[Federal Register Volume 75, Number 191 (Monday, October 4, 2010)]
[Notices]
[Pages 61254-61319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24465]
[[Page 61253]]
-----------------------------------------------------------------------
Part II
Department of Housing and Urban Development
-----------------------------------------------------------------------
Final Fair Market Rents for Fiscal Year 2011 for the Housing Choice
Voucher Program and Moderate Rehabilitation Single Room Occupancy
Program; Notice
Federal Register / Vol. 75 , No. 191 / Monday, October 4, 2010 /
Notices
[[Page 61254]]
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5430-N-02]
Final Fair Market Rents for Fiscal Year 2011 for the Housing
Choice Voucher Program and Moderate Rehabilitation Single Room
Occupancy Program
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of Final Fair Market Rents (FMRs) for Fiscal Year (FY)
2011.
-----------------------------------------------------------------------
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.
The primary uses of FMRs are to determine payment standards for the
Housing Choice Voucher program, to determine initial renewal rents for
some expiring project-based Section 8 contracts, to determine initial
rents for housing assistance payment (HAP) contracts in the Moderate
Rehabilitation Single Room Occupancy program (Mod Rehab), and to serve
as rent ceilings in the HOME program. Today's notice provides final FY
2011 FMRs for all areas that reflect the estimated 40th and 50th
percentile rent levels trended to April 1, 2011. The FY 2011 FMRs are
based on 2000 Census data updated with more current survey data. For FY
2011, FY 2010 FMRs are updated using 2008 American Community Survey
(ACS) data, and Consumer Price Index (CPI) rent and utility indexes
through the year end of 2009. HUD continues to use ACS data in
different ways according to how many two-bedroom standard-quality and
recent-mover sample cases are available in the FMR area or its Core-
Based Statistical Area (CBSA). As proposed in the August 4, 2010,
notice (75 FR 46958), this notice establishes FY 2011 Small Area FMRs
for the Housing Choice Voucher program in the Dallas, TX HUD
Metropolitan FMR Area (HMFA). All Public Housing Authorities (PHAs)
operating in the 8-county HMFA must use the Small Area FMRs from
Schedule B Addendum (listed by county and ZIP code) for the voucher
program. All other programs that use FMRs will continue to use area-
wide FMRs shown in Schedule B for Dallas, TX HMFA.
DATES: Effective Date: The FMRs published in this notice are effective
on October 1, 2010.
FOR FURTHER INFORMATION CONTACT: For technical information on the
methodology used to develop FMRs or a listing of all FMRs, please call
the HUD USER information line at (800) 245-2691 or access the
information at the following link on the HUD Web site: http://www.huduser.org/datasets/fmr.html. FMRs are listed at the 40th or 50th
percentile in Schedule B. An asterisk before the FMR area name
identifies a 50th percentile area. 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 Mark
Stanton, Economic and Market Analysis Division, Office of Economic
Affairs, Office of Policy Development and Research, telephone number
(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 TTY 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 Web site at http://www.hudclips.org. Federal Register notices also are available
electronically from the U.S. Government Printing Office Web site,
http://www.gpoaccess.gov/fr/index.html. Complete documentation of the
methodology and data used to compute each area's Final FY 2011 FMRs is
available at http://www.huduser.org/datasets/fmr/fmrs/index.asp?data=fmr11.
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.
The Department'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. Areas that currently have 50th percentile FMRs are
evaluated for progress in voucher tenant deconcentration after three
years in the program. Continued eligibility is determined using HUD
administrative data that show levels of voucher tenant concentration.
The levels of voucher holder concentration must be above 25 percent and
show a decrease in concentration since the last evaluation. At least 85
percent of the voucher units in the area must be used to make this
determination. For FY 2011, there were 17 areas that were designated as
50th percentile areas. None of the current 50th percentile FMR areas
were evaluated this year because they have not completed three years of
program participation. As listed below, 10 areas complete their three-
year program period and will be evaluated to determine if they remain
50th percentile FMR areas in the proposed FY 2012 FMR publication.
