FR Doc 05-10882

[Federal Register: June 2, 2005 (Volume 70, Number 105)]
[Notices]
[Page 32401-32467]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02jn05-128]

[[Page 32401]]

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Part II

Department of Housing and Urban Development

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Proposed Fair Market Rents for Fiscal Year 2006 for Housing Choice
Voucher, Moderate Rehabilitation Single Room Occupancy and Certain
Other HUD Programs; Notice

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4995-N-01; HUD-2005-0010]

Proposed Fair Market Rents for Fiscal Year 2006 for Housing
Choice Voucher, Moderate Rehabilitation Single Room Occupancy and
Certain Other HUD Programs

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of proposed Fiscal Year (FY) 2006 Fair Market Rents
(FMRs).

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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.
Today's notice proposes FMRs for FY2006. The proposed numbers would
amend FMR schedules used to determine payment standard amounts for the
Housing Choice Voucher program, to determine initial renewal rents for
some expiring project-based Section 8 contracts, and to determine
initial rents for housing assistance payment (HAP) contracts in the
Moderate Rehabilitation Single Room Occupancy program. Other programs
may require use of FMRs for other purposes.
The proposed FY2006 FMRs in this notice differ from the final
FY2005 and previous year FMRs in that they were calculated using the
revised Office of Management and Budget (OMB) area definitions that
were issued in 2003. For FY2006, HUD is using the county-based
statistical areas as defined by OMB, with some modifications. The FMR
estimates have been trended to April 2006, the midpoint of FY2006.

DATES: Comments Due Date: August 1, 2005.

ADDRESSES: Interested persons are invited to submit comments regarding
HUD's estimates of the FMRs as published in this notice to the Office
of the General Counsel, Rules Docket Clerk, Room 10276, Department of
Housing and Urban Development, 451 Seventh Street, SW., Washington, DC
20410-0001. Communications should refer to the above docket number and
title and should contain the information specified in the ``Request for
Comments'' section. To ensure that the information is fully considered
by all of the reviewers, each commenter is requested to submit two
copies of its comments, one to the Rules Docket Clerk and the other to
the Economic and Market Analysis Staff in the appropriate HUD field
office. A copy of each communication submitted will be available for
public inspection and copying during regular business hours (8 a.m. to
5 p.m. Eastern Time) at the above address.

FOR FURTHER INFORMATION CONTACT: For technical information on the
methodology used to develop fair market rents or a listing of all fair
market rents, please call the HUD USER information line at 800-245-2691
or access the information on the HUD Web site at http://www.huduser.org/datasets/fmr.html.
FMRs are listed at the 40th or 50th

percentile in Schedule B. For informational purposes, a table of 40th
percentile recent mover rents for the areas with 50th percentile FMRs
will be provided on the same Web site noted above. Any questions
related to use of FMRs or voucher payment standards should be directed
to the respective local HUD program staff. Questions on how to conduct
FMR surveys or further methodological explanations may be addressed to
Marie L. Lihn or Lynn A. Rodgers, Economic and Market Analysis
Division, Office of Economic Affairs, Office of Policy Development and
Research, telephone 202-708-0590. Persons with hearing or speech
impairments may access this number through TTY by calling the toll-free
Federal Information Relay Service at 800-877-8339. (Other than the HUD
USER information line and TDD numbers, telephone numbers are not toll
free.)

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 areas. In the Housing Choice Voucher 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 Housing Choice Voucher program must meet
reasonable rent standards. The interim rule published on October 2,
2000 (65 FR 58870), established 50th percentile FMRs for certain areas.
Electronic Data Availability: This Federal Register notice is
available electronically from the HUD news page: http://www.hudclips.org.
Federal Register notices also are available

electronically from the U.S. Government Printing Office Web site at
http://www.gpoaccess.gov/fr/index.html.

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.

HUD's regulations at 24 CFR part 888 provide that HUD will develop
proposed FMRs, publish them for public comment, provide a public
comment period of at least 30 days, analyze the comments, and publish
final FMRs. (See 24 CFR 888.115.)
In addition, HUD's regulations at 24 CFR 888.113 set out procedures
for HUD to assess whether areas are eligible for FMRs at the 50th
percentile and, for areas that were formerly eligible for FMRs at the
50th percentile three years ago, whether these areas continue to remain
eligible to use 50th percentile FMRs. The regulations provide that once
an area is determined eligible for 50th percentile FMRs, that area is
eligible to use 50th percentile FMRs for a period of three years. The
three-year period for the first areas determined eligible to receive
the 50th percentile FMRs, following promulgation of the regulation in
Sec. 888.113, has come to a close. HUD has commenced the assessment
for eligibility and continued eligibility for the 50th percentile FMRs
as provided in the regulations. In view, however, of HUD's proposal to
apply new metropolitan area definitions for FY2006, this assessment is
not yet complete and ready for publication with this notice. HUD will
publish a separate notice in approximately six weeks that will identify
any areas newly eligible for 50th percentile FMRs and those areas that
remain eligible or no longer remain eligible for continued use of 50th
percentile FMRs and the applicable proposed FY2006 FMRs for these
areas.

III. Metropolitan Area Definitions

The proposed FY2006 FMRs reflect a change in metropolitan area
definitions.

[[Page 32403]]

HUD is using the county-based statistical areas as defined by OMB, with
some modifications. The new definitions have been implemented with
modifications intended to minimize changes in FMRs due solely to the
use of the new definitions. All proposed metropolitan FMR areas consist
of areas within new OMB metropolitan areas. In general, any parts of
old metropolitan areas, or formerly nonmetropolitan counties, that
would have more than a 5 percent increase or decrease in their FMRs as
a result of implementing the new OMB definitions, are defined as
separate FMR areas. In general, HUD applies the same update factors
(such as random digit dialing (RDD) or consumer price index (CPI) data)
to the rents of all FMR areas within the same new metropolitan area.
Despite these efforts, the changes in area definitions have
resulted in different proposed FMRs than if an area were subject to the
normal updating of last year's FMRs, particularly, for example, in
counties that were in old metropolitan areas that are now considered
nonmetropolitan under the new OMB definitions. This approach, however,
makes HUD FMR area definitions more consistent with those used by most
other federal agencies and facilitates use of the extensive new Census
data that will become available from the American Community Survey
(ACS) and which will replace the decennial census ``long form''
starting in 2010.

A. Background

In June 2003, OMB issued new metropolitan area definitions based on
2000 Census data and a revised methodology that placed increased weight
on commuting patterns. This methodology had been developed and made
subject to public comment prior to and after the 2000 Census data
collection, and reflected the consensus thinking of numerous experts.
HUD economists and demographers were involved in this process and
believe that the new definitions are technically superior to the old
definitions and better reflect how local housing markets should be
evaluated.
OMB metropolitan definitions are important for two reasons. One is
that they are the basis on which the federal government collects and
reports data (e.g., new Census data collections will base samples and
issue reports using the new definitions). For instance, the ACS, which
the Census Bureau began administering in full in 2005 to replace
decennial census sample data (the current source of Base Rent data),
will, starting in 2006 provide extensive and relatively current data on
rents and incomes using the new OMB definitions. The other reason OMB
definitions are important is that federal agencies are expected to use
these definitions in administering their programs unless there is some
strong program reason to do otherwise.
HUD proposed using the new OMB definitions in an August 6, 2004 (69
FR 48040), Federal Register publication that issued proposed FY2005
FMRs. That publication introduced use of both the new OMB definitions
and 2000 Census data and contained an unusually large number of
proposed increases and decreases related to use of the new data and
definitions. In response to the limited timeframe available for public
comments and the number of comments received opposing use of the new
definitions, HUD reverted to using the old definitions in its final
FY2005 FMR publication and in the FY2005 income limit publication. HUD
subsequently received a number of complaints from members of the public
and the Congress related to its failure to implement the new OMB
definitions.
For FY2006, HUD is implementing a modified version of the new OMB
definitions that further reduces the number and scope of FMR changes
that will occur. HUD believes that it is important to implement the new
definitions for the following reasons: (1) The new definitions better
reflect local housing market relationships; (2) inconsistencies with
other federal program standards will be minimized; (3) the new
definitions will facilitate the use of the extensive new ACS data that
the Census will begin releasing next year that is collected and
processed based on the new OMB definitions; and (4) it is responsive to
complaints received after issuance of the final FY2005 FMRs from areas
regarding HUD's failure to implement the new OMB definitions.
According to OMB guidance on the use of metropolitan area
definitions for nonstatistical programs, such as setting FMRs for the
Housing Choice Voucher program, HUD may alter OMB definitions of
metropolitan areas to better suit program operations. As stated in OMB
Bulletin 04-03 defining metropolitan areas:

OMB establishes and maintains the definitions of Metropolitan *
* * Statistical Areas * * * solely for statistical purposes. * * *
OMB does not take into account or attempt to anticipate any non-
statistical uses that may be made of the definitions[.] In cases
where * * * an agency elects to use the Metropolitan * * * Area
definitions in nonstatistical programs, it is the sponsoring
agency's responsibility to ensure that the definitions are
appropriate for such use. An agency using the statistical
definitions in a nonstatistical program may modify the definitions,
but only for the purposes of that program. In such cases, any
modifications should be clearly identified as deviations from the
OMB statistical area definitions in order to avoid confusion with
OMB's official definitions of Metropolitan * * * Statistical Areas.

