Fair Market Rents for Section 8 Housing Assistance Payments ProgramFiscal Year 1996

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

requires the Secretary to publish FMRs annually to be effective on

October 1 of each year. FMRs are used for the Section 8 Rental

Certificate program (including space rentals by owners of manufactured

homes under that program); the Moderate Rehabilitation Single Room

Occupancy program; housing assisted under the Loan Management and

Property Disposition programs; payment standards for the Rental Voucher

program; and any other programs whose regulations specify their use.

On March 2, 1995 (60 FR 11870), HUD published a proposed rule to

revise 24 CFR part 888 to change the FMR rent standard from the 45th to

40th percentile rent level. That change was published in the Federal

Register on August 15, 1995 (60 FR 42222), and made effective on

September 14, 1995.

HUD also published proposed FY 1996 FMRs on August 15, 1995 (60 FR

42290). Because of the delay in publishing the proposed FMRs, the

public comment period will extend beyond the October 1 statutory date

for publishing final FMRs. Therefore, there will be two notices of

final FMRs. Today's document provides final FY 1996 FMRs at the level

of the proposed FMRs, except for the small number of areas with

proposed FMR reductions that will have their FMRs held at the FY 1995

40th percentile level pending evaluation of public comments. The second

publication of final FY 1996 FMRs, which will announce revised FMRs for

the areas that submitted successful public comments, will occur early

next year.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Rental Assistance

Division, Office of Public and Indian 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:

I. Background

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.

II. Publication of FMRs

Section 8(c) of the Act requires the Secretary of HUD to publish

FMRs periodically, but not less frequently than annually. The

Department's regulations provide that HUD will develop FMRs by

publishing proposed FMRs for public comment and after evaluating the

public comments, publish the final FMRs (see 24 CFR 888.115). The final

FY 1996 FMR schedules at the end of this document list the FMR levels

for the Rental Certificate program (Schedule B) and for the areas where

modifications have been approved for the manufactured home space FMRs

(Schedule D).

III. 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). Newly built units less than two years old

are excluded, and adjustments have been made to correct for the below

market rents of public housing units included in the data base.

Data Sources

HUD uses the most accurate and current data available to develop

the FMR estimates. The sources of survey data used for the base-year

estimates are:

(1) the 1990 Census, which provides statistically reliable rent

data for all FMR areas;

(2) the Bureau of the Census' American Housing Surveys (AHSs),

which are used to develop between-Census revisions for the largest

metropolitan areas and which have accuracy comparable to the decennial

Census; and

(3) the Random Digit Dialing (RDD) telephone surveys of individual

FMR areas, which are based on a sampling procedure that uses computers

to select statistically random samples of rental housing.

The base-year FMRs are updated using trending factors based on

Consumer Price Index (CPI) data for rents and utilities or HUD regional

rent change factors developed from RDD surveys. Annual average CPI data

are available individually for 102 metropolitan FMR areas. RDD Regional

rent change factors are developed annually for the metropolitan and

nonmetropolitan parts of each of the 10 HUD regions. The RDD factors

are used to update the base year estimates for all FMR areas that do

not have their own local CPI survey.

FY 1996 FMRs

This document makes effective revised FMRs that reflect estimated

40th percentile rent levels trended to April 1, 1996. The FMRs have

been calculated separately for each bedroom size category based on 1990

Census data. For most FMR areas, the ratios developed from the Census

for that area were applied to the two-bedroom FMR estimate to derive

the FMRs for the other bedroom size categories. Exceptions have been

made for areas with local bedroom size rent intervals below an

acceptable range. For those areas the bedroom size intervals selected

were the minimums determined after outliers had been excluded from the

distribution of bedroom ratios for all metropolitan areas. Higher

ratios continue to be used for three-bedroom and larger size units than

would result from using the actual market relationships. This is done

to assist the largest, most difficult to house families in finding

program-eligible units.

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FMR Areas With Proposed Reductions

In the August 15, 1995, notice of proposed FMRs, HUD announced that

the FMRs for 31 areas were being proposed with reduced FMRs as the

result of recent RDD and AHS surveys. Until the affected PHAs have had

the opportunity to submit public comments, these areas will continue to

use the FY 1995 40th percentile FMRs (included in Schedule B of this

notice). The reductions in the FMRs, or any revisions resulting from

public comments, for these areas will be made effective in the second

publication of final FY 1996 FMRs.

RDD Areas With Proposed FMR Reductions

Atlantic-Cape May, NJ

Bergen-Passaic, NJ

Bridgeport, CT

Dayton-Springfield, OH

Evansville-Henderson, IN-KY

Fitchburg-Leominster, MA

Fort Lauderdale, FL

Hartford, CT

Honolulu, HI

Jackson, MS

Jersey City, NJ

Las Vegas, NV

Miami, FL

Middlesex-Somerset-Hunterdon, NJ

Modesto, CA

Monmouth-Ocean, NJ

Newark, NJ

Omaha, NE-IA

Salinas, CA

Santa Rosa, CA

Stamford, CT

Trenton, NJ

Vallejo-Fairfield-Napa, CA

Ventura, CA

West Palm Beach-Boca Raton, FL

AHS Areas With Proposed FMR Reductions

Boston, MA-NH

Oakland, CA

San Jose, CA

San Francisco, CA

Tampa-St. Petersburg-Clearwater, FL

Washington, DC-MD-VA-WV

FMRs for Puerto Rico

The August 15, notice of proposed FMRs also announced that HUD was

in the process of re-benchmarking the FMRs for Puerto Rico. Specially

designed RDD surveys have been, or are in the process of being,

conducted of each of the metropolitan FMR areas and of the

nonmetropolitan area of Puerto Rico. These surveys were modified by

adding housing quality questions to account for the high incidence of

substandard rental housing in Puerto Rico. Based on the survey results,

today's notice makes effective higher FMRs for Mayaguez. The FMRs for

the San Juan-Bayamon and the Caguas FMR areas will remain at the FY

1995 40th percentile levels pending evaluation of any public comments

received concerning the reductions proposed for FY 1996.