[[Page 61255]]
FY 2010 50th-Percentile FMR Areas Not Slated for Eligibility Evaluation
Until FY 2012 FMRs
------------------------------------------------------------------------
------------------------------------------------------------------------
Albuquerque, NM MSA North Point-Bradenton-Sarasota, FL
MSA
Chicago-Naperville-Joliet, IL HMFA Denver-Aurora, CO MSA
Hartford-West Hartford-East Houston-Baytown-Sugar Land, TX HMFA
Hartford, CT HMFA
Kansas City, MO-KS, HMFA Milwaukee-Waukesha-West Allis, WI
MSA
Richmond, VA HMFA Tacoma, WA HMFA
------------------------------------------------------------------------
An additional seven current 50th percentile FMR areas complete
their three-year program period and will be evaluated to determine if
they remain 50th percentile FMR areas in the proposed FY 2013 FMR, as
shown below.
FY 2010 50th-Percentile FMR Areas Not Slated for Eligibility Evaluation
Until FY 2013 FMRs
------------------------------------------------------------------------
------------------------------------------------------------------------
Baltimore-Towson, MD MSA Fort Lauderdale, FL HMFA
Grand Rapids-Wyoming, MI HMFA New Haven-Meriden, CT HMFA
Philadelphia-Camden-Wilmington, PA- Washington-Arlington-Alexandria, DC-
NJ-DE-MD MSA VA-MD HMFA
West Palm Beach-Boca Raton, FL HMFA
------------------------------------------------------------------------
As noted in the publication of proposed FY 2011 FMRs, an additional
area qualified for 50th percentile FMRs and will be eligible for review
with the proposed FY 2014 FMRs. This area is Bergen-Passaic, NJ HMFA.
III. Proposed FY 2011 FMRs
On August 4, 2010 (75 FR 46958), HUD published proposed FY 2011
FMRs. As noted in the preamble to the proposed FMRs, the FMRs for FY
2011 reflect the use of both one-year and three-year 2008 ACS data to
update June 2007 rent estimates for each area. In addition, the FY 2011
FMRs include all changes made to metropolitan area definitions made by
the Office of Management and Budget (OMB) as of December 2009.
During the comment period, which ended September 3, 2010, HUD
received 16 public comments on the proposed FY 2011 FMRs. None of the
comments HUD received included the data needed to support FMR changes.
Several of these comments expressed that proposed FY 2011 FMRs are
incorrect for their respective market areas. One commenter noted an
inconsistency in the methodology that is corrected and discussed in the
following methodology section. The rest of the comments received are
discussed in more detail later in this notice.
IV. FMR Methodology
The FY 2011 FMRs are based on current OMB metropolitan area
definitions that were first used in the FY 2006 FMRs. The changes OMB
made to the Metropolitan Area Definitions in December 2009 are
incorporated. As of December 2009, there was a change in the principal
cities of three metropolitan areas that resulted in a code change.
These three metropolitan areas are: North Port-Bradenton-Sarasota, FL
MSA, Crestview-Fort Walton Beach-Destin, FL MSA, and Steubenville-
Weirton, OH-WV MSA. In Alaska, there was a name change for a
nonmetropolitan borough, from Prince of Wales-Ketchikan Census Area, AK
to Prince of Wales-Hyder Census Area, AK; and two other Alaskan
boroughs were divided, from Skagway-Hoonah-Angoon to Skagway and
Hoonah-Angoon boroughs; and from Wrangell-Petersburg to Wrangell and
Petersburg boroughs. The area definitions based on 2000 Census data
have the advantages of providing more relevant commuting interchange
standards, and more current measures of housing market relationships
than those based on 1990 Census data and used prior to the FY 2006
FMRs.
At HUD's request, the Census Bureau prepared a special publicly
releasable census file that permits almost exact replication of HUD's
2000 Census 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/.
A. Data Sources--2000 Census and American Community Survey
As in all post-FY 2006 FMR publications, FY 2011 FMRs start with
base rents generated using Census 2000 long form survey data. They are
updated with American Community Survey (ACS) data and Bureau of Labor
Statistics Consumer Price Index (CPI) data. FY 2011 FMRs are FY 2010
FMRs updated by replacing the CPI data used for FY 2010 FMRs with ACS
2008 survey data and updated with CPI data through the end of 2009.
Specifically, the FY 2010 rent (as of date: April, 2010) is deflated to
June 2007 by dividing it by 18 months of CPI data representing June
2007 through December 2008 inflation, and the usual 15 month trend
factor. This June 2007 rent is the best and most recent rent estimate
available using only ACS survey and eliminating all other update data.
It is this rent that is updated with additional ACS data and new CPI
data.
In order to preserve additional information gathered by HUD through
random digit dialing (RDD) surveys, areas surveyed after June 2008 are
updated separately, the details of which can be found at the Web site
listed above.