B. Modified Implementation of New OMB Definitions

HUD had three objectives in defining FMR areas for FY2006: (1) To
incorporate new OMB metropolitan area definitions so the FMR estimation
system can better use new data collected using those definitions; (2)
to better reflect current housing markets; and (3) to minimize the
number of large changes in FMRs due to use of the new OMB definitions.
The proposed FMR area definitions were developed to achieve these
objectives as follows:
FMRs were calculated for each of the new OMB metropolitan
areas using 2000 Census data.
Subparts of any of the new areas that had separate FMRs
under the old OMB definitions were identified, and 2000 Census Base
Rents for these subparts were calculated. Only the subparts within the
new OMB metropolitan area were included in this calculation (e.g.,
counties that had been excluded from the new OMB metropolitan area were
not included).
Metropolitan subparts of new areas that had previously had
separate FMRs were assigned their own FMRs if their 2000 Census Base
Rents differed by more than 5 percent from the new OMB area 2000 Census
Base Rent.
Formerly metropolitan counties removed from metro areas
got their own FMRs. These areas accounted for many of the FMR decrease
of more than 5 percent.
Nonmetropolitan counties that were added to the new OMB
metropolitan areas and did not have enough renters to calculate
separate 2000 Census Base Rents accounted for most of the large
increases in FMRs.
Proposed FY2006 FMRs were calculated using the same
information used to compute FY2005 Final FMRs plus additional update
factors.
Appendix I provides more detailed technical information about data
sources and a summary of the impacts of the metropolitan area
definitional changes. For nonmetropolitan areas, FMRs continue to be
calculated at the county level. The area-specific data and computations
used to calculate proposed FY2006 FMRs and FMR area definitions can be
found at http://www.huduser.org/datasets/fmr/fmrs/.

[[Page 32404]]

C. Future FMR Annual Updates

HUD believes the new OMB definitions of MSAs are reasonable
definitions of housing markets and that their relevance will increase
with time. That is, while HUD makes distinctions among housing markets
within some of these areas based on differences in rents measured in
2000, it believes that the new MSAs better reflect current rental
housing markets than the 1990 Census-based metropolitan area
definitions. Therefore, future updates to FMRs will be made at the
metropolitan area level and applied to all FMR areas within
metropolitan areas where they have been separately designated. HUD-
funded RDDs will be conducted at the metropolitan area level and
compared to the metropolitan area rent estimate to see if adjustments
need to be made. If an RDD indicates that a metropolitan area rent
needs to be changed, the metropolitan area-level change factor will be
computed and applied to all FMRs within the metropolitan area. HUD will
accept information supplied by local housing authorities to make
adjustments to FMRs. HUD will re-benchmark all FMR areas when
sufficient ACS or other data are available to estimate rents at the
same level of accuracy for all FMR areas. To the extent such detailed
data are available, the FY2006 separation of FMR sub-areas within new
OMB metropolitan areas will be re-examined to determine if the new
survey FMR area base rents are sufficiently different to warrant their
continued separation within the metropolitan area.

D. Impacts of FMR Area Changes

The tables in this section present population totals for the parts
of the country affected by various changes in FMRs. Table 1 shows the
effect of the geographic definitional changes on the 2000 Census Base
Rents. Note that 96.9 percent of the population is in areas where the
2000 Census Base Rent changes by less than 5 percent. Larger changes in
base rent are generally limited to places that have been dropped from
major metropolitan areas (these areas now have their own, generally
lower, Base Rents), or small candidate sub-areas with too little census
rent data to estimate a sub-area FMR (these areas are subsumed in
metropolitan areas or FMR areas that have generally much higher 2000
Census Base Rents than the candidate sub-areas' old FMR-area Base
Rents). A listing of the small candidate sub-areas is shown in Appendix
II.

Table 1.--Population-Weighted Effect of FMR Area Definition Changes on 2000 Census Base Rents
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Percent of
2000 Census base rent change Number of 2000 population total
areas* population
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15% or More Decline............................................... 37 1,560,972 0.5
10% to 14.9% Decline.............................................. 23 751,880 0.3
5% to 9.9% Decline................................................ 21 1,798,385 0.6
1% to 4.9% Decline................................................ 346 37,794,535 13.2
Within +/-1%...................................................... 3,817 209,401,324 73.1
1% to 4.9% Increase............................................... 357 30,341,010 10.6
5% to 9.9% Increase............................................... 47 3,244,608 1.1
10% to 14.9% Increase............................................. 16 192,499 0.1
15% or More Increase.............................................. 100 1,332,179 0.5
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All Areas..................................................... 4,764 286,417,392 100.0
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* Areas are counties or county-equivalent areas except in New England where areas are cities and towns.

Table 2 shows population distribution of changes in FMRs that can
be attributed to all differences between the revised final FY2005 FMRs
and proposed FY2006 FMRs including the geographical area changes and
the results of RDDs. Relative to Table 1, there is more dispersion in
the changes, which reflects the overall national trend of a slight
increase in rent on the one hand, and the large number of RDDs
resulting in decreased FMRs on the other. This influence is most
apparent in the much larger percentage of the population that has a 1
percent to 4.9 percent increase in FMRs and the larger percentages with
5 percent to 9.9 percent increases/decreases.

Table 2.--Population Distribution by Changes in FMRs: Revised Final FY2005 to Proposed FY2006
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Percent of
FMR change Number of 2000 population total
areas* population
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15% or More Decline............................................... 32 1,091,769 0.4
10% to 14.9% Decline.............................................. 29 5,721,614 2.0
5% to 9.9% Decline................................................ 74 16,490,802 5.8
1% to 4.9% Decline................................................ 131 22,005,803 7.7
Within +/-1%...................................................... 132 32,600,796 11.4
1% to 4.9% Increase............................................... 3,956 164,012,622 57.3
5% to 9.9% Increase............................................... 238 37,355,878 13.0
10% to 14.9% Increase............................................. 57 4,539,642 1.6
15% or More Increase.............................................. 115 2,598,466 0.9
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All Areas..................................................... 4,764 286,417,392 **100.0
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* Areas are counties or county-equivalent areas except in New England where areas are cities and towns.
** Individual percentages may not sum to 100 percent due to rounding.

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IV. FMR Methodology

As detailed in Appendix I, the proposed FY2006 FMRs use previously
accumulated data differently than prior FMR publications. Because the
Revised Final FY2005 FMRs are such an important source of accumulated
information for the proposed FY2006 FMRs, discussion of the sources and
methods used to develop the Revised Final FY2005 FMRs is included here
along with the specific discussion of FY2006 FMR data and methods.

A. Data Sources: 2000 Census Base Rents

FY2005 FMRs were benchmarked for most areas using 2000 Decennial
Census data, which served to correct estimation errors that accumulated
since 1994 when FMRs were benchmarked with 1990 Decennial Census data.
At HUD's request, the Census Bureau prepared a special publicly
releasable Census file that permits almost exact replication of HUD's
2000 Base Rent calculations except for areas with few rental units.
This data set is located on HUD's HUD USER Web site at http://www.huduser.org/datasets/fmr/CensusRentData/.
An area-specific

explanation of how FY2005 FMRs were benchmarked to the 2000 Census and
updated can be found at http://www.huduser.org/datasets/fmr/fmrs/.