The FMRs for Arecibo, Ponce, and for the nonmetropolitan areas

remain at their FY 1995 40th percentile levels. The slight increase

proposed in the FMRs for Aguadilla is being made effective in this

notice. Results of the RDD surveys now underway for the Aguadilla,

Arecibo, and Ponce metropolitan FMR areas and for the nonmetropolitan

FMR areas of Puerto Rico will be announced in the Federal Register

notice of proposed FY 1997 FMRs.

State Minimum FMRs

Today's document implements HUD's new minimum FMR policy, which

establishes FMRs at the higher of the local FMR or the State-wide

average FMR of nonmetropolitan counties, subject to a ceiling rent cap

of $450 on the nonmetropolitan State averages. HUD adopted this

procedure in recognition of the difficulty that small PHAs in lightly

populated rural areas were having in developing valid FMR surveys and

the concern that their FMRs may be affected by small sample sizes and a

higher incidence of substandard housing and assisted housing with below

market rents. The new policy raises the FMRs for many of the

nonmetropolitan counties. HUD also has decided to apply the policy to a

small number of metropolitan areas that otherwise would have had FMRs

below the State-wide nonmetropolitan county average. The new State

minimum policy may be subject to change, based on further analysis and

public comment.

Manufactured Home Space FMRs

Manufactured home space FMRs are 30 percent of the applicable

Section 8 Rental Certificate program FMR for a two-bedroom unit. HUD

accepts public comments requesting modifications of these FMRs where

they are thought to be inadequate to run the program. In order to be

accepted as a basis for revising the FMRs, such comments must contain

statistically valid survey data that show the 40th percentile space

rent (excluding the cost of utilities) for the entire 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.

New Metropolitan FMR Areas

This publication makes final the definitions of three new

metropolitan FMR areas based on the most recent OMB changes. The Grand

Junction CO FMR area (Mesa County) is the same as the MSA definition.

HUD has decided, however, not to use the Flagstaff, AZ-UT MSA

definition as a FMR area because Kane County, UT is not considered to

be part of the Flagstaff housing market area. The Flagstaff

metropolitan FMR area, therefore, is defined to include only Coconino

County, AZ, while Kane County, UT is identified as a separate

metropolitan FMR area under the State of Utah listing.

IV. 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 $5,000 or less.

PHAs in nonmetropolitan areas may, in certain circumstances, do

surveys of groups of counties. All grouped surveys must be approved in

advance by HUD. PHAs are cautioned that the resultant FMRs will not be

identical within the group; each individual FMR area will have a

separate FMR based on its relationship to the combined rent of the

group of FMR areas.

PHAs that plan to use the RDD survey technique may obtain a copy of

the appropriate survey guide by calling HUD USER on 1-800-245-2691.

Larger PHAs should request ``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.''

HUD prefers but does not mandate the use of RDD telephone surveys

or the more traditional method described in

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the small PHA survey guide. Other survey methodologies are acceptable

as long as they provide statistically reliable, unbiased estimates of

the 40th percentile gross rent. Survey samples should preferably be

randomly drawn from a complete list of rental units for the FMR area.

If this is not feasible, the selected sample must be drawn so as to be

statistically representative of the entire rental housing stock of the

FMR area. In particular surveys must include units of all rent levels

and be representative by structure type (including single-family,

duplex and other small rental properties), age of housing unit, and

geographic location. All survey results must be fully documented.

V. FMRs for Federal Disaster Areas

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 areas that are declared disaster

areas by the Federal Emergency Management Agency (FEMA) during FY 1996.

HUD is prepared to grant disaster-related exceptions up to 10 percent

above the applicable FMRs. HUD field offices are authorized to approve

such exceptions 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

as a result of the disaster is so substantial that it has increased the

prevailing rent levels in the affected area. Such exceptions must be

requested in writing by the responsible PHAs. Once approved by HUD,

they will remain in effect until superseded by the publication of the

final FY 1998 FMRs.

VI. 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 be codified

in 24 CFR Part 888, are amended as follows:

Dated: August 30, 1995.

Henry G. Cisneros,

Secretary.

Fair Market Rents for the Section 8 Housing Assistance Payments 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 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

Flagstaff, AZ-UT--Kane County, UT

Lafayette, LA--St. Landry and Acadia Parishes

New Orleans, LA--St. James Parish

Washington, DC-MD-VA-WV--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 complete definitions of these areas including the

independent cities are as follows:

Virginia Nonmetropolitan County FMR Area and Independent Cities Included

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

County Cities

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

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

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

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

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

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

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

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

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

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

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

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

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

e. FMRs for Section 8 manufactured home spaces are 30 percent of

the two-bedroom Section 8 Rental Certificate program FMRs, with the

exception of the areas listed in Schedule D whose manufactured home

space FMRs have been revised on the basis of public comments. Once

approved, the revised manufactured home space FMRs establish new base-

year estimates that

[[Page 48281]]

are 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. 95-23050 Filed 9-15-95; 8:45 am]

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