[Federal Register Volume 60, Number 180 (Monday, September 18, 1995)]
[Rules and Regulations]
[Pages 48278-48337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23050]
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Part III
Department of Housing and Urban Development
_______________________________________________________________________
Office of the Secretary
_______________________________________________________________________
24 CFR Part 888
Fair Market Rents for Section 8 Housing Assistance Payments Program--
Fiscal Year 1996; Final Rule
Federal Register / Vol. 60, No. 180 / Monday, September 18, 1995 /
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-02]
Fair Market Rents for Section 8 Housing Assistance Payments
Program--Fiscal Year 1996
AGENCY: Office of the Secretary, HUD.
ACTION: Final fiscal year (FY) 1996 fair market rents (FMRs).
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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.
On March 2, 1995 (60 FR 11870), HUD published a proposed rule to
revise 24 CFR part 888 to change the FMR rent standard from the 45th to
40th percentile rent level. That change was published in the Federal
Register on August 15, 1995 (60 FR 42222), and made effective on
September 14, 1995.
HUD also published proposed FY 1996 FMRs on August 15, 1995 (60 FR
42290). Because of the delay in publishing the proposed FMRs, the
public comment period will extend beyond the October 1 statutory date
for publishing final FMRs. Therefore, there will be two notices of
final FMRs. Today's document provides final FY 1996 FMRs at the level
of the proposed FMRs, except for the small number of areas with
proposed FMR reductions that will have their FMRs held at the FY 1995
40th percentile level pending evaluation of public comments. The second
publication of final FY 1996 FMRs, which will announce revised FMRs for
the areas that submitted successful public comments, will occur early
next year.
EFFECTIVE DATE: October 1, 1995.
FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Rental Assistance
Division, Office of Public and Indian Housing, telephone (202) 708-
0477. (TDD: (202) 708-0850). 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
(TDD: (202) 708-0770). (These are not toll-free numbers.)
SUPPLEMENTARY INFORMATION:
I. Background
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.
II. 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 final
FY 1996 FMR schedules at the end of this document list the FMR levels
for the Rental Certificate program (Schedule B) and for the areas where
modifications have been approved for the manufactured home space FMRs
(Schedule D).
III. 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 uses 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.
FY 1996 FMRs
This document makes effective revised FMRs that reflect estimated
40th percentile rent levels trended to April 1, 1996. The FMRs have
been calculated separately for each bedroom size category based on 1990
Census data. For most FMR areas, the ratios developed from the Census
for that area were applied to the two-bedroom FMR estimate to derive
the FMRs for the other bedroom size categories. 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 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.
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FMR Areas With Proposed Reductions
In the August 15, 1995, notice of proposed FMRs, HUD announced that
the FMRs for 31 areas were being proposed with reduced FMRs as the
result of recent RDD and AHS surveys. Until the affected PHAs have had
the opportunity to submit public comments, these areas will continue to
use the FY 1995 40th percentile FMRs (included in Schedule B of this
notice). The reductions in the FMRs, or any revisions resulting from
public comments, for these areas will be made effective in the second
publication of final FY 1996 FMRs.
RDD Areas With Proposed FMR Reductions
Atlantic-Cape May, NJ
Bergen-Passaic, NJ
Bridgeport, CT
Dayton-Springfield, OH
Evansville-Henderson, IN-KY
Fitchburg-Leominster, MA
Fort Lauderdale, FL
Hartford, CT
Honolulu, HI
Jackson, MS
Jersey City, NJ
Las Vegas, NV
Miami, FL
Middlesex-Somerset-Hunterdon, NJ
Modesto, CA
Monmouth-Ocean, NJ
Newark, NJ
Omaha, NE-IA
Salinas, CA
Santa Rosa, CA
Stamford, CT
Trenton, NJ
Vallejo-Fairfield-Napa, CA
Ventura, CA
West Palm Beach-Boca Raton, FL
AHS Areas With Proposed FMR Reductions
Boston, MA-NH
Oakland, CA
San Jose, CA
San Francisco, CA
Tampa-St. Petersburg-Clearwater, FL
Washington, DC-MD-VA-WV
FMRs for Puerto Rico
The August 15, notice of proposed FMRs also announced that HUD was
in the process of re-benchmarking the FMRs for Puerto Rico. Specially
designed RDD surveys have been, or are in the process of being,
conducted of each of the metropolitan FMR areas and of the
nonmetropolitan area of Puerto Rico. These surveys were modified by
adding housing quality questions to account for the high incidence of
substandard rental housing in Puerto Rico. Based on the survey results,
today's notice makes effective higher FMRs for Mayaguez. The FMRs for
the San Juan-Bayamon and the Caguas FMR areas will remain at the FY
1995 40th percentile levels pending evaluation of any public comments
received concerning the reductions proposed for FY 1996.
The FMRs for Arecibo, Ponce, and for the nonmetropolitan areas
remain at their FY 1995 40th percentile levels. The slight increase
proposed in the FMRs for Aguadilla is being made effective in this
notice. Results of the RDD surveys now underway for the Aguadilla,
Arecibo, and Ponce metropolitan FMR areas and for the nonmetropolitan
FMR areas of Puerto Rico will be announced in the Federal Register
notice of proposed FY 1997 FMRs.
State Minimum FMRs
Today's document implements HUD's new minimum FMR policy, which
establishes FMRs at the higher of the local FMR or the State-wide
average FMR of nonmetropolitan counties, subject to a ceiling rent cap
of $450 on the nonmetropolitan State averages. HUD adopted this
procedure in recognition of the difficulty that small PHAs in lightly
populated rural areas were having in developing valid FMR surveys and
the concern that their FMRs may be affected by small sample sizes and a
higher incidence of substandard housing and assisted housing with below
market rents. The new policy raises the FMRs for many of the
nonmetropolitan counties. HUD also has decided to apply the policy to a
small number of metropolitan areas that otherwise would have had FMRs
below the State-wide nonmetropolitan county average. The new State
minimum policy may be subject to change, based on further analysis and
public comment.
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.
New Metropolitan FMR Areas
This publication makes final the definitions of three new
metropolitan FMR areas based on the most recent OMB changes. The Grand
Junction CO FMR area (Mesa County) is the same as the MSA definition.
HUD has decided, however, not to use the Flagstaff, AZ-UT MSA
definition as a FMR area because Kane County, UT is not considered to
be part of the Flagstaff housing market area. The Flagstaff
metropolitan FMR area, therefore, is defined to include only Coconino
County, AZ, while Kane County, UT is identified as a separate
metropolitan FMR area under the State of Utah listing.
IV. HUD Rental Housing Survey Guides
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-$15,000. 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 simplified
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 around $5,000 or less.
PHAs in nonmetropolitan areas may, in certain circumstances, do
surveys of groups of counties. All grouped surveys must be approved in
advance by HUD. PHAs are cautioned that the resultant FMRs will not be
identical within the group; 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
[[Page 48280]]
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. All survey results must be fully documented.
V. 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 1998 FMRs.
VI. 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: August 30, 1995.
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 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 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.
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
[[Page 48281]]
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. 95-23050 Filed 9-15-95; 8:45 am]
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