SUPPLEMENTARY INFORMATION:

I. Legal Requirements for This Notice

In accordance with section 7(p) of the Department of Housing and Urban Development Act (42 U.S.C. 3535(p)), a plan for the reorganization of any HUD regional, area, insuring, or other field office may take effect only upon the expiration of 90 days after publication in the Federal Register of a cost-benefit analysis of the effect of the plan on each HUD office involved. Such cost-benefit analysis shall include, but not be limited to (1) an estimate of cost savings supported by background information detailing the source and substantiating the amount of the savings; (2) an estimate of the additional cost which will result from the reorganization; (3) a study of the impact on the local economy; and (4) an estimate of the effect of the reorganization on the availability, accessibility, and quality of services provided for recipients of those services. Where any of the factors cannot be quantified, the Secretary shall provide a statement on the nature and extent of those factors in the cost-benefit analysis.

II. Required Statutory Cost-Benefit Analysis

A. Background

HUD is proposing to move the KCMFO, currently operating from a leased space of 11,465 rentable square feet (RSF) with 25 staff, into the leased KCRO, which occupies about 69,437 square feet and houses 107 staff. The two locations are separated by approximately 5.2 miles and across the Kansas-Missouri state line, minimizing potential disruption.

The objectives of this consolidation are to achieve measurable cost savings, enhance operational efficiency and optimize utilization of federally leased space. The KCRO has sufficient capacity to absorb the incoming staff. IT ( printed page 38010) transition costs are anticipated to be negligible due to HUD's standardized national network and laptop-based workforce.

This analysis finds that the consolidation yields immediate net savings in the first year, a payback period of approximately two weeks, and substantial multi-year cost avoidance through elimination of lease expenses and associated overhead. Risks to program delivery, community access, and workforce continuity are minimal and short-term in nature.

At present, the following facilities are in use by HUD staff in Kansas City, Missouri and Kansas City, Kansas, despite their close proximity and the presence of another HUD field office in St. Louis, Missouri.

B. Estimate of Cost Savings

The expected Cost Savings associated with this consolidation can be loosely described in terms of Rent and other costs associated with the leasing of the KCMFO that would be avoided, the Reimbursable Work Authorization (RWA) and infrastructure costs of operating the KCMFO, and additional efficiencies of operation created by the consolidation of these offices.

1. Annual Lease Cost Avoidance

HUD is presently paying a Shell Rent amount of $160,051.44 annually for the KCMFO, with additional lease related operating costs of $110,181.24 and Public Building Service (PBS) Fees of $18,916.32. With the consolidation of KCMFO into existing space at the KCRO, HUD will be able to avoid these costs moving forward, saving $289,149.00 annually.

2. Elimination of Reimbursable Work Authorization (RWA) Costs

In connection with the operation and maintenance of the KCMFO facility, HUD expends $298,827 annually, which includes approximately $9,678 relating to the maintenance of the facility's technical infrastructure. With the consolidation of KCMFO into existing space at the KCRO, HUD will be able to avoid these costs moving forward.

3. Non-Quantifiable Operational Efficiencies

In addition, HUD will also realize important non-quantifiable cost savings. Because HUD currently operates two separate facilities, it bears two distinct costs of facility overhead and administrative burdens associated with their operation. The consolidation of the KCMFO into the KCRO will allow HUD to increase efficiencies and reduce cost by eliminating duplicative facility overhead and consolidating administrative functions. Additionally, HUD is currently underutilizing space in both the KCMFO and KCRO, with significant unused, excess space being funded with taxpayer dollars. This proposed consolidation will allow the existing leased footprint of the KCRO to be more fully utilized and excess space to be decommissioned and released from HUD's space management.

C. Estimate of the Additional Costs

While significant, long-term cost savings are anticipated from this consolidation, there will be minimal, one-time costs associated with this effort. These include the costs of the physical relocation of staff and resources from the KCMFO to the KCRO and the minor modifications of the space in the KCRO to incorporate the KCMFO staff into the space.

