Office of the Secretary; Fair Market Rents for the Section 8 Housing Assistance Payments ProgramFiscal Year 1997
Federal RegisterMay 8, 1996
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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.
Today's notice provides proposed FY 1997 FMRs for all areas.
DATES: Comments due date: July 1, 1996.
ADDRESSES: Interested persons are invited to submit comments regarding
HUD's estimates of the FMRs as published in this Notice to the Office
of the General Counsel, Rules Docket Clerk, Room 10276, Department of
Housing and Urban Development, 451 Seventh Street SW., Washington, DC
20410. Communications should refer to the above docket number and title
and should contain the information specified in the ``Request for
Comments'' section. To ensure that the information is fully considered
by all of the reviewers, each commenter is requested to submit two
copies of its comments, one to the Rules Docket Clerk and the other to
the Economic and Market Analysis Staff in the appropriate HUD Field
Office. A copy of each communication submitted will be available for
public inspection and copying during regular business hours (7:30 a.m.-
5:30 p.m. Eastern Time) at the above address.
FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Operations Division,
Office of Rental Assistance, telephone (202) 708-0477. For technical
information on the development of schedules for specific areas or the
method used for the rent calculations, contact Alan Fox, Economic and
Market Analysis Division, Office of Economic Affairs, telephone (202)
708-0590. Hearing- or speech-impaired persons may use the
Telecommunications Devices for the Deaf (TTY) by contacting the Federal
Information Relay Service at 1-800-877-8339. (Other than the ``800''
TDD number, telephone numbers are not toll free.)
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.
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
proposed FY 1997 FMR schedules at the end of this document list the FMR
levels for the Rental Certificate program (Schedule B), and for the
areas where the manufactured home space FMRs have had modifications
approved (Schedule D).
Method Used To Develop FMRs
FMR Standard: 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 used 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) 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.
State Minimum FMRs: Starting with the FY 1996 FMRs, HUD implemented
a new minimum FMR policy in response to numerous public concerns that
FMRs in rural area were too low to operate the program successfully. As
a result, FMRs are established at the higher of the local FMR or the
Statewide average of nonmetropolitan counties, subject to a ceiling
rent cap. The State minimum also affects a small number of metropolitan
areas whose rents would otherwise fall below the State minimum.
FY 1997 FMRs: This document proposes revised FMRs that reflect
estimated 40th percentile rent levels trended to April 1, 1997. FMRs
have been calculated separately for each bedroom size category. For
most FMR areas, the bedroom size ratios are based on 1990 Census data
for that area. 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
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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.
RDD Surveys: RDD surveys are used to obtain statistically-reliable
FMR estimates for selected FMR areas. This survey technique involves
drawing random samples of renter units occupied by recent movers. RDD
surveys exclude public housing units, units built in the past two
years, seasonal units, non-cash rental units, and those owned by
relatives. A HUD analysis has shown that the slight downward RDD survey
bias caused by including some rental units that are in substandard
condition is almost exactly offset by the slight upward bias that
results from surveying only units with telephones.
On average, about 8,000 telephone numbers need to be contacted to
achieve the target survey sample level of at least 400 eligible
responses. RDD surveys have a high degree of statistical accuracy;
there is a 95 percent likelihood that the recent mover rent estimates
developed using this approach are within 3 to 4 percent of the actual
rent value. Virtually all of the estimates will be within 5 percent of
the actual value.
Today's notice proposes reduced FMRs based on RDD surveys for 7
areas. They are the Aguadilla, Arecibo, Ponce, and the nonmetropolitan
areas of PR, plus the Danbury, CT, Portland, ME, and Portsmouth-
Rochester, NH-ME FMR areas.
AHS Areas: AHSs cover the largest metropolitan areas on a four-year
cycle, encompassing nearly half of the nation's rental housing stock.
The 40th percentile rents for these areas are calculated from the
distributions of two-bedroom units occupied by recent movers. Public
housing units, newly constructed units and units that fail a housing
quality test are excluded from the rental housing distributions before
the FMRs are calculated. The proposed FY 1997 FMRs incorporate the
results of the 1994 AHSs. Based on the 1994 survey results, the FMRs
for the Orange County, CA and Riverside-San Bernardino, CA FMR areas
are being proposed with decreases. No changes were necessary for 5
other AHS areas. The FMRs for Buffalo-Niagara Falls, NY, Dallas, TX,
Fort Worth-Arlington, TX, Milwaukee-Waukesha, WI, and San Diego, CA,
were updated in the normal manner.
FMR Area Definition Change
At the request of the Rural Housing and Community Development
Service (RHS), HUD has reevaluated the Lafayette Louisiana FMR area
definition and has decided to use the full OMB metropolitan area
definition. This publication, therefore, proposes the revised
definition, consisting of Acadia, Lafayette, St. Landry, and St. Martin
Parishes. HUD accepts the RHS position that there is significant
commuting among these four Parishes and that they should be treated as
a single housing market area for FMR purposes.