The proposed FY2006 FMRs are also benchmarked to the 2000 Census.
The FY2006 Census Base Rents are computed for the new geography of
metropolitan areas, candidate sub-areas of metropolitan areas (which
may become HUD Metro FMR areas), and nonmetropolitan counties using the
same computational techniques as the FY2005 benchmarking. The 2000
Census Base Rents for old FMR areas are used, along with the Revised
Final FY2005 FMRs, to determine the 2000-to-2005 portion of the 2000-
to-2006 update factor for metropolitan areas, new FMR areas, and
nonmetropolitan counties. A publicly releasable version of the data
used for the FY2006 Census Base Rent determinations will also be
available at the above website.

B. FMR Updates: 2000 Census to 2005

For the FY2006 FMR areas (metropolitan areas, HUD Metro FMR areas,
and non-metropolitan counties), update factors from the 2000 Census
Base Rent to 2005 are computed using weighted average update factors
derived from old FMR area, Revised Final FY2005 FMRs, old FMR area 2000
Census Base Rents and 2000 Census 100 percent population counts as
described in Appendix I.
After 2000 Census Base Rent estimates were established for each FMR
area and bedroom size, they are updated from the estimated Census date
of April 1, 2000, to April 1, 2005 (the midpoint of FY2005). Update
factors for the 2000-through-end-of-2003 period were based either on
the area-specific CPI survey data that were available for the largest
metropolitan areas or on HUD regional RDD survey data.
FMRs are updated using a combination of data. Annual CPI data are
available for most of the largest metropolitan areas. Data from the
Census Bureau's American Housing Survey are also available for some of
the larger areas. For the 2000-to-2003 period, HUD conducted regional
RDD surveys to obtain rent changes for the metropolitan and
nonmetropolitan parts of the 10 HUD regions not covered by area-
specific CPI surveys. A 3 percent trending factor is used to cover the
portions of time for which there are no better data.
For areas with local CPI surveys, CPI annual data on rents and
utilities were used to update the Census rent estimates. Three-quarters
of the 2000 CPI change factor was used to bring the FMR estimates
forward from April to December of 2000. Annual CPI survey data could
then be used for Calendar Years 2001, 2002, and 2003. Trending to cover
the period from December 2003, to April 1, 2005, was then needed. An
annual trending factor of 3 percent, based on the average annual
increase in the median Census gross rent between 1990 and 2000, was
used to update estimates from the end of 2003 (i.e., the last date for
which CPI data were available) until the midpoint of the fiscal year in
which the estimates were used. The 15-month trending factor was 3.75
percent (3 percent times 15/12).
For areas without local CPI surveys, the same process was used
except that regional RDD survey data were substituted for CPI data for
the period through the end of 2003. Regional RDD surveys were done for
20 areas--the metropolitan and nonmetropolitan part of each of the 10
HUD regions. Areas covered by CPI metropolitan surveys were excluded
from the RDD metropolitan regional surveys.
HUD also conducted RDD telephone FMR surveys for selected areas and
incorporated these into FMR update factors.

C. Updates From 2005 to Proposed FY2006

After using the old FMR area data as described above to update
metropolitan area, new FMR area, and nonmetropolitan county rents to
2005, metropolitan area and nonmetropolitan county update factors from
2005 to 2006 are applied to derive the proposed FY2006 FMRs. All new
FMR areas that are part of a new metropolitan area are updated with the
same metropolitan area-level 2005-to-2006 update factor.
Specifically, local CPI data is used to move rents from the end of
2003 to the end of 2004 and the same 15-month trending factor is then
applied. Regional RDDs, however, were not conducted in 2004 in
anticipation of the arrival of ACS data. Therefore, for proposed FY2006
FMRs, Census region-level CPI data for Class B- and C-size cities is
being used to update areas without local CPI update factors. Data from
the 2004 ACS will be used to replace regional CPI data if it becomes
available in time for inclusion in the final FY2006 publication. Once
full-scale ACS data collections start to become available in the latter
part of 2006, sample sizes will be large enough to estimate FMRs for
the larger metropolitan areas on an annual basis and for other areas on
a two- to four-year basis.

D. Additional RDD Surveys and Other Data

RDDs covering 35 additional areas were conducted by HUD in the
January-February period of 2005 and completed in time for use in this
publication. In addition, PHA surveys were conducted for 5 area RDDs.
Table 3 shows the results of the HUD and PHA surveys. The first column
of Table 3 identifies the RDD survey area. Except where noted, RDD
survey areas correspond to metropolitan areas as defined by OMB. In
metropolitan areas where HUD defines HUD Metro FMR Areas (HMFAs), the
percent change due to the RDD reported in the last column is applied to
the unrevised FY2006 FMR of each HMFA in the metropolitan area. A
change in FMR estimates is shown only if the RDD result shows a
statistically significant difference from the FMR estimate based on
non-RDD update factors. The ``Result of RDD'' column shows whether or
not the RDD results were statistically different enough to justify
replacing the unrevised estimates with the RDD results.
The RDD results show an unusually high percentage of FMR decreases.
These decreases are consistent with multifamily apartment complex time-
series data that also indicated decreases and were available for
comparison for all of the larger metropolitan areas surveyed.
Nationally, Census vacancy data continue to show rental vacancy rates
at record highs, which, combined with loss of higher income renters to

[[Page 32406]]

homeownership, have adverse impacts on rents. The survey results were
as follows:
BILLING CODE 4210-01-P
[GRAPHIC] [TIFF OMITTED] TN02JN05.004

[[Page 32407]]

[GRAPHIC] [TIFF OMITTED] TN02JN05.005

[[Page 32408]]

[GRAPHIC] [TIFF OMITTED] TN02JN05.006

BILLING CODE 4210-01-C

E. Large Bedroom Rents

FMR estimates are calculated for two-bedroom units. This is the
most common size of rental units, and, therefore, the most reliable to
survey and analyze. After each Decennial Census, rent relationships
between two-bedroom units and other unit sizes are calculated and used
to set FMRs for other units. This is done because it is much easier to
update two-bedroom estimates and to use pre-established cost
relationships with other bedroom sizes than it is to develop
independent FMR estimates for each bedroom size, which was last done
using 2000 Census data. A publicly releasable version of the data file
that permits derivations of rent ratios is available at http://www.huduser.org/datasets/fmr/CensusRentData/
.

The rents for three-bedroom and larger units continue to reflect
HUD's policy to set higher rents for these units than would result from
using normal market rents. This adjustment is intended to increase the
likelihood that the largest families, which have the most difficulty in
leasing units, will be successful in finding eligible program units.
The adjustment adds bonuses of 8.7 percent to the unadjusted three-
bedroom FMR estimates and adds 7.7 percent to the unadjusted four-
bedroom FMR estimates. The FMRs for unit sizes larger than four
bedrooms are calculated by adding 15 percent to the four-bedroom FMR
for each extra bedroom. For example, the FMR for a five-bedroom unit is
1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is
1.30 times the four-bedroom FMR. FMRs for single-room occupancy units
are 0.75 times the zero-bedroom (efficiency) FMR.
A further adjustment was made using 2000 Census data in
establishing rent ratios for areas with local bedroom-size intervals
above or below what are considered to be reasonable ranges or where
sample sizes are inadequate to accurately measure bedroom rent
differentials. Experience has shown that highly unusual bedroom ratios
typically reflect inadequate sample sizes or peculiar local
circumstances that HUD would not want to utilize in setting FMRs (e.g.,
luxury efficiency apartments in New York City that rent for more than
typical one-bedroom units). Bedroom interval ranges were established
based on an analysis of the range of such intervals for all areas with
large enough

[[Page 32409]]

samples to permit accurate bedroom ratio determinations. The following
ranges were used: efficiency units were between 0.65 and 0.83 of the
two-bedroom FMR, one-bedroom units were between 0.76 and 0.90 of the
two-bedroom unit, three-bedroom units were between 1.10 and 1.34 of the
two-bedroom unit, and four-bedroom units were between 1.14 and 1.63 of
the two-bedroom unit. Bedroom rents for a given FMR area were then
adjusted if the differentials between bedroom-size FMRs were
inconsistent with normally observed patterns (e.g., efficiency rents
were not allowed to be higher than one-bedroom rents and four-bedroom
rents were set at a minimum of 3 percent higher than three-bedroom
rents).
For low-population, nonmetropolitan counties with small Census
recent-mover rent samples, Census-defined county group data were used
in determining rents for each bedroom size. This adjustment was made to
protect against unrealistically high or low FMRs due to insufficient
sample sizes. The areas covered by this new estimation method had less
than the HUD standard of 200 two-bedroom, Census-tabulated
observations.

