Section 8 Housing Assistance Payments Program; Fair Market Rent Schedules for Use in the Rental Certificate Program, Loan Management and Property Disposition Programs, Moderate Rehabilitation Program and Rental Voucher Program

SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937

requires the Secretary to publish Fair Market Rents (FMRs) annually to

be effective on October 1 of each year. FMRs are used for the Section 8

Rental Certificate program (part 882, subparts A and B), including

space rentals by owners of manufactured homes under the Section 8

Rental Certificate program (part 882, subpart F) and project-based

Certificate assistance (part 882, subpart G); the Section 8 Moderate

Rehabilitation program (part 882, subparts D and E); Section 8 housing

assisted under part 886, subparts A and C (Section 8 Loan Management

and Property Disposition programs); and to determine payment standard

schedules in the Rental Voucher program (part 887).

HUD published the proposed Fiscal Year (FY) 1995 FMRs in the

Federal Register on June 23, 1994 (59 FR 32492), and in another

publication on July 13, 1994 (59 FR 35739), announced that the public

comment period was extended to October 14, 1994. The public comment

period was extended to give Public Housing Agencies (PHAs) the

opportunity to use the new rental housing survey guide that HUD had

recently developed for smaller, nonmetropolitan areas.

Two separate sets of proposed FMRs were published on June 23--one

based on the 45th percentile rent standard and the other based on the

40th percentile rent standard. The authorization bill now moving

through Congress establishes FMRs at the 45th percentile rent standard.

This notice, therefore, makes effective the final FY 1995 FMRs at the

45th percentile level.

As announced in the Federal Register on July 13, there will be two

final FY 1995 FMR publications. Today's notice makes effective final

FMRs for all areas on October 1, 1994. The FMRs in this notice are

based on the proposed FMRs included in the June 23 notice for all areas

except eight with RDD and AHS surveys that will have proposed

reductions in their FMRs postponed pending the outcome of the review of

comments submitted (see AHS and RDD surveys). A second publication

later this year will announce revised final FMRs for the areas for

which HUD makes a determination that the rental housing surveys

submitted as public comments provided a sufficient basis for such

revision.

EFFECTIVE DATE: The FMRs published in this notice are effective on

October 1, 1994.

FOR FURTHER INFORMATION CONTACT: Shirley C. Stone, Rental Assistance

Division, Office of Elderly and Assisted Housing, telephone (202) 708-

0477. (TDD: (202) 708-0850). For technical information on the

development of schedules for specific areas or the method used for the

rent calculations, contact Michael R. Allard, Economic and Market

Analysis Division, Office of Economic Affairs, telephone (202) 708-0577

(TDD: (202) 708-0770). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: Section 8 of the United States Housing Act

of 1937 (the Act) (42 U.S.C. 1437f) authorizes housing assistance to

aid lower income families in renting decent, safe, and sanitary

housing. Assistance payments are limited by FMRs established by HUD for

different areas. In general, the FMR for an area is the amount that

would be needed to pay the gross rent (shelter rent plus utilities) of

privately owned, decent, safe, and sanitary rental housing of a modest

(non-luxury) nature with suitable amenities.

Method Used to Develop FMRs

FMR Standard: The FMRs are gross rent estimates; they include

shelter rent and the cost of utilities, except telephone. HUD sets FMRs

to assure that a sufficient supply of rental housing is available to

program participants. To accomplish this objective, FMRs must be both

high enough to permit a selection of units and neighborhoods and low

enough to serve as many families as possible. The level at which FMRs

are set is expressed as a percentile point within the rent distribution

of standard quality rental housing units. The current definition used

is the 45th percentile rent, the dollar amount below which 45 percent

of the standard quality rental housing units rent. The 45th percentile

rent is drawn from the distribution of rents of units which are

occupied by recent movers (renter households who moved into their unit

within the past 15 months). Public housing units and newly built units

less than two years old are excluded.

