Fair Market Rents for the Section 8 Housing Assistance Payments ProgramFiscal Year 1997

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 final FY 1997 FMRs for all areas. It

includes increased FMRs for 21 areas as a result of HUD-contracted

Random Digit Dialing (RDD) surveys conducted through August, 1996. It

also includes increased FMRs in 8 areas that submitted public comments,

plus 4 areas that submitted manufactured home space rent comments.

Today's notice also makes effective FMR reductions for 9 areas that

were proposed for reduction in the May 8, 1996 notice (61 FR 20982),

based on the results of recent RDD and American Housing Surveys (AHSs).

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

October 1, 1996.

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, Extension 328. Hearing- or speech-impaired persons may

contact the Federal Information Relay Service at 1-800-877-8339 (TTY).

(Other than the ``800'' TTY 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.

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 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) 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.

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 RDD survey FMR estimates will be within 5 percent

of the actual value.

State Minimum FMRs: Starting with the FY 1996 FMRs, HUD implemented

a new minimum FMR policy in response to concerns that FMRs in rural

areas 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.

Public Comments

In response to the May 8, 1996 proposed FMRs, HUD received 53

public comments covering 37 FMR areas. Rental housing survey

information was provided for 20 of the FMR areas covered by comments,

including the 4 requests for manufactured home space rent changes only.

HUD carefully evaluated all of the survey data submitted and, based on

that review, is revising the FMRs for 12 of the 20 areas. The

information submitted for the other 17 FMR areas that did not submit

rental housing surveys was not considered sufficient to provide a basis

for revising the FMRs.

The 8 FMR areas with approved FMR revisions are as follows:

Dover, DE MSA

Sussex County, DE

Reno, NV MSA

Preble County, OH

Box Elder County, UT

Cache County, UT

Iron County, UT

Fond du Lac County, WI

The 4 manufactured home space survey areas with approved revisions

are:

Mendocino County, CA

Rochester, NY MSA

Utica-Rome, NY MSA

Portland-Vancouver, OR-WA MSA

PHAs and other interested parties should be aware that FMR comments

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may be sent to HUD at any time during the year, not just during the 60-

day comment period. Comments received too late for adjusting the

current year's Final FMRs will be held for use in the following year,

in which case HUD will trend the survey results to the date of the FMR

estimate using its standard trending factor. If the PHA is concerned

that rents are changing rapidly, surveys should be timed to be received

as close as possible to HUD's deadline for processing, which is usually

around July 30.

AHS and RDD Surveys

This notice makes effective the FMRs for 9 areas proposed with

reductions based on recent RDD or AHS surveys. One of these areas, the

Portland, ME MSA, submitted information that caused HUD to reduce the

FMRs less than had been proposed. For the other areas, the lower

proposed FMRs are, by this notice, being made final. FMR areas with

reductions based on AHS surveys are Orange County, CA PMSA, and

Riverside-San Bernardino, CA PMSA. The areas with reductions based on

RDD surveys include: Danbury, CT PMSA, Portland, ME MSA (see note,

above), Portsmouth-Rochester, NH-ME PMSA, and Aguadilla, PR MSA,

Arecibo, PR PMSA, Ponce, PR MSA, and Nonmetropolitan Puerto Rico.

In addition, by this notice HUD is increasing FMRs for the

following 21 areas, based on RDDs that were completed after the date of

the proposed FMR notice; they are:

Abilene, TX MSA

Bloomington-Normal, IL MSA

Boston, MA-NH PMSA

Charlottesville, VA MSA

Fayetteville-Springdale-Rogers, AR MSA

Gary, IN PMSA

Greenville, NC MSA

Huntington-Ashland, WV-KY-OH MSA

Iowa City, IA MSA

Kokomo, IN MSA

Lafayette, IN MSA

Lansing-East Lansing, MI MSA

Nashville, TN MSA

Richmond-Petersburg, VA MSA

Sioux City, IA-NE MSA

Springfield, MA MSA

Hall County, NE

Grant County, NM

Luna County, NM

Knox County, OH

Pike County, OH

FMR Area Definition Change

The May 8, 1996 publication invited comments on HUD's proposal to

include St. Landry and St. Martin Parishes with the Lafayette, LA FMR

area, in accordance with OMB's practice. No comments were received on

this proposed change, and therefore the proposal is being put into

effect.

Manufactured Home Space Surveys

HUD also received public comments and survey data from 4 FMR areas

concerning the manufactured home space FMRs. As a result of a review of

the data, increased FMRs have been approved for Portland-Vancouver, OR-

WA MSA, Rochester, NY MSA, Utica-Rome, NY MSA, and Mendocino County,

CA.

Manufactured home space FMRs are 30 percent of the applicable

Section 8 Rental Certificate Program two-bedroom FMR. HUD accepts

public comments requesting modifications of manufactured home space

FMRs. 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. However, the sampling requirements for manufactured

home space rent surveys are easier to meet than for regular FMR

comments, and interested parties should contact HUD for suggestions.

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.

HUD Rental Housing Survey Guides

HUD recommends the use of professionally-conducted 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 the actual two-

bedroom FMR rent standard is significantly different than that 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 about $5,000.

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 resulting 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 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 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. 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. All survey

results must be fully documented.

The cost of an RDD survey may vary, depending on the

characteristics of the telephone system used in the FMR area. RDDs (and

simplified telephone surveys) of some non-metropolitan areas have been

unusually expensive because of telephone system characteristics. A PHA

or PHA contractor that cannot obtain the recommended number of sample

responses after reasonable efforts should consult with HUD before

abandoning its survey; in such situations HUD is prepared to relax

normal sample size requirements.

FMRs for Federal Disaster Areas

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

HUD 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 1997. HUD field offices are authorized to approve exceptions up to

10 percent above the applicable FMRs for: (1) Single-county

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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.

Puerto Rico FMRs

The May 8, 1996 notice proposed 4 areas in Puerto Rico for

reductions, based on RDD surveys begun in 1995 and completed in 1996.

HUD has received several written comments on those proposed reductions,

but no survey data with which to adjust them. Having received no

comments with valid survey data, FMRs for the following areas are being

made final: the Aguadilla, Arecibo, and Ponce MSAs, and the

nonmetropolitan parts of Puerto Rico.

Technical Correction: Santa Rosa, CA

In the May 8, 1996 notice of proposed FMRs, the full schedule for

the Santa Rosa, CA PMSA was wrong, although the 2 bedroom figure was

correct. The corrected final FMRs for FY 1997 are listed in Schedule B.

Other Matters

Environmental Impact

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).

Regulatory Flexibility Act

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.

Impact on the Family

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.

Federalism Impact

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).

Dated: September 13, 1996.

Henry G. Cisneros,

Secretary.

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

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

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 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-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 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.

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

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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. 96-24068 Filed 9-19-96; 8:45 am]

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