V. Manufactured Home Space Surveys

The FMR used to establish payment standard amounts for the rental
of manufactured home spaces in the Housing Choice Voucher program is 40
percent of the FMR for a two-bedroom unit. HUD will consider
modification of the manufactured home space FMRs where public comments
present statistically valid survey data showing the 40th percentile
manufactured home space rent (including the cost of utilities) for the
entire FMR area.
All approved exceptions to these rents that were in effect in
FY2005 were updated to FY2006 using the same data used to estimate the
Housing Choice Voucher program FMRs if the respective FMR area's
definition had remained the same. If the result of this computation was
higher than 40 percent of the rebenchmarked two-bedroom rent, the
exception remained and is listed in Schedule D. The FMR area
definitions used for the rental of manufactured home spaces are the
same as the area definitions used for the other FMRs. Areas with
definitional changes that previously had exception, manufactured
housing space rental FMRs have been requested to submit new surveys to
justify higher than standard space rental FMRs if they believe higher
space rental allowances are needed.

VI. Request for Public Comments

HUD seeks public comments on FMR levels for specific areas.
Comments on FMR levels must include sufficient information (including
local data and a full description of the rental housing survey
methodology used) to justify any proposed changes. Changes may be
proposed in all or any one or more of the unit-size categories on the
schedule. Recommendations and supporting data must reflect the rent
levels that exist within the entire FMR area.
For the supporting data, 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 approximately $20,000 to $30,000. Areas with 500 or more
program units usually meet this cost criterion, and areas with fewer
units may meet it if actual rents for two-bedroom units are
significantly different from the FMRs proposed by HUD. In addition, HUD
has developed a version of the RDD survey methodology for smaller,
nonmetropolitan public housing agencies (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 may, under certain circumstances,
conduct surveys of groups of counties. HUD must approve all county-
grouped surveys in advance. 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 the relationship of rents in
that area to the combined rents in the cluster of FMR areas. In
addition, PHAs are advised that counties whose FMRs are based on the
combined rents in the cluster of FMR areas will not have their FMRs
revised unless the grouped survey results show a revised FMR above the
combined rent level.
PHAs that plan to use the RDD survey technique should obtain a copy
of the appropriate survey guide. Larger PHAs should request HUD's
survey guide entitled, ``Random Digit Dialing Surveys; A Guide to
Assist Larger Public Housing Agencies in Preparing Fair Market Rent
Comments.'' Smaller PHAs should obtain the guide entitled, ``Rental
Housing Surveys; A Guide to Assist Smaller Public Housing Agencies in
Preparing Fair Market Rent Comments.'' These guides are available from
HUD USER on 800-245-2691, or from HUD's Web site, in Microsoft Word or
Adobe Acrobat format, at http://www.huduser.org/datasets/fmr.html.

In providing data to support comments, other survey methodologies
are acceptable if the survey methodology can provide statistically
reliable, unbiased estimates of the 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 to be statistically representative of the entire rental housing
stock of the FMR area. Surveys must include units at 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 means of
verifying if a sample is representative of the FMR area's rental
housing stock.
Most surveys cover only one- and two-bedroom units, which has
statistical advantages. If the survey is statistically acceptable, HUD
will estimate FMRs for other bedroom sizes using ratios based on the
Decennial Census. A PHA or 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.
HUD will consider increasing manufactured home space FMRs where
public comment demonstrates that 40 percent of the two-bedroom FMR is
not adequate. In order to be accepted as a basis for revising the
manufactured home space FMRs, comments must include a pad rental survey
of the mobile home parks in the area, identify the utilities included
in each park's rental fee, and provide a copy of the applicable PHA's
utility schedule.
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: May 26. 2005.
Roy A. Bernardi,
Deputy Secretary.

Fair Market Rents for the Housing Choice Voucher Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage
a. Metropolitan Areas--FMRs are market-wide rent estimates that are
intended to provide housing opportunities throughout the geographic
area in which rental-housing units are

[[Page 32410]]

in direct competition. The proposed FY2006 FMRs reflect a change in
metropolitan area definitions. HUD is using the metropolitan Core-Based
Statistical Areas (CBSA), which are made up of one or more counties, as
defined by OMB, with some modifications. HUD is generally assigning
separate FMRs to the component counties of CBSA Micropolitan Areas.
b. Modifications to OMB Definitions--Following OMB guidance, the
estimation procedure for the FY2006 proposed FMRs incorporates the 2003
OMB definitions of metropolitan areas based on the new CBSA standards
as implemented with 2000 Census data, but makes adjustments to the
definitions to separate subparts of these areas where FMRs would
otherwise change significantly if the new area definitions were used
without modification. In CBSAs where sub-areas are established, it is
HUD's view that the geographic extent of the housing markets are not
yet the same as the geographic extent of the CBSAs, but may become so
as the social and economic integration of the CBSA component areas
increases. Modifications to metropolitan CBSA definitions are made
according to a formula as described below.
Metropolitan Areas CBSAs (referred to as Metropolitan Statistical
Areas or MSAs) may be modified to allow for sub-area FMRs within MSAs
based on the boundaries of old FMR areas (OFAs) within the boundaries
of new MSAs. (OFAs are the FMR areas defined for the FY2005 FMRs)).
Collectively, they include old definition MSAs/PMSAs, metropolitan
counties deleted from old definition MSAs/PMSAs by HUD for FMR
purposes, and counties and county parts outside of old definition MSAs/
PMSAs referred to as nonmetropolitan counties. Sub-areas of MSAs are
assigned their own FMRs when the sub-area 2000 Census Base Rent differs
by at least 5 percent from (i.e., is at most 95 percent or at least 105
percent of) the MSA 2000 Census Base Rent. MSA sub-areas, and the
remaining portions of MSAs after sub-areas have been determined, are
referred to as HMFAs to distinguish these areas from OMB's official
definition of MSAs.
The specific counties (or New England towns and cities) within each
state in MSAs and HMFAs are listed in the FMR tables.
2. Bedroom Size Adjustments
Schedule B shows the FMRs for 0-bedroom through 4-bedroom units.
The FMRs for unit sizes larger than 4 bedrooms are calculated by adding
15 percent to the 4-bedroom FMR for each extra bedroom. For example,
the FMR for a 5-bedroom unit is 1.15 times the 4-bedroom FMR, and the
FMR for a 6-bedroom unit is 1.30 times the 4-bedroom FMR. FMRs for
single room occupancy (SRO) units are 0.75 times the 0-bedroom FMR.
3. 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 (or 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.