Data Sources: HUD used the most accurate and current data available

to develop the FMR estimates. Three sources of survey data were used

for the base-year estimates. They are: (1) The 1990 Census; (2) RDD

telephone surveys conducted of individual FMR areas since the 1990

Census; and (3) the post-1990 Census American Housing Surveys (AHSs)

available at the time the FMR estimates were prepared. The base-year

FMRs were then updated using Consumer Price Index (CPI) data for rents

and utilities or the HUD regional rent change factors developed from

RDD surveys. Annual average CPI data are available individually for 103

metropolitan FMR areas. RDD Regional rent change factors are developed

annually for the metropolitan and nonmetropolitan parts of each of the

10 HUD regions (a total of 20 separate factors). The RDD factors are

used to update the base year estimates for all FMR areas that do not

have their own local CPI survey.

The decennial Census provides statistically reliable rent data for

use in establishing base-year FMRs. AHSs are conducted by the Bureau of

the Census for HUD and have accuracy comparable to the decennial

Census. These surveys enable HUD to develop between-census revisions

for the largest metropolitan areas on a revolving schedule. The RDD

telephone survey technique is based on a sampling procedure that uses

computers to select random samples of rental housing, dial and keep

track of the telephone numbers and tabulate the responses.

Manufactured Home Space FMRs: The final manufactured home space

FMRs are established at 30 percent of the applicable Section 8 Rental

Certificate program two-bedroom FMR. HUD accepts public comments

requesting modifications of manufactured home space FMRs. To be

accepted for approval, such comments must contain statistically valid

survey data that show the 45th percentile space rent (excluding the

cost of utilities) for the FMR area. This program uses the same FMR

area definitions as the Section 8 Rental Certificate program. All

manufactured home space FMR revisions approved will be published as

final FMRs in Schedule D. In addition HUD has retained all of the

modifications approved since 1990 because they are based on recent

survey data that HUD had determined to be valid.

New Metropolitan Area

This publication makes final the FMRs for the newly designated

Hattiesburg, Mississippi Metropolitan Statistical Area (MSA), which was

defined by OMB on July 1, 1994 (OMB Bulletin 94-07) to include Forrest

and Lamar Counties. HUD has determined that the new metropolitan area

definition is appropriate for use as an FMR area definition.

AHS and RDD Surveys

The eight areas identified in the proposed FMR notice with reduced

FMRs resulting from RDD and AHS surveys will continue to use the FY

1994 FMRs, which are republished in this notice. Final FY 1995 FMRs for

these areas, including any revisions resulting from public comments,

will be included in the second publication later this year. The eight

areas are:

RDD AREAS

Gage County, NE

Holmes County, FL

Jamestown, NY, MSA

Las Cruces, NM, MSA

Reading, PA, MSA

Washington County, FL

AHS AREAS

Memphis, TN-AR-MS, MSA

Oklahoma City, OK, MSA

HUD Rental Housing Survey Guides

HUD continues to recommend use of professionally-conducted Random

Digit Dialing (RDD) telephone surveys to test the accuracy of FMRs for

areas where there is a sufficient number of Section 8 units to justify

the survey cost of $10,000-$12,000. Areas with 500 or more units

usually meet this criterion, and areas with fewer units may meet it if

the actual two-bedroom FMR rent standard is significantly different

than that proposed by HUD. In addition, HUD has developed a simplified

version of the RDD survey methodology for smaller, non-metropolitan

PHAs. This methodology is designed to be simple enough to be done by

the PHA itself, rather than by professional survey organizations, at a

cost of around $5,000. The smallest PHAs may, in certain circumstances,

do surveys of clusters of counties. All clustered surveys must be

approved in advance by HUD. PHAs are cautioned that the resultant FMRs

will not be identical within the cluster--e.g., each individual FMR

area will have a separate FMR based on its relationship to the combined

rent of the cluster of FMR areas. HUD does not mandate the use of

either the RDD telephone survey or the modified RDD telephone survey

methodology. Other survey methodologies are acceptable as long as they

provide statistically reliable unbiased estimates of the 45th

percentile gross rent. All survey results must be fully documented.

