2012-28086. Final Fair Market Rents for the Housing Choice Voucher Program for Small Area Fair Market Rent Demonstration Program Participants; Fiscal Year 2013

AGENCY:

Office of the Assistant Secretary for Policy Development and Research, HUD.

ACTION:

Notice of Final Fiscal Year (FY) 2013 Fair Market Rents (FMRs) for selected Public Housing Authorities (PHAs) participating in the Small Area FMR Demonstration.

SUMMARY:

Section 8(c)(1) of the United States Housing Act of 1937 (USHA) requires the Secretary to publish FMRs periodically, but not less than annually, adjusted to be effective on October 1 of each year. This notice publishes the FMRs for the Housing Choice Voucher (HCV) Program for those PHAs selected to participate in the Small Area FMR Demonstration Program. Only those PHAs that have agreed to participate in the Demonstration are authorized to use these Small Area FMRs within their metropolitan operating areas.

DATES:

Effective Date: The FMRs published in this notice are effective on October 1, 2012.

FOR FURTHER INFORMATION CONTACT:

For general information regarding FMRs, please call the HUD USER information line at 800-245-2691 or access the information on the HUD USER Web site http://www.huduser.org/​portal/​datasets/​fmr.html.

Questions related to use of Small Area FMRs or voucher payment standards should be directed to the respective local HUD program staff. Technical questions concerning the methodology used to develop Small Area FMRs may be addressed to Geoffrey B. Newton or Peter B. Kahn, Economic and Market Analysis Division, Office of Economic Affairs, Office of Policy Development and Research, telephone [phone]. Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800-877-8339. (Other than the HUD USER information line and TDD numbers, telephone numbers are not toll-free.)

Electronic Data Availability: This Federal Register notice is available electronically from the HUD User page at http://www.huduser.org/​datasets/​fmr.html. Federal Register notices also are available electronically from http://www.gpoaccess.gov/​fr/​index.html,, the U.S. Government Printing Office Web site. Complete documentation of the methodology and data used to compute each area's final FY 2013 FMRs is available at http://www.huduser.org/​portal/​datasets/​fmr/​fmrs/​docsys.html&​data=​fmr13. Final FY 2013 FMRs are available in a variety of electronic formats at http://www.huduser.org/​portal/​datasets/​fmr.html.

SUPPLEMENTARY INFORMATION:

I. Background

Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing assistance to aid lower-income families in renting safe and decent housing. Housing assistance payments are limited by FMRs established by HUD for different geographic areas. In the HCV program, the FMR is the basis for determining the “payment standard amount” used to calculate the maximum monthly subsidy for an assisted family (see 24 CFR 982.503). 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, and safe rental housing of a modest (non-luxury) nature with suitable amenities. In addition, all rents subsidized under the HCV program must meet reasonable rent standards. Small Area FMRs (SAFMRs) are subject to all of the same rules and regulations that govern the use of all other FMRs.

II. Procedures for the Development of FMRs

Section 8(c) of the USHA requires the Secretary of HUD to publish FMRs periodically, but not less frequently than annually. Section 8(c) states, in part, as follows:

Proposed fair market rentals for an area shall be published in the Federal Register with reasonable time for public comment and shall become effective upon the date of publication in final form in the Federal Register. Each fair market rental in effect under this subsection shall be adjusted to be effective on October 1 of each year to reflect changes, based on the most recent available data trended so the rentals will be current for the year to which they apply, of rents for existing or newly constructed rental dwelling units, as the case may be, of various sizes and types in this section.

III. Small Area Fair Market Rents

Small Area FMRs represent a fundamentally different way of operating the voucher program in metropolitan areas; therefore, HUD is testing SAFMRs through a demonstration program to better understand the programmatic impacts of changing the way voucher payment standards are set. The purpose of the demonstration program is two-fold: (1) HUD needs to evaluate the demonstration project in terms of effectiveness in meeting the primary goal of improving tenants' housing choices in areas of opportunity while also assessing the impact on tenants in areas with SAFMRs below the metropolitan-wide FMR, and (2) HUD wants to understand and evaluate the administrative and budget impacts of converting and operating the tenant-based voucher program using SAFMRs.

SAFMRs are calculated using a rent ratio determined by dividing the median gross rent across all bedrooms for the small area (a ZIP code) by the similar median gross rent for the metropolitan area covering the ZIP code. This rent ratio is multiplied by the current two- bedroom rent for the entire metropolitan area containing the small area to generate the current year two-bedroom SAFMR. In small areas where the median gross rent is not statistically reliable, HUD substitutes the median gross rent for the county containing the ZIP code in the numerator of the rent ratio calculation. The methodology used to determine the two-bedroom rent for the entire metropolitan area is identical to the methods used to calculate FY 2013 FMRs.