Appendix I--Detailed Explanation of How New FMR Areas Determined

A. Use and Modification of New OMB Metropolitan Area Definitions

Following OMB guidance, the estimation procedure for the FY2006
proposed FMRs incorporates the 2003 OMB definitions of metropolitan
areas based on the new Core-Based Statistical Area (CBSA) standards
as implemented with 2000 Census data, but makes adjustments to the
definitions to separate subparts of these areas where FMRs would
otherwise change significantly if the new area definitions were used
without modification. In CBSAs where sub-areas are established, it
is HUD's view that the geographic extent of the housing markets are
not yet the same as the geographic extent of the CBSAs, but may
become so as the social and economic integration of the CBSA
component areas increases.
The geographic baseline for the new estimation procedure is the
CBSA Metropolitan Areas (referred to as Metropolitan Statistical
Areas or MSAs) and CBSA Nonmetropolitan Counties (nonmetropolitan
counties include the county components of Micropolitan CBSAs where
the counties are generally assigned separate FMRs). The proposed
HUD-modified CBSA definitions allow for sub-area FMRs within MSAs
based on the boundaries of ``Old FMR Areas'' (OFAs) within the
boundaries of new MSAs. (OFAs are the FMR areas defined for the
FY2005 FMRs). Collectively, they include June 30, 1999, OMB
definition Metropolitan Statistical Areas and Primary Metropolitan
Statistical Areas (old definition MSAs/PMSAs), metropolitan counties
deleted from old definition MSAs/PMSAs by HUD for FMR purposes, and
counties and county parts outside of old definition MSAs/PMSAs
referred to as non-metropolitan counties. Sub-areas of MSAs are
assigned their own FMRs when the sub-area 2000 Census Base Rent
differs significantly from the MSA 2000 Census Base Rent. MSA sub-
areas, and the remaining portions of MSAs after sub-areas have been
determined, are referred to as ``HUD Metro FMR Areas (HMFAs)'' to
distinguish these areas from OMB's official definition of MSAs. The
proposed FY2006 FMRs are calculated using a three-step process
designed to: (1) Identify MSAs that should be broken up into HMFAs
because of quantified differences in OFA and CBSA rents; (2) capture
information used to set the FY2005 Revised Final FMRs; and (3)
update the FMRs to FY2006 and move the FMR estimation process toward
a CBSA-based geography.

1. Step 1, Identifying Housing Markets

To identify MSAs that should be broken up into HMFAs because
rental-housing markets are not yet well integrated, HUD compares
2000 Census Base Rents for the MSAs to 2000 Census Base Rent for the
parts of each MSA that were in different OFAs and, therefore, had
different FY2005 Revised Final FMRs. The parts of each MSA that were
in different OFAs are referred to here as ``candidate sub-areas.''
If the 2000 Census Base Rent of a candidate sub-area differs from
the MSA 2000 Census Base Rent by at least 5 percent (i.e., is at 95
percent or less or 105 percent or more) of the MSA 2000 Census Base
Rent, then the candidate sub-area is designated as an HMFA and is
assigned its own 2000 Census Base Rent to be updated, as described
below, to derive the proposed FY2006 FMR. HUD identifies the HMFA
with a name based on its geography and ending with ``HUD Metro FMR
Area'' to distinguish it from the parent MSA.
The remaining candidate sub-areas within an MSA, having
candidate sub-area 2000 Census Base Rents that differ from the MSA
2000 Census Base Rent by less than 5 percent (i.e., are 95 percent
or more and 105 percent or less of the MSA 2000 Census Base Rent),
are combined to form an HMFA and are assigned the MSA 2000 Base Rent
which is updated, as described below, to derive the proposed FY2006
FMR. HUD identifies the HMFA with a name based on its geography and
ending with ``HUD Metro FMR Area'' to distinguish it from the parent
MSA.
MSAs with no candidate sub-areas, or where all candidate sub-
areas have 2000 Census Base Rents within 5 percent of the MSA 2000
Census Base Rent, are assigned the MSA 2000 Census Base Rent, which
is updated, as described below, to derive the proposed FY2006 FMR.
Since these areas do not vary from OMB's official metropolitan area
definitions, HUD identifies them with their official MSA names as
determined by OMB.
Generally, 2000 Census Base Rents for MSAs, HMFAs, and
nonmetropolitan counties are set at the 40th percentile rent of
recent movers in standard quality two-

[[Page 32411]]

bedroom units. Base Rents are set at the 50th percentile recent
mover rent if at least 75 percent of the population of the MSA,
HMFA, or nonmetropolitan county was in an OFA with a 50th percentile
FMR. In all cases except the Bergen-Passaic, NJ HMFA, the 40th
percentile 2000 Census Base Rents are used to evaluate whether HMFAs
are created from MSAs. The Bergen-Passaic, NJ HMFA was unique among
the former FY2005 FMR areas with 50th percentile FMRs in that if the
50th percentile rent had not been used as its 2000 Census Base Rent
for establishing the HMFA, the Bergen-Passaic, NJ HMFA would have
been made part of a larger HMFA with no mechanism within the formula
established in this notice to continue its 50th percentile FMR.
The 2000 Census data for any candidate sub-area must be
sufficient to estimate a reliable FMR. HUD's standard is that at
least 200 Census-tabulated cases are needed for a reliable 2000
Census Base Rent estimate. Candidate sub-areas with insufficient
samples are combined with adjacent candidate sub-areas and 2000
Census Base Rents (as well as 2000-to-2005 update factors as
described below) are computed for the combined areas. (See Table 3
for a list of counties and New England towns combined with different
candidate sub-areas because of insufficient sample size).
Nonmetropolitan counties must also meet the 200-case standard to get
their own 2000 Census Base Rent. Nonmetropolitan counties with fewer
than 200 cases are assigned the 2000 Census Base Rent of contiguous
county groups designated by the Census Bureau for purposes of
releasing data under the Public Use Microdata Sample program.
In New England, some towns that formerly were part of a
metropolitan OFA are now in nonmetropolitan counties under the new
OMB metropolitan area definitions. Because these towns were outlying
parts of old metropolitan areas and were determined to have limited
interaction with the old metropolitan areas, HUD did not include
formerly metropolitan parts of now nonmetropolitan counties in
developing HMFAs, but instead followed OMB's county-based area
designations.

2. Step 2, Capturing 2000 to 2005 Update Information

MSA, HMFA, and nonmetropolitan county FMRs are updated from the
2000 Census Base Rents to 2005 using a population-weighted average
aggregate update factor (WAUF). Within each component of a MSA,
HMFA, or nonmetropolitan county having a different FY2005 Revised
Final FMR (i.e., within a different OFA), the aggregate 2000-to-2005
OFA update factor is computed by dividing the FY2005 Revised Final
FMR by the 2000 Census Base Rent for the OFA. The WAUF is computed
by multiplying each component OFA update factor by the part of the
population of the MSA, HMFA, or nonmetropolitan county in each of
the OFAs, summing these products, and dividing by the total
population of the MSA, HMFA, or nonmetropolitan county. The WAUF is
then applied to the 2000 Census Base Rent for the MSA, HMFA, or
nonmetropolitan county to determine the 2005 Rent.

3. Step 3, Updating From 2005 to 2006 on an MSA Basis

For each MSA and nonmetropolitan county, a 2005-to-2006 update
factor is computed based on available information, such as local or
regional CPI data, or the results of a local RDD survey. Most of the
HMFA FMRs in an MSA are updated from 2005 to 2006 using MSA-wide
update factors. Exceptions to this practice are areas where HUD
conducted RDDs at the HMFA level, and where there are variations
among HMFAs with local CPI update factors in the utilities-to-gross
rent ratio. Numerical examples of this approach are provided in the
following sections.

B. Numerical Examples of Proposed FY2006 FMR Computations

FMRs are estimated for all MSAs as follows: the 40th percentile
rent for renters who recently moved into two-bedroom standard
quality units is estimated for each MSA using the 2000 Census. This
is the MSA 2000 Census Base Rent. The MSA 2000 Census Base Rent is
updated through 2005 by applying the population-weighted average of
the update factors used to produce the Revised Final FY2005 FMRs for
OFAs (or OFA parts) within the MSA. Multiplying the MSA 2000 Census
Base rent by the blended 2005 update factor, and that result (the
2005 intermediate rent) by an MSA-based 2005-to-2006 update factor,
produces the proposed FY2006 FMR.
For areas without RDDs, the FY2006 FMRs equal the Base 2000 FMR
times the 2000-to-2005 update factor times the most recent year's
local or regional CPI change. (Strictly speaking, a year of trending
is removed, the most recent annual rent change factor is used as a
replacement, and another year of trending is then added.) For areas
with MSA RDDs, the same process is used, but the 2005-to-2006 update
factor is based on the RDD change. For instance, a forward-trended
April 2005 RDD result for an MSA would be compared with the FY2006
evaluated rent calculated from the 2000 Census Base MSA Rent, the
MSA 2000-to-2005 update factor, and the MSA 2005-to-2006 update
factor. If the MSA 2006 evaluated rent is outside the 90 percent
confidence interval of the RDD, then the MSA 2005-to-2006 update
factor is set at the ratio of the RDD result to the 2005 MSA
intermediate rent. This ratio is used as the 2005-to-2006 update
factor for all HMFAs within the MSA in the event that the MSA has
been split into more than one HMFA.
The following paragraphs provide examples of different ways the
proposed FY2006 FMRs are computed based on the differences in
geography and 2000 Census Base Rents between the Revised Final
FY2005 FMRs and the proposed FY2006 FMRs.