The proposed FY 1997 FMRs for the Lafayette FMR area, therefore,
are based on an RDD survey of the four-Parish area conducted by HUD in
1995 and updated to the as-of date of this year's FMR estimates. As a
result of combining the four Parishes into one FMR area, the proposed
FMRs for Lafayette and St. Martin Parishes are $21 lower and those for
Acadia and St. Landry Parishes are $37 higher than last year's levels.
HUD invites public comments on the appropriateness of the revised FMR
area definition as well as the accuracy of the proposed FMRs.
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.
Puerto Rico FMRs
RDD surveys were conducted for all Puerto Rico FMR areas during
1995. For three of them, Aguadilla, Arecibo, and Ponce, not enough
sample cases were obtained in 1995 to be usable with sufficient
confidence for FMR purposes. In early 1996, HUD resumed and completed
the RDD surveys of these three areas, and re-evaluated the 1995
nonmetropolitan survey results, and this Federal Register notice
includes proposed reductions for all of them. This notice also corrects
an erroneous statement in the February 21, 1996 Federal Register notice
regarding Aguadilla and the nonmetropolitan areas that their RDD
surveys had been completed. The FMRs for the nonmetropolitan areas of
Puerto Rico are being proposed for reduction, using data from the 1995
RDD survey. As stated in previous Federal Register notices on this
subject, the Puerto Rico surveys used an augmented questionnaire which
included many questions regarding housing quality, and the survey was
administered in Spanish. This completes HUD's RDD-based review of FMRs
throughout Puerto Rico.
Technical Correction--Santa Rosa, CA
In the February 21, 1996, Federal Register publication (61 FR
6690), the FMRs for the zero-bedroom, 3-bedroom, and 4-bedroom sizes
for the Santa Rosa, CA PMSA were in error. The corrected FY 1996 FMRs
are as follows:
------------------------------------------------------------------------
Bedroom
----------------------------------
0 1 2 3 4
------------------------------------------------------------------------
Santa Rosa, CA PMSA.................. $512 581 753 1047 1236
------------------------------------------------------------------------
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 1999 FMRs.
Request for Comments
HUD seeks public comments on FMR levels for specific areas.
Comments on
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FMR levels must include sufficient information (including local data
and a full description of the rental housing survey methodology used)
to justify any proposed changes. Changes may be proposed in all or any
one or more of the bedroom-size categories on the schedule.
Recommendations and supporting data must reflect the rent levels that
exist within the entire FMR area.
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-$12,000. Areas with 500 or more program units usually
meet this criterion, and areas with fewer units may meet it if actual
two-bedroom FMR rents are significantly different from the FMRs
proposed by HUD. In addition, HUD has developed a 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 $5,000 or less.
PHAs in nonmetropolitan areas may, in certain circumstances, do
surveys of groups of counties. All grouped county surveys must be
approved in advance by HUD. PHAs are cautioned that the resultant FMRs
will not be identical for the counties surveyed; each individual FMR
area will have a separate FMR based on its relationship to the combined
rent of the cluster 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 the small PHA
survey guide along with the simplified RDD methodology. Other survey
methodologies are acceptable as long as the surveys submitted 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. The decennial Census should be used as a starting point and
means of verification for determining whether the sample is
representative of the FMR area's rental housing stock.
Local rental housing surveys conducted with alternative methods
must include the same type of documentation required of the RDD-type
surveys. Specifically, PHA submissions must include:
--Identification of the 40th percentile gross rent (gross rent is rent
including the cost of utilities) and the actual distribution (or
distributions if more than one bedroom size is surveyed) of the
surveyed units rank-ordered by gross rent.
--An explanation of how the rental housing sample was drawn and a copy
of the survey questionnaire, transmittal letter, and any publicity
materials.
--An explanation of how the contract rents of the individual units
surveyed were converted to gross rents. (For RDD-type surveys HUD
requires use of the Section 8 utility allowance schedule.)
--An explanation of how the survey excluded units built within two
years prior to the survey date.
--The date the rent data were collected so that HUD can apply a
trending factor to update the estimate. If the survey has already been
trended to this date, the date the survey was conducted and a
description of the trending factor used.
--Copies of all survey sheets.
Since FMRs are based on standard quality units and units occupied
by recent movers, both of which are difficult to identify and survey,
HUD will accept surveys of all rental units and apply appropriate
adjustments.
Most surveys cover only one- and two-bedroom units, in which case
HUD will make the adjustments for other size units consistent with the
differentials established on the basis of the 1990 Census data for the
FMR area. When three- and four-bedroom units are surveyed separately to
determine FMRs for these unit size categories, the commenter should
multiply the 40th percentile survey rents by 1.087 and by 1.077,
respectively, to determine the FMRs. The use of these factors will
produce the same upward adjustments in the rent differentials as those
used in the HUD methodology.
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: April 30, 1996.
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
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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.
Flagstaff, AZ-UT--Kane County, UT
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 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
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 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 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. 96-11417 Filed 5-7-96; 8:45 am]
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.