Because it takes two months to obtain survey estimates, interested

organizations concerned about FMR accuracy may wish to begin their FMR

surveys in the next few months to assure that the results will be

available in time to be incorporated into the FY 1996 FMRs. The

starting point is to carefully review one of the two following

publications, both obtainable from HUD USER at 1-800-245-2691. Larger

PHAs should obtain ``Random Digit Dialing Surveys; A Guide to Assist

Larger Public Housing Agencies in Preparing Fair Market Rent

Comments.'' Smaller PHAs should obtain ``Rental Housing Surveys; A

Guide to Assist Smaller Public Housing Agencies in Preparing Fair

Market Rent Comments.''

FMRs for Flood Damaged Areas in the Southeast and Midwest

Under the authority granted in 24 CFR part 899, the Secretary finds

good cause to waive the regulatory requirements that govern requests

for geographic area FMR exceptions for the flood-impacted areas in the

midwest and southeast that have been declared Federal disaster areas.

The FMR areas eligible for exceptions are those declared Federal

disaster areas. Recognizing that the substantial losses resulting from

the floods will have a direct effect on local rent levels, HUD is

prepared to grant FMR exceptions up to 10 percent above the final FY

1995 FMRs for single-county FMR areas and for individual county parts

of multi-county FMR areas. The flood-related FMR exceptions will be

approved by the HUD field office with jurisdiction for: (1) Counties

that qualify as disaster areas under the Robert T. Stafford Disaster

Relief and Emergency Assistance Act; if (2) the PHA certifies that

damage to the rental housing stock is so substantial that it has

increased the prevailing rent levels. Such exceptions must be requested

in writing by the responsible PHAs. Once approved by HUD, they will

remain in effect until superseded by final FY 1996 FMRs.

Other Matters

A Finding of No Significant Impact with respect to the environment

as required by the National Environmental Policy Act (42 U.S.C. 4321-

4374) is unnecessary, since the Section 8 Rental Certificate program is

categorically excluded from the Department's National Environmental

Policy Act procedures under 24 CFR 50.20(d).

The undersigned, in accordance with the Regulatory Flexibility Act

(5 U.S.C. 605(b)), hereby certifies that this notice does not have a

significant economic impact on a substantial number of small entities,

because FMRs do not change the rent from that which would be charged if

the unit were not in the Section 8 program.

The General Counsel, as the Designated Official under Executive

Order No. 12606, The Family, has determined that this notice will not

have a significant impact on family formation, maintenance, or well-

being. The notice amends Fair Market Rent schedules for various Section

8 assisted housing programs, and does not affect the amount of rent a

family receiving rental assistance pays, which is based on a percentage

of the family's income.

The General Counsel, as the Designated Official under section 6(a)

of Executive Order No. 12611, Federalism, has determined that this

notice will not involve the preemption of State law by Federal statute

or regulation and does not have Federalism implications. The Fair

Market Rent schedules do not have any substantial direct impact on

States, on the relationship between the Federal government and the

States, or on the distribution of power and responsibility among the

various levels of government.

The Catalog of Federal Domestic Assistance program number is

14.156, Lower-Income Housing Assistance Program (section 8).

Accordingly, the Fair Market Rent Schedules, which will not be

codified in 24 CFR Part 888, are amended as follows:

Dated: September 20, 1994.

Henry G. Cisneros,

Secretary.

