Section 8 Housing Assistance Payments Program; Fair Market Rent Schedules for Use in the Rental Certificate Program; Final Rule

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 888

[Docket No. N-94-3616; FR-3510-N-05]

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

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of final fair market rents; amendment.

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

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

requires the Secretary to publish Fair Market Rents (FMRs)

periodically, but not less frequently than 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); 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 are used to determine payment

standard schedules in the Rental Voucher program (part 887).

HUD published proposed Fiscal Year (FY) 1994 FMRs for the Section 8

Rental Certificate program on May 6, 1993 (58 FR 27062) and solicited

public comments for a 60-day period. The FY 1994 FMRs were the first to

be developed with revisions based on use of the 1990 Census data; they

also included post-Census American Housing Surveys (AHSs) and Random

Digit Dialing (RDD) telephone surveys. Because of the large number of

requests in response to changes in the FMRs caused by the Census data

rebenchmarking, the public comment period was extended to August 31,

1993 by notice on July 6, 1993 (58 FR 36175).

On October 1, 1993, HUD published final FMRs for all areas,

including over 600 areas that still had comments under review. The FMRs

for those areas were retained at the levels of the previous year (FY

1993) pending completion of the review of the comments. This review has

now been completed and today's notice announces final FY 1994 FMR

schedules for the areas under review. The FMR schedules for all areas

are included in this notice to avoid the confusion of having more than

one publication of FY 1994 FMRs.

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

April 6, 1994.

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

Division, Office of Public and Indian Housing, telephone (202) 708-

0477. 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. The TDD number for the

hearing impaired is (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 a housing assistance

program to aid lower income families in renting decent, safe, and

sanitary housing. Assistance payments are limited by Fair Market Rents

(FMRs), or payment standards in the Rental Voucher Program, established

by HUD for different areas. In general, the FMR for an area is the

amount that would be needed to rent privately owned, decent, safe, and

sanitary rental housing of a modest (non-luxury) nature with suitable

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

publish FMRs periodically, but not less frequently than annually, to be

effective on October 1 of each year. The FMRs must reflect changes

based on the most recent available data so FMRs will be current for the

year in which they apply.

Metropolitan Area Definitions

In the May 6, 1993 publication of the proposed FMRs, HUD announced

that the FMR area definitions, with several exceptions, incorporated

the changes made in the definitions of metropolitan areas by the Office

of Management and Budget (OMB Bulletin No. 93-05). The HUD exceptions

were for nine large metropolitan areas whose revised OMB definitions

encompassed areas larger than what HUD considers appropriate for FMR

area definitions.

At that time, the metropolitan area definitions for both the Boston

and New York-Northern New Jersey areas were still under review by OMB.

HUD decided, therefore, to continue using the previous definitions

until OMB made its final decisions and HUD could evaluate them. On June

30, 1993, OMB announced its revised definitions in OMB Bulletin NO. 93-

17.

OMB's final decisions were, with minor differences, to return to

the pre-1993 definitions for both the Boston and New York-Northern New

Jersey areas. For the Boston area, the only significant change was to

combine the former Salem-Gloucester PMSA with the former Boston PMSA to

form the new Boston MA-NH PMSA. This change increased the FMRs for the

Salem-Glouchester area, but did not change the Boston area FMRs. For

the New York-Northern New Jersey area, Pike County, Pennsylvania was

combined with Orange County, New York to form the Newburgh NY-PA PMSA.

This had the effect of increasing the FMRs for Pike County but did not

change those for Orange County. Because these changes had no

significant impact on HUD's existing FMR areas, the October 1

publication adopted the revised OMB definitions of the Primary

Metropolitan Statistical Areas (PMSAs) that comprise the greater Boston

and the greater New York metropolitan areas as the area definitions for

the final FY 1994 FMRs.