1. No Geographic Change

The A MSA has the same geographic definition as OFA A. In this
case, the proposed FY2006 FMR is simply an update of the OFA A
Revised Final FY2005 FMR. That is because the 2000 Census Base Rent
for the A MSA is identical to that of OFA A, and there is no need to
compute a weighted average 2000-to-2005 update factor because there
is only one OFA in the A MSA. This same logic applies to
nonmetropolitan counties, and to any new MSA that consists of a part
of a single OFA.

2. Candidate Sub-Areas in an MSA With Similar 2000 Census Base
Rents

HUD examined MSA sub-areas in establishing proposed FY2006 FMR
areas. Candidate sub-areas considered for calculation of separate
FMRs were generally determined from the way MSAs are divided by
OFAs. Any candidate sub-area with a 2000 Census Base Rent that
differs from the MSA Census Base Rent by 5 percent or more is
designated an HMFA and receives a separate proposed FY2006 FMR based
on its own 2000 Census Base Rent and OFA 2000-to-2005 update factor.
Remaining candidate sub-areas with 2000 Census Base Rents that
differ from their MSA Census Base Rent by less than 5 percent are
combined into HMFAs, receive the MSA Base Rent, and are updated to
2005 using a population-weighted average of their component OFA
2000-to-2005 update factors. All HMFAs are updated from 2005-to-2006
using the same MSA-wide update factor.
The D-E MSA is made up of OFA D and part of OFA E. These two
areas are candidate sub-areas of the D-E MSA. Suppose they had the
following characteristics:

------------------------------------------------------------------------
2000-to-
2000 2005 FMR
Area 2000 census base update
population rent factor from
OFA FMRs
------------------------------------------------------------------------
Candidate Sub-area D............. 700,000 $700 1.250
Candidate Sub-area E............. 300,000 740 1.210
D-E MSA Total.................... 1,000,000 710 1.238
------------------------------------------------------------------------

The 2000 Census Base Rents of the candidate sub-areas D and E do
not differ from the D-E MSA 2000 Census Base Rent by more than 5
percent, and is calculated as follows:

[[Page 32412]]

($710-$700)/$710 = $10/$710 = 1.4% < 5%, and
($740-$710)/$710 = $30/$710 = 4.2% < 5%.

Therefore, HUD does not establish sub-areas within the D-E MSA;
the D-E MSA is a single proposed FY2006 FMR area.
The update factor for the D-E MSA through 2005 is:

(1.250 x 700,000 + 1.210 x 300,000)/1,000,000
= (875,000 + 363,000)/1,000,000
= (1,238,000)/1,000,000 = 1.238

The 2005 intermediate rent estimate for the D-E MSA is $710 x
1.238 = $879. The 2005-to-2006 regional update factor for D-E MSA is
1.03 for a proposed FY2006 FMR of:

$710 x 1.238 x 1.03
= $879 x 1.03 = $905.

3. Candidate Sub-areas in an MSA With Dissimilar 2000 Census Base
Rents

Next, consider the X-Y-Z MSA made up of three candidate sub-
areas with the following characteristics:

------------------------------------------------------------------------
2000-to-
2005 FMR
Area 2000 2000 census update
population base rent factor from
OFA FMRs
------------------------------------------------------------------------
Candidate Sub-area X............. 500,000 $700 1.280
Candidate Sub-area Y............. 300,000 715 1.230
Candidate Sub-area Z............. 200,000 625 1.200
X-Y-Z MSA Total.................. 1,000,000 690 1.249
------------------------------------------------------------------------

Suppose further that the regionally estimated 2005-to-2006
update factor for the X-Y-Z MSA is 1.03. First, the 2000 Census Base
Rents for candidate sub-areas X and Y differ from the MSA 2000
Census Base Rent by less than 5 percent:

($700--$690)/$690 = $10/ $690 = 1.45 % < 5%, and
($715--$690)/$690 = $25/$690 = 3.62 % < 5%.

Therefore, these two areas are assigned the MSA 2000 Census Base
Rent and form the X-Y HUD Metro FMR Area. Their combined 2000-to-
2005 update factor is derived from the 2000 Census-to-Revised Final
FY2005 FMR update factors for their OFAs:

(1.28 x 500,000 + 1.23 x 300,000)/800,000
= (640,000 + 369,000)/800,000
= 1,009,000/800,000 = 1.2613.

The proposed FY2006 FMR for the X-Y HUD Metro FMR Area is
therefore:

$690 x 1.2613 x 1.03
= $870 x 1.03 = $896.

In candidate sub-area Z, the 2000 Census Base Rent differs from
the X-Y-Z MSA 2000 Census Base Rent by more than 5 percent [($690--
$625)/$690 = $65/$690 = 9.42% > 5%], so it is designated the Z HUD
Metro FMR Area. Because of its difference from the X-Y-Z MSA 2000
Census Base Rent, the proposed FY2006 FMR for the Z HUD Metro FMR
Area is estimated using that area's own 2000 Census Base Rent, a
2000-to-2005 FMR update factor derived from its OFA 2000 Census Base
Rent to Revised Final FY2005 FMR update factor, and the X-Y-Z MSA
2005-to-2006 update factor. The proposed FY2006 FMR for the Z HUD
Metro FMR Area is:

$625.00 x 1.20 x 1.03
= $750 x 1.03 = $773.

4. Application of an MSA RDD in an MSA With HMFAs

Finally, suppose that an RDD survey was performed in X-Y-Z MSA.
The results of the MSA RDD survey are compared to a 2006 evaluated
rent for the MSA. The 2006 X-Y-Z MSA evaluated rent is computed from
the X-Y-Z MSA 2000 Census Base Rent, the combined 2000-to-2005
update factor for all of the candidate sub-areas, and the regionally
estimated 2005-to-2006 update factor for the X-Y-Z MSA as follows:

$690 x [(1.28 x 500,000 + 1.23 x 300,000 + 1.20 x 200,000)/
1,000,000] x 1.03
= $690 x [(640,000 + 369,000 + 240,000)/1,000,000] x 1.03
= $690 x [1,249,000/1,000,000] x 1.03
= $690 x1.249 x 1.03
= $862 x 1.03 = $888

The RDD finds, however, that the proposed FY2006 FMR for the X-
Y-Z MSA should be $800. So, the actual RDD-based 2005-to-2006 update
factor for the X-Y-Z MSA is set at the ratio of the RDD result to
the MSA 2005 intermediate rent:

$800/$862 = 0.9281.
The FMRs for the X-Y HUD Metro FMR Area and the Z HUD Metro FMR
Area are computed by applying the MSA RDD-based 2005-to-2006 update
factor (0.9281) to the two HMFAs' 2005 intermediate rents.
Therefore, the proposed FY2006 FMR for the X-Y HUD Metro FMR Area
is:

$690 x 1.2613 x 0.9281
= $870 x 0.9281 = $808,
and the proposed FY2006 FMR for the Z HUD Metro FMR Area is:
$625.00 x 1.20 x 0.9281
= $750 x 0.9281 = $696.