For FY 2013 SAFMRs, HUD has implemented two changes to the rent ratio calculation methodology. First, HUD has updated the 2005-2009 5-year ACS based ZIP code median gross rent data with 2006-2010 5-year ZIP Code Tabulation Area (ZCTA) median gross rent data. The use of the more current ACS data is consistent with the update process in the FMR methodology. However, the change from ZIP code to ZCTA was a change that the Bureau of the Census made for its aggregation process. The Census Bureau required the change to ZCTA data from ZIP code data because ZCTAs are a standard Census geography. Furthermore, The Census Bureau will not continue to support both ZIP code and ZCTA based tabulations due to concerns that ACS respondents' confidentiality could be compromised. Second, HUD expanded the criteria for determining the statistical reliability of the small area rent data in order to ensure that more SAFMRs are based on the data collected from the small area as opposed to using data from the parent county as a proxy. This change is consistent with the changes in the FMR methodology that eliminated the use of the statistical Z-test.^[1]

IV. Small Area FMR Demonstration Invitation Process

HUD set out to create fair treatment and control groups of PHAs to objectively evaluate the impacts of SAFMRs. Eligible PHAs, as described below, were stratified into eight groups for local PHAs, with one additional group for state PHAs that met the criteria. HUD randomly selected which PHAs within each group would be offered the opportunity to participate and a monetary incentive to do so. No PHA was compelled to participate, and no PHA could participate unless randomly selected to receive the offer.

HUD's Office of Policy Development and Research (PD&R) compiled statistics on PHAs, and in consultation with HUD's Public and Indian Housing (PIH) Office of Housing Voucher Programs, produced a list of PHAs eligible for random selection to participate in the Small Area FMR Demonstration. The set of eligible PHAs is defined as follows: (1) Metropolitan PHAs that have at least 500 voucher tenants, (2) have at least 10 voucher tenants living in ZIP codes where the SAFMR exceeds the metropolitan FMR by more than 10 percent; (3) have at least 10 voucher tenants living in ZIP codes where the small area FMR is more than 10 percent below the metropolitan FMR; (4) have attained at least 95 percent voucher family reporting in the PIH Information Center (PIC); (5) are not “troubled” as determined by SEMAP; (6) have the administrative capacity as determined by PIH's Office of Field Operations; and (7) not be involved in litigation that would seriously impede their ability to administer the vouchers.

Participating PHAs (and alternates) were randomly selected from stratified sets of eligible PHAs. Selected PHAs were presented with the participation agreement, including an offer of supplemental administrative fees to cover the necessary expenses they will have to incur, and given the option to decline to participate. These fees are only to be used for administrative expenses related to the implementation of Small Area FMRs and in no way used for Housing Assistance Payments. If a PHA declined to participate, an offer was presented to the next alternate until the full slate of demonstration PHAs was established.

V. Small Area FMR Demonstration Participants

Following the process of presenting invitations to eligible PHAs, the following have agreed to participate in the Demonstration: ^[2]

1. The Chattanooga (TN) Housing Authority.

2. The Housing Authority of the City of Laredo (TX).

3. The Housing Authority of the City of Long Beach (CA).

4. The Housing Authority of the County of Cook (IL).

5. The Town of Mamaroneck (NY) Public Housing Agency.

The ZIP Code-level Small Area FMRs for all known and anticipated metropolitan ZIP codes for these five PHAs are included in Schedule B of this Notice. Additional SAFMRs are available at in the Small Area FMR section of http://www.huduser.org/​portal/​datasets/​fmr.html.

VI. Environmental Impact

This Notice involves the establishment of Fair Market Rent schedules, which do not constitute a development decision affecting the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19(c)(6), this Notice is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Accordingly, the Fair Market Rent Schedules, which will not be codified in 24 CFR part 888, are proposed to be amended as shown in the Appendix to this notice:

Dated: October 23, 2012.

Erika C. Poethig,

Acting Assistant Secretary for Policy Development and Research.

Footnotes

1.  HUD has provided numerous detailed accounts of the calculation methodology used for Small Area Fair Market Rents. Please see our Federal Register notice of April 20, 2011 (76 FR 22125) for more information regarding the calculation methodology. Also, HUD's Final FY 2013 FMR documentation system available at (http://www.huduser.org/​portal/​datasets/​fmr/​fmrs/​docsys.html&​data=​fmr13) contains detailed calculations for each ZIP code area in which Small Area FMR Demonstration participants operate.

2.  Additionally, all PHAs operating within the Dallas, TX HUD Metropolitan FMR Area will continue to manage their voucher programs using Small Area FMRs. These Small Area FMRs were released in a previous Federal Register Notice.