HUD also proposed in the May 6, 1993 publication to modify the FMR

area definitions for seven other metropolitan areas by deleting

counties that OMB had added to its revised definitions. The decision to

delete these counties was based on an evaluation conducted by HUD

headquarters and field staff. The counties deleted from the FMR areas

are those that are the most remote from the central cities/counties of

the metropolitan area and have the lowest rents, in most cases

significantly below the FMR area rent averages. They are as follows:

FMR Area and Changes in FMR Area

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

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

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

Grant and Pendleton Counties in Kentucky; and Ohio County, Indiana.

Dallas, TX--Deleted Henderson County.

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

New Orleans, LA--Deleted St. James Parish.

Washington, DC--Deleted Berkeley and Jefferson Counties in West

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

Virginia.

The counties deleted from the FMR areas are included in Schedule B

within their respective states as separate metropolitan FMR areas. The

only comments received concerning the revised FMR areas for the above

areas were several from Lake County, Illinois, requesting that it be

designated a separate FMR area independent of the Chicago FMR area. On

the basis of its analysis, HUD has determined that Lake County is

appropriately categorized as part of the Chicago housing market area

and should remain a part of the Chicago FMR area. HUD, therefore, has

not changed the definition.

OMB also modified the definitions of four other metropolitan areas

in its final Bulletin. The four are: Augusta-Aiken, GA-SC; Baton Rouge,

LA; Huntington-Ashland, WV-KY-OH; Wilmington, NC. HUD is implementing

the new definitions because the changes involved adding small counties

that did not affect the FMRs or significantly alter the FMR area

definitions.

HUD also proposed in the May 6, 1993 Notice that the FMRs for the

independent cities and surrounding counties in Virginia be established

by combining the city and county data, rather than having separate FMRs

for the cities and counties. The final FY 1994 FMRs are based on the

following FMR areas:

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

FMR area (county) Independent cities included

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

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.

Southampton........................ Franklin.

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

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

Method Used To Develop the FY 1994 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 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 as

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

(2) the RDD telephone surveys conducted since the Census; and (3) the

post-1990 Census American Housing Surveys (AHSs) available up to 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 95 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 44 of the largest metropolitan areas on a revolving schedule of 11

areas annually. 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. RDD surveys are designed to produce FMR

estimates that are within two to four percent of the actual 45th

percentile rent.

Public Comments

In response to the proposed FY 1994 FMRs, HUD received over 2,500

comments covering more than 1,100 FMR areas. The first publication on

October 1, 1993 included final FMRs (held at the FY 1993 levels) for

the areas for which the review of public comments had not been

completed. HUD announced in that publication that there would be a

second publication of FMRs for those areas and for those with RDD

surveys still under review. The final count of FMR areas under

consideration was 669, including 40 FMR areas for which both public

comments and RDD surveys were submitted. The areas under review are

identified in this publication with a ``+'' symbol next to the FMR

schedule for the areas that had both comments and RDD surveys; and with

an ``*'' next to the FMR schedule for all other areas with comments.

HUD carefully evaluated all information submitted with the public

comments. Based on this evaluation, the FMRs for 572 areas have been

revised. This total includes revised FMRs for: 165 areas that were

increased based on the survey data submitted by the commenters; 39

areas that were increased as the result of RDD surveys; and 368 areas

that submitted incomplete information but that HUD was able to

supplement with available information. The amount of the FMR increase

was not always the same as the amount requested by the commenters. For

the 165 areas notified with survey data, the increases sometimes

differed because commenters requested a return to the FY 1993 FMRs even

though their surveys showed something different. In other cases, the

survey data had to be re-tabulated and corrected; this resulted in

revised FMRs that are sometimes higher and sometimes lower than the

requested modifications. The increases approved for the 368 areas, with

incomplete but usable data, generally were smaller than those requested

by the commenter and generally applied only to the one- and two-bedroom

unit sizes. The information submitted for 97 FMR areas was not

sufficient to provide a basis for revising the FMRs.

