[Federal Register Volume 61, Number 35 (Wednesday, February 21, 1996)]
[Rules and Regulations]
[Pages 6690-6748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3763]
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Part II
Department of Housing and Urban Development
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Office of the Secretary
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24 CFR Part 888
Fair Market Rents for the Section 8 Housing Assistance Payments
Program--Fiscal Year 1996; Final Rule
Federal Register / Vol. 61, No. 35 / Wednesday, February 21, 1996 /
Rules and Regulations
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Part 888
[Docket No. FR-3933-N-03]
Fair Market Rents for the Section 8 Housing Assistance Payments
Program--Fiscal Year 1996
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of final fiscal year (FY) 1996 fair market rents.
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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
requires the Secretary to publish Fair Market Rents (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 1996 FMRs for all areas. It
includes revised FMRs for 6 areas for which the FMRs have been
increased as a result of HUD-contracted RDD surveys received in late
October. The 6 areas are: Gallatin County, MT; the Johnson City-
Kingsport-Bristol, TN-VA; Lexington, KY; Lincoln, NE; Macon, GA; and
Raleigh-Durham-Chapel Hill, NC FMR areas.
Today's notice also makes effective the FMR reductions for 26 areas
that were proposed in the August 15 notice based on the results of the
most recent Random Digit Dialing and American Housing Surveys.
EFFECTIVE DATE: The FMRs published in this notice are effective on
February 21, 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 Michael R. Allard, Economic and Market Analysis
Division, Office of Economic Affairs, telephone (202) 708-0577.
Hearing- or speech-impaired persons may use the Telecommunications
Devices for the Deaf (TDD) 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.
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 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 numerous public concerns that
FMRs in rural areas were too low to operate the program successfully.
As a result, FMRs are not established at the higher of the local FMR or
the State-wide 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 August 15, 1995, proposed FMRs, HUD received 78
public comments covering 59 FMR areas. Rental housing survey
information was included for 18 of the FMR areas covered by comments.
HUD carefully evaluated all of the survey data submitted and, based on
that review, is revising the FMRs for 10 of the 18 areas. The
information submitted for the 41 areas that did not provide rental
housing survey data was not considered sufficient to provide a basis
for revising the FMRs.
Of the 10 FMR areas with approved FMR revisions, 6 submitted RDD
surveys conducted by the Public Housing Agency (PHA) or by a
professional survey firm, and 4 submitted traditional landlord/owner
type surveys. The 6 areas that used the RDD survey method were: the
Austin-San Marcos, TX; Boston, MA; Lake Charles, LA; Oakland, CA; Santa
Rosa, CA; and the Washington, DC FMR areas. The 4 areas with successful
traditional surveys were: the Kenai Peninsular Borough and the
Matanuska-Susitna Borough in Alaska and Archuleta County and Laplata
County in Colorado.
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HUD also received submissions from 7 firms in Iowa, Nebraska, and
South Dakota which consisted essentially of an appraisal of an
individual project in 15 different FMR areas. This information was
referred to the appropriate staff in the HUD field offices with
jurisdiction. These submissions have not been counted in this year's
summary of FMR comments because they did not address the adequacy of
the area-wide FMRs, but rather the need for higher rents in specific
projects. The requirements for successful FMR comments are specific in
the subsequent section of this preamble, HUD Rental Housing Survey
Guides, and are included in the preambles of the annual notices of
proposed FMRs.
AHS and RDD Surveys
In the August 15, 1995 (60 FR 42290), notice of proposed FMRs, 31
FMR areas had FMRs proposed with reductions based on recent RDD or AHS
surveys. Four of these areas subsequently submitted RDD surveys which
indicated higher FMRs than the proposed levels. Revised FMRs,
therefore, have been approved for the Boston, MA-NH; Oakland, CA; Santa
Rosa, CA; and Washington, DC-MD-VA FMR areas. The survey submitted for
the Dayton-Springfield, OH FMR area did not contain sufficient rental
housing survey information to provide a basis for revising the FMRs.
HUD did not receive any comments from the other 26 areas with proposed
FMR reductions.
Manufactured Home Space FMRs
HUD also received public comments and survey data from 7 FMR areas
concerning the manufactured home space FMRs. As a result of a review of
the data, increased FMRs have been approved for 4 of these areas and
added to Schedule D. These 4 areas are: Vallejo-Fairfield-Napa, CA;
Provo-Orem, UT; Benton County, OR; and Linn County, OR. The information
submitted from the other 3 areas was not considered sufficient to
provide a basis for revising the manufactured home space FMRs.
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. 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.
Virgin Islands
After consultation with the Virgin Islands Housing Authority, HUD
agreed to group the Virgin Islands into two areas for FMR calculation
purposes. One area consists of the island of St. Croix and the other
the islands of St. Johns and St. Thomas. The revised FMRs, based on the
results of a PHA-supported RDD survey, are higher than the previous
FMRs for St. Johns and St. Thomas and lower for St. Croix.
Puerto Rico
RDD surveys were conducted for all seven Puerto Rico FMR areas
during 1995. HUD's September 18, 1995 (60 FR 48278), Federal Register
notice of final FMRs implemented increased FMRs for the Mayaguez and
Aguadilla areas. FMRs for the other five Puerto Rico FMR areas, four of
which had proposed FMR decreases, were held at their previous levels
pending completion of the RDD surveys.
The final FMRs based on the survey results for these five areas are
as follows: the FMRs for San Juan and nonmetropolitan Puerto Rico are
the same as last year's; the FMRs for Caguas are slightly lower than
last year's; and the FMRs for Arecibo and Ponce are being implemented
at the reduced proposed levels, although further reductions will be
proposed next year for these two areas based on the still lower
estimates determined from the RDD survey results.
HUD Rental Housing Survey Guides
HUD recommends 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 $5,000 or less.
PHAs in nonmetropolitan areas, in certain circumstances, may 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 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.
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
[[Page 6692]]
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.
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 not be
codified in 24 CFR Part 888, are amended as follows:
Dated: February 7, 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 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
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 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 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. 96-3763 Filed 2-20-96; 8:45 am]
BILLING CODE 4210-32-C