Appendix II.--Candidate MSA Sub-Areas With Insufficient FMR Sample Assigned to Adjacent Areas
----------------------------------------------------------------------------------------------------------------
County or New England New MSA or HUD Metro FMR
State city or town Old FMR area (OFA) area assigned to
----------------------------------------------------------------------------------------------------------------
Alabama........................... Bibb County............ Bibb County........... Birmingham-Hoover, AL MSA.
Geneva County.......... Geneva County......... Dothan, AL MSA.
Greene County.......... Greene County......... Tuscaloosa, AL MSA.
Hale County............ Hale County........... Tuscaloosa, AL MSA.
Lowndes County......... Lowndes County........ Montgomery, AL MSA.
Arkansas.......................... Cleveland County....... Cleveland County...... Pine Bluff, AR MSA.
Lincoln County......... Lincoln County........ Pine Bluff, AR MSA.
Madison County......... Madison County........ Fayetteville-Springdale-
Rogers, AR-MO MSA.
Perry County........... Perry County.......... Little Rock-North Little
Rock, AR MSA.
Colorado.......................... Clear Creek County..... Clear Creek County.... Denver-Aurora, CO MSA.
Elbert County.......... Elbert County......... Denver-Aurora, CO MSA.
Gilpin County.......... Gilpin County......... Denver-Aurora, CO MSA.
Connecticut....................... Hartland town.......... Hartford County....... Hartford-West Hartford-East
Hartford, CT MSA.
Chester town........... Middlesex County...... Hartford-West Hartford-East
Hartford, CT MSA.
Clinton town........... New Haven-Meriden, CT. Southern Middlesex County,
CT HUD Metro FMR Area.
Deep River town........ Middlesex County...... Southern Middlesex County,
CT HUD Metro FMR Area.
Essex town............. Middlesex County...... Southern Middlesex County,
CT HUD Metro FMR Area.
Killingworth town...... New Haven-Meriden, CT. Southern Middlesex County,
CT HUD Metro FMR Area.
Old Saybrook town...... New London-Norwich, CT- Southern Middlesex County,
RI. CT HUD Metro FMR Area.
Westbrook town......... Middlesex County...... Southern Middlesex County,
CT HUD Metro FMR Area.
Lyme town.............. New London County..... Norwich-New London, CT MSA.

[[Page 32413]]

Voluntown town......... New London County..... Norwich-New London, CT MSA.
Union town............. Tolland County........ Hartford-West Hartford-East
Hartford, CT MSA.
Florida........................... Gilchrist County....... Gilchrist County...... Gainesville, FL MSA.
Jefferson County....... Jefferson County...... Tallahassee, FL MSA.
Georgia........................... Baker County........... Baker County.......... Albany, GA MSA.
Brantley County........ Brantley County....... Brunswick, GA MSA.
Brooks County.......... Brooks County......... Valdosta, GA MSA.
Burke County........... Burke County.......... Augusta-Richmond County, GA-
SC MSA.
Crawford County........ Crawford County....... Macon, GA MSA.
Dawson County.......... Dawson County......... Atlanta-Sandy Springs-
Marietta, GA MSA.
Echols County.......... Echols County......... Valdosta, GA MSA.
Heard County........... Heard County.......... Atlanta-Sandy Springs-
Marietta, GA MSA.
Jasper County.......... Jasper County......... Atlanta-Sandy Springs-
Marietta, GA MSA.
Lanier County.......... Lanier County......... Valdosta, GA MSA.
McIntosh County........ McIntosh County....... Brunswick, GA MSA.
Marion County.......... Marion County......... Columbus, GA-AL MSA.
Oglethorpe County...... Oglethorpe County..... Athens-Clarke County, GA
MSA.
Pike County............ Pike County........... Atlanta-Sandy Springs-
Marietta, GA MSA.
Terrell County......... Terrell County........ Albany, GA MSA.
Worth County........... Worth County.......... Albany, GA MSA.
Idaho............................. Boise County........... Boise County.......... Boise City-Nampa, ID MSA.
Franklin County........ Franklin County....... Logan, UT-ID MSA.
Jefferson County....... Jefferson County...... Idaho Falls, ID MSA.
Owyhee County.......... Owyhee County......... Boise City-Nampa, ID MSA.
Power County........... Power County.......... Pocatello, ID MSA.
Illinois.......................... Calhoun County......... Calhoun County........ St. Louis, MO-IL MSA.
Ford County............ Ford County........... Champaign-Urbana, IL MSA.
Marshall County........ Marshall County....... Peoria, IL MSA.
Mercer County.......... Mercer County......... Davenport-Moline-Rock
Island, IA-IL MSA.
Piatt County........... Piatt County.......... Champaign-Urbana, IL MSA.
Stark County........... Stark County.......... Peoria, IL MSA.
Indiana........................... Benton County.......... Benton County......... Lafayette, IN MSA.
Brown County........... Brown County.......... Indianapolis, IN MSA.
Franklin County........ Franklin County....... Cincinnati-Middletown, OH-
KY-IN MSA.
Newton County.......... Newton County......... Gary, IN HUD Metro FMR
Area.
Ohio County............ Cincinnati, OH-KY-IN.. Cincinnati-Middletown, OH-
KY-IN MSA.
Iowa.............................. Grundy County.......... Grundy County......... Waterloo-Cedar Falls, IA
MSA.
Guthrie County......... Guthrie County........ Des Moines, IA MSA.
Harrison County........ Harrison County....... Omaha-Council Bluffs, NE-IA
MSA.
Madison County......... Madison County........ Des Moines, IA MSA.
Mills County........... Mills County.......... Omaha-Council Bluffs, NE-IA
MSA.
Kansas............................ Doniphan County........ Doniphan County....... St. Joseph, MO-KS MSA.
Jackson County......... Jackson County........ Topeka, KS MSA.
Jefferson County....... Jefferson County...... Topeka, KS MSA.
Linn County............ Linn County........... Kansas City, MO-KS MSA.
Osage County........... Osage County.......... Topeka, KS MSA.
Wabaunsee County....... Wabaunsee County...... Topeka, KS MSA.
Kentucky.......................... Bracken County......... Bracken County........ Cincinnati-Middletown, OH-
KY-IN MSA.
Edmonson County........ Edmonson County....... Bowling Green, KY MSA.
Gallatin County........ Cincinnati, OH-KY-IN.. Cincinnati-Middletown, OH-
KY-IN MSA.
Hancock County......... Hancock County........ Owensboro, KY MSA.
Henry County........... Henry County.......... Louisville, KY-IN MSA.
Larue County........... Larue County.......... Elizabethtown, KY MSA.
McLean County.......... McLean County......... Owensboro, KY MSA.
Pendleton County....... Cincinnati, OH-KY-IN.. Cincinnati-Middletown, OH-
KY-IN MSA.
Spencer County......... Spencer County........ Louisville, KY-IN MSA.
Trigg County........... Trigg County.......... Clarksville, TN-KY MSA.
Trimble County......... Trimble County........ Louisville, KY-IN MSA.
Webster County......... Webster County........ Evansville, IN-KY MSA.
Louisiana......................... Cameron Parish......... Cameron Parish........ Lake Charles, LA MSA.
De Soto Parish......... De Soto Parish........ Shreveport-Bossier City, LA
MSA.
East Feliciana Parish.. East Feliciana Parish. Baton Rouge, LA MSA.
Grant Parish........... Grant Parish.......... Alexandria, LA MSA.
Pointe Coupee Parish... Pointe Coupee Parish.. Baton Rouge, LA MSA.
St. Helena Parish...... St. Helena Parish..... Baton Rouge, LA MSA.
Union Parish........... Union Parish.......... Monroe, LA MSA.
West Feliciana Parish.. West Feliciana Parish. Baton Rouge, LA MSA.
Maine............................. Durham town............ Androscoggin County... Lewiston-Auburn, ME MSA.
Leeds town............. Androscoggin County... Lewiston-Auburn, ME MSA.
Livermore town......... Androscoggin County... Lewiston-Auburn, ME MSA.