Many commenters expressed their concern that owners would have to

accept the reduced FMRs and would not renew leases at a lower rent, and

families would be forced to move. The Department wants to assure the

PHAs administering the program and the families that are currently

participating in the Section 8 program that current participants will

not be forced to move or have to pay a higher portion of the rent. The

rents specified in the housing assistance contract between the owner

and the PHA will continue to be paid by the PHA unless the owner

requests a rent increase in accordance with the provisions of the

housing assistance contract. In such cases, the rent increase will be

calculated using the annual adjustment factors and will be approved by

the PHA if the new rent does not exceed the amount of rent charged for

comparable unassisted units. The amount of rent the family pays will

continue to be based on the family's income, and for families in the

rental voucher program the applicable payment standard. The new FMRs

will be used for new families entering the program or for current

participants when they move to a new unit.

In addition, PHA officials expressed concern about the impact that

the reduced FMRs would have on administrative fees and, therefore,

their continuing capacity to administer the program. The calculation of

PHA administrative fees for FY 1994 is subject to a recent statutory

change. FY 1994 administrative fees are calculated using the FY 1993

FMRs if there was a decrease in the FMRs. However, if the FY 1994 FMRs

are higher, the law limited the fee increase to 3.5 percent above the

FY 1993 fee. HUD Notice PIH-93-66(HA), which was issued on December 16,

1993, contains detailed information on how FY 1994 administrative fees

should be calculated.

RDD Surveys

Both HUD and PHAs used RDD telephone surveys to test the

reliability of the proposed FY 1994 FMRs in areas with large decreases

proposed in FY 1994 FMRs. Of the 46 HUD RDD surveys completed since the

proposed FMRs were published, 21 had results that were higher than the

proposed FMRs and 24 had results that were lower or not statistically

different. FMRs for eighteen areas were increased based on the results

of PHA-funded RDD surveys. PHAs that funded surveys which produced FMR

estimates below those proposed opted not to comment, so comparative

data are not available.

For the areas where RDD survey FMRs are higher than the proposed

FMRs, the FMRs published for effect are based on the RDD surveys. The

FY 1993 FMRs and the proposed and final FY 1994 FMRs for these areas

are as follows:

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

Two-bedroom FMRs

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

HUD RDD Surveys with increases State Proposed RDD-based

FY 93 FMR FY94 FMR FY94 FMR

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

Humboldt Co................................................ CA $583 $503 $552

Bannock Co................................................. ID 478 345 377

Boise...................................................... ID 594 440 485

Kootenai Co................................................ ID 478 403 501

Peoria..................................................... IL 552 426 450

Duluth..................................................... MN 466 382 422

Beaufort Co................................................ NC 410 331 363

Baker Co................................................... OR 552 336 389

Deschutes Co............................................... OR 584 504 543

Eugene..................................................... OR 608 521 536

Grant Co................................................... OR 552 352 400

Malheur Co................................................. OR 527 336 389

Odessa-Midland............................................. TX 550 402 425

Provo...................................................... UT 462 388 409

Bellingham................................................. WA 619 540 618

Ferry Co................................................... WA 424 362 382

Pend Oreille Co............................................ WA 424 362 382

Spokane.................................................... WA 501 432 491

Stevens Co................................................. WA 424 358 379

Yakima..................................................... WA 523 418 503

Walla Walla................................................ WA 552 381 407

PHA RDD Surveys with increases

Mobile..................................................... AL 447 338 401

Phoenix.................................................... AZ 505 502 512

Tucson..................................................... AZ 490 486 501

Colorado Springs........................................... CO 504 472 477

Ft. Collins-Loveland....................................... CO 581 472 530

Greeley.................................................... CO 501 420 466

Grand Rapids............................................... MI 505 505 510

Flathead Co................................................ MT 495 382 419

Gallatin Co................................................ MT 544 418 436

Great Falls................................................ MT 487 394 395

Lewis & Clark Co........................................... MT 564 398 413

Missoula Co................................................ MT 495 415 476

Santa Fe................................................... NM 657 627 665

Tulsa...................................................... OK 396 397 467

Austin..................................................... TX 538 509 613

Bryan-College St........................................... TX 572 486 497

Killeen-Temple............................................. TX 386 387 429

Janesville-Beloit.......................................... WI 476 459 496

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

RDD survey results that are lower than the proposed FY 1994 FMRs

are not being used this year, but will be used in developing the

proposed FY 1995 FMRs. For such areas, this publication makes effective

the proposed FY 1994 FMRs published on May 6, 1993.

