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Federal Register / Vol. 86, No. 215 / Wednesday, November 10, 2021 / Rules and Regulations Paragraph a establishes the types of rental assistance that may be provided, such as payment of rent, penalties, or fees, to help the participant remain in permanent housing or obtain permanent housing. Paragraph a8 currently states, in part, that extremely lowincome veteran families and very lowincome veteran families who meet the criteria of 62.11 may be eligible to receive a rental subsidy for a 2-year period without recertification. The existing paragraph further states that the maximum amount of rental subsidy is 35 percent of the applicable Fair Market Rent FMR published by Housing and Urban Development HUD.
First, we are increasing the subsidy from 35 percent to 50 percent in 62.34a8. We have received strong feedback from the community that increasing the Shallow Subsidy rate up to a maximum of 50 percent is necessary to provide meaningful assistance to the very low and extremely low-income Veteran households eligible for SSVF
services. The housing affordability gap for these households is too wide to be bridged with a 35 percent subsidy. The National Low Income Housing Coalition The Gap: A Shortage of Affordable Rental Homes, https reports.
nlihc.org/gap/about reports that 70
percent of all extremely low-income families pay more than half their income on rent HUD defines affordable housing as paying no more than 30
percent of income on housing costs due to the acute shortage of affordable housing. Increasing the subsidy to a maximum of 50 percent will bring more private sector housing units into the range of housing affordability for SSVF
participants. Grantees will have the option of setting a subsidy rate of less than 50 percent, as 50 percent will be the maximum for the rental subsidy, on the condition that the subsidy rate set by the grantee is sufficient to sustain housing up to the 50 percent level. As these subsidies only support rent utilities for instance are not supported through this subsidy, and can be set at a rate of no more than 50 percent of the rent, the overall subsidy is still less than half of the veterans housing costs. The term shallow subsidy is consistent with this approach as the veteran will still be responsible for most of the housing costs. This change is expected to promote housing stability, which is central to SSVFs mission, and will support VAs goal of ending homelessness among Veterans.
We are also amending the basis for the rental subsidy for eligible participant families to be a maximum of 50 percent of the reasonable rent as defined in 62.34a4. VA defines rent
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reasonableness in 62.34a4 to mean the total rent charged for a unit must be reasonable in relation to the rents being charged during the same time period for comparable units in the private unassisted market and must not be in excess of rents being charged by the property owner during the same time period for comparable non-luxury unassisted units.
The reasons for this change are several. First, VA has received feedback from SSVF grantees in California stating that using the FMR reduces the amount of subsidies payable to participants because HUDs FMR rental rates consistently lag behind the true rental rates in the market, resulting in a subsidy of less than the intended 35
percent of the rental rates in the market.
HUD sets the FMR at the 40th percentile of gross rents for typical, nonsubstandard rental units occupied by recent movers in a local housing market, meaning 60 percent of units will have rental costs that exceed the FMR.
Furthermore, HUD counts households who moved in within the past 15 to 22
months as recent movers for purposes of determining the FMR. This results in rates that do not include the impact of recent rental inflation. Together, these policies set the FMR at below market rates.
In responding to the COVID19 health emergency, SSVF obtained a modification under section 301 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act 42 U.S.C.
5141 to employ a reasonable rent standard instead of the FMR. On March 31, 2020, HUD, also responding to the COVID19 health emergency, issued a waiver of the Continuum of Care CoC
program regulations at 24 CFR
578.49b2 which prohibit CoC
program recipients from using CoC
funds to lease units above the FMR. In implementing the waiver of the FMR
restriction, CoC program recipients were still required to ensure that units leased with CoC funds meet the CoC programs rent reasonableness standard. HUD
explained that its waiver of FMR
restriction will assist recipients in locating additional units to house individuals and families experiencing homelessness and reduce the spread and harm of COVID19.
VA agrees with the SSVF grantees and believes that using a reasonable rent would more accurately represent the rental rates by providing a real time measure of rent for comparable units within the same rental market. VA also believes that the reasonable rent standard should continue to apply after the COVID19 public health emergency.
In addition, SSVF already uses rent
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reasonableness for purposes of determining rental assistance paid by grantees to its participants under 62.34a4 and proposes to apply that definition to 62.34a8 to support internal consistency and reduce administrative errors and burdens as this allows grantees to have a single standard for determining allowable rental assistance.
38 CFR 62.34e2
VA is amending 38 CFR 62.34e2 in order to increase the cap on general housing stability assistance. Paragraph e establishes the general housing stability assistance. Paragraph e2
currently states that a grantee may pay directly to a third party and not to a participant, in an amount not to exceed $1,500 per participant during any 2-year period, beginning on the date that the grantee first submits a payment to a third party for certain types of expenses.
The current cap of $1,500 was set with the publication of 62.34e2 on February 24, 2015. See 80 FR 9611. Due to inflation, the value of that cap has eroded with time.
The Consumer Price Index for all Urban Consumers CPIU is a measure of the average change over time in the prices paid by urban consumers for a variety of goods and services. It provides indexes for various geographic areas and price data for food, clothing, shelter, fuels, transportation, medical care, drugs, and other goods and services that people buy for day-to-day living. General housing stability assistance funds can be provided for some of the goods and services measured by the CPIU such as uniforms, tools, kitchen utensils, and bedding. The CPIU is a useful indicator of the increasing annual costs of these items. Between 2015 and 2021 the cumulative CPIU, not corrected for compounding, was 14.4 percent.
Assuming an annual CPI of 3 percent for 2022, and including a modest effect for compounding interest, we are increasing the $1,500 cap to $1,800 so that the purchasing power of the $1,500 cap set on February 24, 2015 is restored.
Additionally, there will be an automatic adjustment to this cap so that it increases annually based on the CPIU.
38 CFR 62.34f Currently, 38 CFR 62.34f2 states that placement for a veteran and his or her spouse with dependents in emergency housing may not exceed 45
days. We are amending 38 CFR
62.34f2 to provide additional assistance to vulnerable, unsheltered homeless veteran families. We note that, for the purpose of this part, veteran
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