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 Single Room Occupancy Program and Rental Voucher Program

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 888

[Docket No. FR-3699-N-04]

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 Single Room

Occupancy Program and Rental Voucher Program

AGENCY: Office of the Secretary, HUD.

ACTION: Final fiscal year (FY) 1995 fair market rents.

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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).

There have been several Federal Register publications leading to

this final publication of the FY 1995 FMRs at the 40th percentile rent

level. On June 23, 1994, HUD published separate sets of proposed FMRs

at the 45th and the 40th percentile rent levels. The proposed 40th

percentile FMRs were included in that publication to alert the public

that the Administration was considering lowering the FMR standard as a

cost saving measure. On July 13, the FMR comment period was extended to

October 14 to give small PHAs in nonmetropolitan areas the opportunity

to use HUD's recently issued rental housing survey guide. Because of

the extended comment period, HUD could not review the comments in time

to meet the October 1 deadline for publishing the final FMRs. On

September 28, therefore, HUD published final 45th percentile FMRs for

all areas at the proposed FMR levels and announced that there would be

a later publication that would include revised FMRs for the areas whose

rental housing surveys were still being evaluated.

On March 2, 1995, HUD published the proposed rule to revise 24 CFR

part 888 to change the FMR rent standard from the 45th to 40th

percentile rent level. The comment period ended on April 3, 1995, and,

in a separate Federal Register publication on August 15, 1995, the

changes were published.

This document concludes the process by providing final FY 1995 FMRs

at the 40th percentile level. Included in this publication are

increased FMRs for 131 areas that submitted rental housing surveys that

HUD determined provided a sufficient basis for revising the FMRs. Five

areas also are being added to Schedule D on the basis of surveys

submitted on manufactured home space rentals in these areas. In

addition, HUD has increased the FMRs for 325 nonmetropolitan counties

after discovering that the original analysis of 1990 Census data

comparing low rent nonmetropolitan counties with minimum rent values

computed for States had led to an unintended result. HUD is continuing

to study this issue, and is considering a further change in the way the

State minimums are determined in the FY 1996 proposed FMRs.

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

September 14, 1995.

FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Rental Assistance

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

0477 or 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

or 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 40th percentile rent, the dollar amount below which 40 percent of

the standard quality rental housing units rent. The 40th 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

geographic 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

Manufactured home space FMRs are established at 30 percent of the

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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 40th 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. Manufactured home space FMR revisions are published as final

FMRs in Schedule D. Once approved, the revised manufactured home space

FMRs establish new base year estimates that are updated annually using

the same data used to update the Rental Certificate program FMRs.

Public Comments

In response to the June 23 proposed FMRs, HUD received 175 comments

covering 267 FMR areas, for which rental housing survey information was

included for 188 areas. HUD carefully evaluated all information

submitted and, based on this review, revised the FMRs for 131 areas.

The information submitted for the 57 other areas was not considered

sufficient to provide a basis for revising the FMRs.

The 131 FMR areas with approved FMR revisions included 87 areas for

which RDD surveys were conducted either by the Public Housing Agency or

by a professional survey firm. Successful surveys were submitted for 18

areas using the more traditional landlord/owner type surveys. FMR

increases were also approved for 26 other areas that submitted

incomplete survey information but for which HUD was able to make

adjustments using available information on assisted housing.

AHS and HUD Sponsored RDD Surveys

HUD received public comments with survey data from two of the eight

areas identified in the September 28 FMR publication with RDD or AHS

surveys indicating FMR reductions. Based on the rental housing survey

conducted for Gage County, NE, the FMRs have been increased. The survey

data provided for the Memphis metropolitan area was not sufficient to

provide a basis for revising the FMRs.

Based on RDD survey results obtained since the last publication of

final FMRs on September 28, 1994, the FMRs for the following 14

additional areas are being increased in today's notice:

Allentown-Bethlehem-Easton, PA

Corpus Christi, TX

Davenport-Moline-Rock Island, IA-IL

Greensboro-Winston Salem-Highpoint, NC

Greenville-Spartanburg-Anderson, SC

Louisville, KY-IN

Medford-Ashland, OR

Olympia, WA

Pensacola, FL

Salem, OR

Shreveport-Bossier City, LA

Syracuse, NY

Utica-Rome, NY

Columbus County, NC

HUD Rental Housing Survey Guides

HUD recommends 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-$15,000. Areas with 500 or more program 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, nonmetropolitan

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 $6,000. In addition, PHAs in nonmetropolitan areas 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: 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 40th 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 will

continue to waive the regulatory requirements that govern requests for

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

midwest and southeast. The flood-related FMR exceptions will be

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

county FMR areas and for individual county parts of multi-county FMR

areas 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

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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: August 4, 1995.

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 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, 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 revised on the basis of public comments. Once approved, the

revised manufactured home space FMRs establish new base-year estimates

that will be updated annually using the same data used to estimate the

Rental Certificate program FMRs. 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. 95-19835 Filed 8-14-95; 8:45 am]

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