1. Relocation Expenses

Based on a fixed-price quote, HUD estimates the one-time relocation cost of $11,639.28, will be incurred in moving the KCMFO, which includes packing, transport, and project management of the relocation.

2. IT Infrastructure Transition

No material costs are anticipated due to existing standardized infrastructure.

3. Lease Termination

No penalties will be incurred due to active 90-day termination rights.

4. Facility Modifications

Only minor reconfigurations are anticipated and are not expected to result in material cost increases.

5. Indirect/Transitional Costs

Indirect costs such as temporary productivity impacts, administrative transition efforts, and minor employee commute adjustments are expected to be minimal and short-term in nature and do not materially affect the overall cost-benefit outcome.

D. Summary of Financial Analysis

( printed page 38011)

The one-time relocation cost is treated as a Year 0 outflow (paid immediately), while the annual savings are treated as end-of-year inflows for Years 1, 2, and 3.

The consolidation therefore represents a high-confidence, low-risk investment in long-term fiscal efficiency, fully consistent with federal objectives to reduce underutilized real estate.

E. Study of the Impact on the Local Economy

The consolidation will have distinct, albeit localized, economic and community impacts on both Kansas City, MO, and Kansas City, KS, with a largely net-neutral effect on the broader Kansas City Metropolitan Statistical Area (MSA). As noted above, the physical location of these offices is only 5.2 miles apart.

1. Kansas City, Missouri (Departure)

With the relocation of the HUD staff in the KCMFO, approximately 25 federal employees will be removed from the downtown Kansas City, Missouri workforce. This may result in a small decrease in the patronage of businesses located near the KCMFO. The relatively small footprint of the KCMFO will be returned to the commercial leased space available, which could lead to a minor reduction in demand for commercial office space in the city.

2. Kansas City, Kansas (Arrival)

With the relocation of the HUD staff to the KCRO, approximately 25 federal employees will be added to the existing utilization of the Kansas City, Kansas Federal Building. This will result in a better utilization rate within the Federal Building. This may also result in a small increase in the patronage of businesses located near the KCRO. It is not anticipated that such a small number of employees will create any appreciable strain on infrastructure due to the current availability of capacity in the area.

3. Overall Metropolitan Impact

The Kansas City metropolitan area will experience a net-neutral economic impact, as jobs and economic activity remain within the same regional economy. The relocation represents a redistribution rather than a loss of federal presence.

F. Estimate of the Effect of the Reorganization

1. Impact on Availability, Accessibility and Quality of Services

The consolidation is designed to maintain, if not enhance, the quality and continuity of services provided to the public, stakeholders, and program beneficiaries. Several factors contribute to this objective.

a. Continuity of Program Delivery

The availability of HUD's services will remain unchanged. Currently, the KCMFO staff provide specialized Financial Management Center (FMC) with a national scope, which may be accomplished effectively from any location. In fact, integrating the FMC into the larger KCRO is expected to centralize expertise and potentially improve coordination for financial management activities across Region VII and beyond.

Additionally, all programs and staffing levels will be retained through the relocation, and no reductions in Full-Time Equivalents (FTEs) are planned. HUD's core programs, including those related to Federal Housing Administration (FHA) mortgage insurance, Public and Indian Housing (PIH), and Community Planning and Development (CPD), which are critical for housing stability and community development, will continue to provide uninterrupted delivery of services. The physical proximity of the two offices (5.2 miles apart) means the operational transition should have minimal impact on staff's ability to continue their work.

b. Accessibility for Stakeholders, Housing Authorities, and the General Public

Concerns regarding accessibility for local housing authorities, community partners, and the general public are paramount in any office consolidation. Accessibility will not be materially impacted due to the short relocation distance (approximately 5.2 miles) within the same metropolitan area. Stakeholders will continue to access services through in-person visits, as well as established virtual channels including phone, email, and online platforms.

c. Quality

Service quality is expected to be maintained or modestly improved by this relocation. Co-location within a larger regional office enhances coordination, allows for shared expertise, and improves access to centralized administrative and technical resources.