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Livermore Falls town... Androscoggin County... Lewiston-Auburn, ME MSA.
Minot town............. Androscoggin County... Lewiston-Auburn, ME MSA.
Massachusetts..................... Blandford town......... Hampden County........ Springfield, MA MSA.
Brimfield town......... Hampden County........ Springfield, MA MSA.
Chester town........... Hampden County........ Springfield, MA MSA.
Granville town......... Hampden County........ Springfield, MA MSA.
Holland town........... Worcester, MA--CT..... Springfield, MA MSA.
Tolland town........... Hampden County........ Springfield, MA MSA.
Wales town............. Hampden County........ Springfield, MA MSA.
Chesterfield town...... Hampshire County...... Springfield, MA MSA.
Cummington town........ Hampshire County...... Springfield, MA MSA.
Goshen town............ Hampshire County...... Springfield, MA MSA.
Middlefield town....... Hampshire County...... Springfield, MA MSA.
Pelham town............ Hampshire County...... Springfield, MA MSA.
Plainfield town........ Hampshire County...... Springfield, MA MSA.
Westhampton town....... Hampshire County...... Springfield, MA MSA.
Worthington town....... Hampshire County...... Springfield, MA MSA.
Ashby town............. Fitchburg--Leominster, Boston-Cambridge-Quincy, MA-
MA. NH HUD Metro FMR Area.
Marion town............ New Bedford, MA....... Brockton, MA HUD Metro FMR
Area.
Mattapoisett town...... New Bedford, MA....... Brockton, MA HUD Metro FMR
Area.
Rochester town......... New Bedford, MA....... Brockton, MA HUD Metro FMR
Area.
Minnesota......................... Dodge County........... Dodge County.......... Rochester, MN MSA.
Mississippi....................... Copiah County.......... Copiah County......... Jackson, MS MSA.
George County.......... George County......... Pascagoula, MS MSA.
Perry County........... Perry County.......... Hattiesburg, MS MSA.
Stone County........... Stone County.......... Gulfport-Biloxi, MS MSA.
Missouri.......................... Caldwell County........ Caldwell County....... Kansas City, MO-KS MSA.
DeKalb County.......... DeKalb County......... St. Joseph, MO-KS MSA.
Howard County.......... Howard County......... Columbia, MO MSA.
Osage County........... Osage County.......... Jefferson City, MO MSA.
Montana........................... Carbon County.......... Carbon County......... Billings, MT MSA.
Nebraska.......................... Dixon County........... Dixon County.......... Sioux City, IA-NE-SD MSA.
Nevada............................ Storey County.......... Storey County......... Reno-Sparks, NV MSA.
New Hampshire..................... Pelham town............ Lowell, MA--NH........ Nashua, NH HUD Metro FMR
Area.
Deerfield town......... Rockingham County..... Western Rockingham County,
NH HUD Metro FMR Area.
Northwood town......... Rockingham County..... Western Rockingham County,
NH HUD Metro FMR Area.
Nottingham town........ Rockingham County..... Western Rockingham County,
NH HUD Metro FMR Area.
Middleton town......... Strafford County...... Portsmouth-Rochester, NH
HUD Metro FMR Area.
New Durham town........ Strafford County...... Portsmouth-Rochester, NH
HUD Metro FMR Area.
Strafford town......... Strafford County...... Portsmouth-Rochester, NH
HUD Metro FMR Area.
New Mexico........................ Torrance County........ Torrance County....... Albuquerque, NM MSA.
Rhode Island...................... New Shoreham town...... Washington County..... Westerly-Hopkinton-New
Shoreham, RI HUD Metro FMR
Area.
South Carolina.................... Calhoun County......... Calhoun County........ Columbia, SC MSA.
Fairfield County....... Fairfield County...... Columbia, SC MSA.
Saluda County.......... Saluda County......... Columbia, SC MSA.
South Dakota...................... McCook County.......... McCook County......... Sioux Falls, SD MSA.
Turner County.......... Turner County......... Sioux Falls, SD MSA.
Union County........... Union County.......... Sioux City, IA-NE-SD MSA.
Tennessee......................... Cannon County.......... Cannon County......... Nashville-Davidson--
Murfreesboro, TN MSA.
Polk County............ Polk County........... Cleveland, TN MSA.
Sequatchie County...... Sequatchie County..... Chattanooga, TN-GA MSA.
Trousdale County....... Trousdale County...... Nashville-Davidson--
Murfreesboro, TN MSA.
Texas............................. Armstrong County....... Armstrong County...... Amarillo, TX MSA.
Bandera County......... Bandera County........ San Antonio, TX MSA.
Burleson County........ Burleson County....... College Station-Bryan, TX
MSA.
Callahan County........ Callahan County....... Abilene, TX MSA.
Carson County.......... Carson County......... Amarillo, TX MSA.
Clay County............ Clay County........... Wichita Falls, TX MSA.
Crosby County.......... Crosby County......... Lubbock, TX MSA.
Delta County........... Delta County.......... Dallas-Fort Worth-
Arlington, TX MSA.
Goliad County.......... Goliad County......... Victoria, TX MSA.
Irion County........... Irion County.......... San Angelo, TX MSA.
Jones County........... Jones County.......... Abilene, TX MSA.
Robertson County....... Robertson County...... College Station-Bryan, TX
MSA.
San Jacinto County..... San Jacinto County.... Houston-Baytown-Sugar Land,
TX MSA.
Utah.............................. Juab County............ Juab County........... Provo-Orem, UT MSA.
Morgan County.......... Morgan County......... Ogden-Clearfield, UT MSA.
Vermont........................... Bolton town............ Chittenden County..... Burlington-South
Burlington, VT MSA.

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Buels gore............. Chittenden County..... Burlington-South
Burlington, VT MSA.
Huntington town........ Chittenden County..... Burlington-South
Burlington, VT MSA.
Underhill town......... Chittenden County..... Burlington-South
Burlington, VT MSA.
Westford town.......... Chittenden County..... Burlington-South
Burlington, VT MSA.
Bakersfield town....... Franklin County....... Burlington-South
Burlington, VT MSA.
Berkshire town......... Franklin County....... Burlington-South
Burlington, VT MSA.
Enosburg town.......... Franklin County....... Burlington-South
Burlington, VT MSA.
Fairfield town......... Franklin County....... Burlington-South
Burlington, VT MSA.
Fletcher town.......... Franklin County....... Burlington-South
Burlington, VT MSA.
Franklin town.......... Franklin County....... Burlington-South
Burlington, VT MSA.
Highgate town.......... Franklin County....... Burlington-South
Burlington, VT MSA.
Montgomery town........ Franklin County....... Burlington-South
Burlington, VT MSA.
Richford town.......... Franklin County....... Burlington-South
Burlington, VT MSA.
Sheldon town........... Franklin County....... Burlington-South
Burlington, VT MSA.
Alburg town............ Grand Isle County..... Burlington-South
Burlington, VT MSA.
Isle La Motte town..... Grand Isle County..... Burlington-South
Burlington, VT MSA.
North Hero town........ Grand Isle County..... Burlington-South
Burlington, VT MSA.
Virginia.......................... Amelia County.......... Amelia County......... Richmond, VA MSA.
Appomattox County...... Appomattox County..... Lynchburg, VA MSA.
Caroline County........ Caroline County....... Richmond, VA MSA.
Clarke County.......... Clarke County, VA..... Washington-Arlington-
Alexandria, DC-VA-MD-WV
MSA.
Craig County........... Craig County.......... Roanoke, VA MSA.
Cumberland County...... Cumberland County..... Richmond, VA MSA.
King and Queen County.. King and Queen County. Richmond, VA MSA.
King William County.... King William County... Richmond, VA MSA.
Nelson County.......... Nelson County......... Charlottesville, VA MSA.
Surry County........... Surry County.......... Virginia Beach-Norfolk-
Newport News, VA-NC MSA.
Sussex County.......... Sussex County......... Richmond, VA MSA.
Washington........................ Skamania County........ Skamania County....... Portland-Vancouver-
Beaverton, OR-WA MSA.
West Virginia..................... Clay County............ Clay County........... Charleston, WV MSA.
Lincoln County......... Lincoln County........ Charleston, WV MSA.
Morgan County.......... Morgan County......... Hagerstown-Martinsburg, MD-
WV MSA.
Pleasants County....... Pleasants County...... Parkersburg-Marietta, WV-OH
MSA.
Wirt County............ Wirt County........... Parkersburg-Marietta, WV-OH
MSA.
Wisconsin......................... Kewaunee County........ Kewaunee County....... Green Bay, WI MSA.
Puerto Rico....................... A[ntilde]asco Municipio Mayagez, PR........... Aguadilla-Isabela-San
Sebastian, PR MSA.
----------------------------------------------------------------------------------------------------------------
Note: Counties or New England cities or towns with common Old FMR Area names are in the same insufficient sample
candidate sub-area.

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[FR Doc. 05-10882 Filed 6-1-05; 8:45 am]

BILLING CODE 4210-01-C