RDD Surveys With No Change or Decreases

Albuquerque, NM

Baton Rouge, LA

Beaumont-Port Arthur, TX

Billings, MT

Bismarck, ND

Boston, MA

Charleston, WV

Dimmit Co., TX

Drew Co., AR

Duval Co., TX

Frio Co., TX

Gage Co., NE

Harrisburg, PA

Holmes Co., FL

Imperial Co., CA

Indiana Co., PA

Jamestown, NY

LaSalle Co., TX

Live Oak Co., TX

McMullen Co., TX

Miami, FL

New Bedford, MA

Park Co., MT

Raleigh Co., WV

Washington, Co., FL

Zavala Co., TX

HUD continues to recommend use of RDD 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 $12,000-$20,000. Areas with 500 or more

units 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. Interested organizations concerned about FMR

accuracy may wish to begin contracting for an RDD survey in the next

few months to assure that the results will be available in time to be

incorporated into the FY 1995 FMRs. It takes two to three months to

obtain survey rent estimates after contract award. The ``PHA Guide To

Conducting A Fair Market Rent Telephone Survey'' is available from HUD

USER by calling 1-800-245-2691. This guide provides information on

whether a PHA should consider using this approach, and it includes a

draft contractor solicitation letter and a Contract Statement of Work.

FMRs for Flood Damaged Areas in the 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 areas that were

declared Federal disaster areas. Recognizing that there are a large

number of FMR areas that experienced substantial losses as a result of

the floods of the past summer in the midwestern states which will have

a direct effect on local rent levels, HUD is prepared to grant FMR

exceptions under the following conditions. FMR exceptions up to 10

percent above the final FY 1994 FMRs may be approved 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 on the grounds that: (1) The affected counties

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

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

pressures and/or damage to the rental housing stock is so substantial

that it has resulted in an increase in the prevailing rent levels. Such

exceptions must be requested in writing by the responsible PHAs. The

exceptions approved for this special disaster-related purpose will

remain in effect until superseded by final FY 1995 FMRs.

Manufactured Home Space FMRs

The FMRs for manufactured home spaces are the same as those

published on October 1, 1993, and are reprinted here for the

convenience of the program administrators.

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 the 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: March 17, 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

Schedules B and D--General Explanatory Notes

1. Geographic Coverage

a. FMRs for the Section 8 Rental Certificate program (Schedule B)

are established for Metropolitan Statistical Areas (MSAs), Primary

Metropolitan Statistical Areas (PMSAs), other HUD-designated

metropolitan FMR areas. FMRs also are established for nonmetropolitan

counties and county equivalents in the United States, Puerto Rico, the

Virgin Islands and the Pacific Islands and for nonmetropolitan parts of

counties in the New England states.

b. FMRs for the areas in Virginia shown in the table below are

established by combining the 1990 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

Allegheny

Augusta

Carroll

Frederick

Greensville

Halifax

Henry

Montgomery

Rockbridge

Rockingham

Southhampton

Wise

Virginia Independent Cities Included with County

Clifton Forge and Covington

Staunton and Waynesboro

Galax

Winchester

Emporia

South Boston

Martinsville

Radford

Buena Vista and Lexington

Harrisonburg

Franklin

Norton

c. FMRs for Manufactured Home spaces in the Section 8 Certificate

program (Schedule D) are established for MSAs, PMSAs, HUD-designated

metropolitan counties, and for selected nonmetropolitan counties and

the residual nonmetropolitan part of each State.

2. Arrangement of FMR Areas and Identification of Constituent Parts

a. The FMR areas in Schedules B and D are listed alphabetically by

metropolitan FMR area and by nonmetropolitan county within each 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.

BILLING CODE 4210-32-M