent possible the long and short-term adverse impacts associated with the occupancy and modification of floodplains and to avoid direct and indirect support of floodplain development wherever there is a practicable alternative. A floodplain refers to the lowland and relatively flat areas adjoining inland and coastal waters including flood-prone areas of offshore islands that, at a minimum, are subject to a one percent or greater chance of flooding in any given year (often referred to as the "100-year" flood or "base flood"). Consistent with E.O. 11988, when no practicable alternative exists to floodplain development, HUD requires the design or modification of the proposed action to minimize potential adverse impact to and from the floodplain. HUD has implemented E.O. 11988 and its 8 step review process through regulations at 24 CFR part 55.
Alternatives: Two alternatives exist that would produce the same effect as the current rule, an actuarially fair flood insurance program and complete prohibition of new construction or substantial rehabilitation in areas below an equivalent flood plain level, which as mentioned below in the discussion of an anticipated costs and benefits, averages to approximately the 250-year level. The actuarially fair flood insurance program would need to be established by legislation and the complete prohibition of new construction or substantial rehabilitation in areas below and equivalent flood plain level is action that would likely need to be taken by State and/or local jurisdictions and likely not to occur. Therefore this rule is undertaken to help ensure that HUD funds are used prudently in connection with any new construction or substantial rehabilitation in areas below flood plain level.
Anticipated Cost and Benefits: Increasing the base elevation of a structure in a floodplain will increase the construction cost and decrease the annual flood insurance premium. The additional cost for each additional foot of vertical elevation varies from 0.3 percent - 0.5 percent of the base building cost.[2] The construction cost for multifamily properties averages $100,000 per unit for new construction. The average size of HUD-assisted properties in 100-year floodplains is approximately 100 units. [2] Thus, construction costs per property total approximately $10.0 million. Applying the midpoint of the cost range stated above, 0.4 percent, construction costs would increase by $40,000 per property. HUD estimates that approximately 75 properties are placed in service annually in 100-year floodplains and therefore would be affected by this rule. It is not clear, however, how many of these are built to BFE+1, so these estimates should be considered an upper bound. The aggregate annual cost of adding this increase to an owners mortgage at 3.5 percent, would increase costs $3.264 million assuming a 3 percent discount rate and $2.146 million assuming a 7 percent discount rate.
The benefits of this rule include decreased flood insurance premiums for property owners and decreased costs to tenants to avoided search costs for temporary replacement housing and lost wages. The annual premium for the maximum multifamily coverage of $250,000 at the 100-year flood level is $1,359. This decreases to $660 at one foot above the 100-year flood plain level for an annual savings of $699. Assuming a 30-year useful life and returns to these savings to the owner of 3.5 percent annually, the discounted savings for a property totals $23,303, and $1.748 million in aggregate assuming a 3 percent discount rate, and $13,962 per property or $1.047 million in aggregate assuming a 7 percent discount rate.
The significant benefits also accrue to tenants who avoid costs of moving from a flooded property. The family cost of moving a two-bedroom apartment costs approximately $800 plus lost wages. This analysis uses the national median hourly wage reported by BLS of $16.71. If an affected households' wage earners are unable to work for a combined 40 hours each due to a flood-related apartment search and move, a family would lose $668. Combined, a flood would cost each tenant $1,468. There is a 1 percent chance each year that a 100-year flood will occur. Increasing the base elevation by one foot would place the building, on average, to a 250-year flood plane, which has a 0.4 percent probability of occurring each year. Thus, this rule decreases the annual risk by 0.6 percent. The discounted value of decreased expected tenant costs is $8.81 per tenant ($1,468 * 0.6%). The discounted 30-year value of these avoided costs is $178 per tenant assuming a 3 percent discount rate and $117 per tenant assuming a 7 percent discount rate. Aggregating over 100 tenants per property and 75 properties, the total benefit to tenants is $1.334 million assuming a 3 percent discount rate and $0.877 million assuming a 7 percent discount rate.
There are also unvalued benefits to tenants of avoiding relocation. Being forced to relocate on short notice creates considerable stress and uncertainty for families. Further, some families may not be able to find affordable housing in their immediate area and will be forced to move far, sometimes out of State. Long distance moves removes a family from their local social network leads and adds additional stress not only on adults, but also on children who may be forced to enroll in difference schools.
Finally, this rule also eliminates renovations and replacements that are paid for by FEMA insurance claims. Flood damage could require various internal renovations and replacement of necessary building utility systems, including electrical and heating systems. Although flood insurance covers $250,000, this analysis assumes approximately $50,000 in damage per property. This damage represents a cost to society that would otherwise not have occurred in the presence of actuarially fair insurance rates. The discounted value of this cost for 100 properties totals $0.454 million assuming a 3 percent discount rate and $0.299 million assuming a 7 percent discount.
Valued benefits of this rule total $3.536 million assuming a 3 percent discount rate and $2.223 million assuming a 7 percent discount.
Risks: This rule poses no risk to public health, safety, or the environment.
Timetable:
Action Date FR Cite
NPRM 01/01//14
NPRM Comment Period End
Final Action
Regulatory Flexibility Analysis Required: No
Small Entities Affected: No
Government Levels Affected: No.
Agency Contact:
Danielle Schopp,
Director Office of Environment and Energy
Office of Community Planning and Development,
U.S. Department of Housing and Urban Development
Phone: 202-708-1201
RIN: 2501
[1] Energy Independence and Security Act of 2007, Section 481(d).
[2] In 2012, Congress passed the Flood Insurance Reform Act which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the National Flood Insurance Program (NFIP) is run. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk. Depending on when actuarially fair rates are applied, the impact of this rule would significantly decrease as the market failure, which this rule addresses, is eliminated.