Section 8 Housing Assistance Payments Program; Fair Market Rent

Schedules for Use in the Rental Certificate Program, Loan Management

and Property Disposition Programs, Moderate Rehabilitation Program and

Rental Voucher Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage

a. The FMRs shown in Schedule B incorporate the Office of

Management and Budget's (OMB) most current definitions of metropolitan

areas (with the exceptions discussed in paragraph b). HUD uses the OMB

Metropolitan Statistical Area (MSA) and Primary Metropolitan

Statistical Area (PMSA) definitions for FMR areas because they closely

correspond to housing market area definitions. FMRs are housing market-

wide rent estimates that are intended to provide housing opportunities

throughout the geographic area in which rental housing units are in

direct competition.

b. The exceptions are counties which have been deleted from seven

large metropolitan areas whose revised OMB definitions were determined

by HUD to be larger than the housing market areas. The FMRs for the

following counties (shown by the metropolitan area) are calculated

separately and are shown in Schedule B within their respective States

under the ``Metropolitan FMR Areas'' listing:

Metropolitan Area and Counties Deleted

Atlanta, GA--Carroll, Pickens, Spalding, and Walton Counties.

Chicago, IL--DeKalb, Grundy and Kendall Counties.

Cincinnati-Hamilton, OH-KY-IN--Brown County, Ohio; Gallatin, Grant and

Pendleton Counties in Kentucky; and Ohio County, Indiana.

Dallas, TX--Henderson County.

Lafayette, LA--St. Landry and Acadia Parishes.

New Orleans, LA--St. James Parish.

Washington, DC--Berkeley and Jefferson Counties in West Virginia; and

Clarke, Culpeper, King George and Warren counties in Virginia.

c. FMRs also are established for nonmetropolitan counties and for

county equivalents in the United States, for nonmetropolitan parts of

counties in the New England states and for FMR areas in Puerto Rico,

the Virgin Islands and the Pacific Islands.

d. FMRs for the areas in Virginia shown in the table below were

established by combining the Census data for the nonmetropolitan

counties with the data for the independent cities that are located

within the county borders. Because of space limitations, the FMR

listing in Schedule B includes only the name of the nonmetropolitan

county. The full definitions of these areas including the independent

cities are as follows:

Virginia Nonmetropolitan County FMR Area and Virginia Independent Cities

Included With County

------------------------------------------------------------------------

County Cities

------------------------------------------------------------------------

Allegheny.......................... Clifton Forge and Covington.

Augusta............................ Staunton and Waynesboro.

Carroll............................ Galax.

Frederick.......................... Winchester.

Greensville........................ Emporia.

Halifax............................ South Boston.

Henry.............................. Martinsville.

Montgomery......................... Radford.

Rockbridge......................... Buena Vista and Lexington.

Rockingham......................... Harrisonburg.

Southhampton....................... Franklin.

Wise............................... Norton.

------------------------------------------------------------------------

e. FMRs for Section 8 manufactured home spaces are established at

30 percent of the two-bedroom Section 8 Rental Certificate program

FMRs, with the exception of the areas listed in Schedule D whose FMRs

have been modified on the basis of public comments. The FMR area

definitions used for manufactured home spaces are the same as for the

Section 8 Certificate program.

2. Arrangement of FMR Areas and Identification of Constituent Parts

a. The FMR areas in Schedule B are listed alphabetically by

metropolitan FMR area and by nonmetropolitan county within each State.

The exception FMRs for manufactured home spaces in Schedule D are

listed alphabetically by State.

b. The constituent counties (and New England towns and cities)

included in each metropolitan FMR area are listed immediately following

the listings of the FMR dollar amounts. All constituent parts of a

metropolitan FMR area that are in more than one State can be identified

by consulting the listings for each applicable State.

c. Two nonmetropolitan counties are listed alphabetically on each

line of the nonmetropolitan county listings.

d. The New England towns and cities included in a nonmetropolitan

part of a county are listed immediately following the county name.

e. The FMRs are listed by dollar amount on the first line beginning

with the FMR area name.

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[FR Doc. 94-23987 Filed 9-27-94; 8:45 am]

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