HUD-4119 Appendix B

Appendix B: Challenging Total Development Cost Data

Challenging Total Development Cost Data:
Guidelines for the Indian Housing Block Grant Formula
This document describes the data and documentation required by HUD for a tribe to
challenge the Total Development Cost (TDC) data used in the Formula Current Assisted Stock
(FCAS) component of the Indian Housing Block Grant (IHBG) formula.
Q1:

How is TDC used in the formula?

A1: In accordance with 24 CFR 1000.320 and 1000.324, TDC is an adjustment factor applied
to Low-Rent, Mutual Help, and Turnkey III units in the FCAS and the Need components of the
formula.
Q2:

How is TDC calculated?

A2: TDC is calculated by averaging the current construction costs for a moderately designed
house as listed in not less than two nationally recognized residential construction cost indices.
These indices draw their data from surveys of construction costs in a geographic area.
Multipliers for each area are applied against these basic numbers to provide costs that are
specific to a geographic location. A second multiplier is then applied to account for nonconstruction costs (administration, planning, site acquisition, financing, etc.) Site-based utility
costs are included. Off-site costs such as water, sewer, roads, etc., are excluded.
Q3:

How is TDC applied in the formula?

A3: The TDC adjustment is weighted to derive a local TDC relative to the national average
for TDC. It is then applied to the modernization component of FCAS and the Need component
of the formula.
Q4: Can tribes or tribally designated housing entities (TDHE) challenge their TDC as
used in the IHBG formula?
A4: In accordance with §1000.336 (a)(5) a tribe/TDHE may challenge Total Development
Costs.
Q5:

How can a tribe/TDHE challenge its TDC?

A5: A tribe/TDHE can request a variance for an individual project or overall adjustment to
their current cost limits. If the variance is 110% or less than the published TDC, a tribe/TDHE
must provide relevant information and request approval from the Area Office of Native
American Programs (ONAP). If the variance is greater than 110%, a tribe/TDHE must provide
relevant information and request approval from the Headquarters ONAP. Relevant information
to support a variance, can include, but is not limited to documentation demonstrating:
• Material costs have significantly increased since
last publication of

Appendix B: Challenging Total Development Cost Data

TDCs.
• Unusual site acquisition costs.
• Transportation costs of materials have increased
since the last
publication of TDCs.
• Natural disasters occurring after the last TDC
publication date have
caused an increase in material, labor and other
construction costs.
• Special local conditions exist that result in higher
construction costs as verified by historical cost
data for building affordable housing in their
community.
• Evidence the tribe/TDHE has worked with the AONAP to
lower the
costs of the project, etc.
For additional information, please see Notice PIH 2009-27 (TDHEs), Total Development Costs
(TDC) for Affordable Housing under the Native American Housing Assistance and SelfDetermination Act of 1996 (NAHASDA) issued August 10, 2009.
Q6: What do I need to do to update my IHBG formula data once my challenge has been
accepted by the Area or Headquarters ONAP?
A6: Only approved variances for adjustments to the current cost limits will affect IHBG
formula data. Variances approved for individual projects will not affect IHBG formula TDC
data.
In order for a challenge to be considered for the upcoming Fiscal Year (FY) allocation, a TDC
variance for adjustments to current cost limits must be submitted by August 1 to the appropriate
Area ONAP if the request is 110% or less of the published TDC or to the Headquarters ONAP if
the request is greater than 110% as described in Question 5 above.
Once a variance is approved, the Area or Headquarters ONAP will notify the IHBG Formula
Customer Service Center. However, to ensure timely reporting, tribes/TDHEs are encouraged to
send a copy of the approved adjustment to the current cost limit variance to the IHBG Formula
Customer Service Center at the following address:
1875 Connecticut Ave., NW, 10th Floor
Washington, D.C. 20009
Toll Free: 800-410-8808

Appendix B: Challenging Total Development Cost Data

Fax: 202-393-6411
E-mail: [email protected]