2. Impact on HUD Employees

The consolidation is expected to have only minimal impacts on HUD staff and is not expected to result in workforce reductions.

a. Commute Impact

The short relocation distance is unlikely to significantly affect commute times for most employees. The distance between the KCMFO and the KCRO is approximately 5.2 miles, making it a relatively short commute across the state line. For most of the 25 employees, this change is unlikely to significantly alter their daily commute time or cost, especially for those already residing in the broader Kansas City metropolitan area.

b. Transit Support

No relocation assistance is required; however, HUD may adjust transit guidance or commuter support resources as appropriate.

c. Tax Considerations

Employees may experience changes in state tax obligations due to cross-state commuting. These impacts are modest and vary by residency status.

i. Employees Residing in Missouri: Most affected employees will now be subject to Kansas non-resident income tax withholding wages earned at the new KS facility. For 2025, the top marginal tax rate in Kansas (5.58%) is slightly higher than Missouri's flat rate (4.70%). These employees must file a Kansas nonresident return and a ( printed page 38012) Missouri resident return. To prevent double taxation, Missouri allows a resident credit (Form MO-CR) for taxes paid to Kansas. The net effect is that Missouri residents will pay the higher of the two state rates (effectively the KS 5.58% rate), resulting in a modest increase in their overall state tax burden (approximately 0.88% of their wages).

ii. Employees Residing in Kansas: Employees who already live in Kansas and currently commute to Missouri will experience a simplification of their tax filing. They will no longer need to file a Missouri nonresident return or claim credit for taxes paid to another state. Their wages will be taxed solely by their home state of Kansas, resulting in a net-neutral financial impact but reduced administrative burden.

iii. Kansas City, MO Earnings Tax (E-Tax): Kansas City, MO levies a 1% earnings tax on all its residents, regardless of where they work, and on all nonresidents who work within the city limits. Employees who live in KCMO will continue to pay this 1% tax even after their workplace moves to Kansas. However, employees who live outside KCMO but currently work at the departing MO facility will experience a financial benefit: by moving their workplace to Kansas, they will no longer be subject to the 1% KCMO earnings tax as nonresidents.

iv. No Relocation-related taxes: Because the physical relocation costs are borne directly by the agency through a fixed-price vendor contract, individual employees will not receive taxable moving expense reimbursements. Therefore, federal Relocation Income Tax Allowance (RITA) or Withholding Tax Allowance (WTA) provisions are not triggered by this consolidation.

G. Conclusion

The proposed consolidation of the KCMFO into the KCRO is a financially and operationally sound decision that aligns with federal real property optimization goals. It generates significant and immediate cost savings, minimizes duplication of resources, and maintains continuity of services. The cost-benefit analysis demonstrates that this consolidation results in substantial net cost savings, minimal additional and indirect costs, negligible localized economic disruption, and no adverse impact on service availability, accessibility, or quality. Moreover, the integration of the KCMFO into the KCRO, particularly the integration of the Financial Management Center into a larger regional office, is expected to enhance operational synergies and overall efficiency.

III. Finding of No Significant Impact

A Finding of No Significant Impact with respect to the environment has been completed in accordance with HUD regulations in 24 CFR part 50 that implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding is available for public inspection during regular business hours in the Regulations Division, Office of General Counsel; Department of Housing and Urban Development; 2415 Eisenhower Avenue, Alexandria, VA 22314. Due to security measures at the HUD building, please schedule an appointment to review the Finding by calling the Regulations Division at 202-402-3055 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. To learn more about how to make an accessible telephone call, please visit https://www.fcc.gov/​consumers/​guides/​telecommunications-relay-service-trs.

[FR Doc. 2026-12655 Filed 6-23-26; 8:45 am]

BILLING CODE 4210-67-P