B. Updates From 2007 to 2008-2008 ACS
ACS survey data continues to be applied to areas based on the type
of area (CBSA, metropolitan subarea, or non-metropolitan county), the
amount of survey data available, and the reliability of the survey
estimates. Both one- and three-year ACS 2008 data are used to update
June 2007 rents. HUD considered using the change in the three-year
2005-2007 ACS to three-year 2006-2008 ACS in place of the change from
2007 one-year ACS to 2008 one-year ACS, but the nature of the 3 year
data mutes the effects of the more recent data, which HUD finds more
important for achieving the objectives of the HCV program.
Consequently, HUD calculates update factors using the change in ACS
one-year data from 2007 to 2008. Beginning with the FY 2010 FMRs, HUD
tests these rent changes for statistical significance \1\
---------------------------------------------------------------------------
\1\ The change is considered statistically significant if Z >
1.645 where (see equation above) and EST1 = ACS 2008
Estimate, EST2 = ACS 2007 Estimate (or ACS 2006 Estimate
when the change from 2006-2007 = 1), SE1 = Standard Error
of Estimate 1 and SE2 = Standard Error of Estimate 2.
---------------------------------------------------------------------------
[[Page 61256]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.062
before applying them to the appropriate base rent. Any state- or
metropolitan-level change that is not statistically significant is not
applied. That is, the updated 2008 rent is the same as the 2007 rent if
the applicable update factor does not represent a statistically
significant change. HUD applied this test as a measure to minimize
fluctuations in rents due to survey error. Metropolitan level rent
changes are used for CBSA areas and subareas that have more than 200
standard quality cases in 2007 and 2008. All other areas are updated
with state level rent changes. For subareas, State and CBSA change
factors continue to be selected based on which factor brings the
subarea rent closer to the CBSA-wide rent. Subareas which have 200 or
more local standard quality survey observations are updated with their
local area update factor.
The error measurement test and ACS-based update factor is revised
from the proposed FY 2011 FMRs, in response to a comment. The commenter
noted that using a z-test that compared the 2008 rent to the 2007 rent
was not logical for areas where the 2007 ACS rent was never used in the
update, or where the z-test last year (evaluating the change from 2006
to the 2007 ACS rent) was not statistically significant and HUD applied
an ACS update factor of one. To correct this oversight, HUD revised the
FMR estimation process for areas where there was no statistically
significant difference between the 2006 and the 2007 ACS rent result,
where the ACS update equaled one. The z-test for these areas would be
applied to the difference in the rent and error measurement for 2006
compared with 2008 ACS, rather than a comparison of 2007 to 2008 ACS.
After all areas have been updated with a standard quality median
rent change, local areas with estimates that reflect more than 200 one-
year recent mover cases are evaluated further. If the updated rent is
outside the confidence interval of the ACS recent mover estimate, the
updated rent is replaced with the ACS recent mover rent estimate. In
areas without 200 or more one-year ACS recent mover observations, but
with 200 or more three-year ACS recent mover observations, the three
year estimate \2\ is used if it is statistically different from the
updated 2008 rent based on the standard quality median rent change.
This process creates a June 2008 rent.
---------------------------------------------------------------------------
\2\ The recent mover estimate from the three year data includes
all those who moved in the most recent 24 month period. That means
that no 2006 survey data are included in this three-year recent
mover classification and the likelihood of having a valid (with 200
or more cases) three-year recent mover rent is lower for these
estimates.
---------------------------------------------------------------------------
C. Updates From 2008 to 2009
ACS 2008 data updates the June 2007 rents used in the FY 2010 FMRs
forward by 12 months to June 2008. HUD uses six months of 2008 and 12
months of 2009 CPI rent and utilities price index data to update the
June 2008 rents to the end of 2009. HUD uses local CPI data for FMR
areas with at least 75 percent of their population within Class A
metropolitan areas covered by local CPI data. HUD uses CPI data
aggregated to Census regions for FMR areas in Class B and C size
metropolitan areas and nonmetropolitan areas without local CPI update
factors.
D. Updates From 2009 to 2011
HUD applies the national 1990 to 2000 average annual rent increase
trend of 1.03 to end-of-2009 rents for 15 months, to derive the
proposed FY 2011 FMRs. HUD will publish an additional Federal Register
notice this fall requesting alternatives to the use of this long-term
historical trend factor. HUD is considering alternatives for trend
factors that include historical average annual trend factors based on
shorter time periods and trends based on projections linked to other
government forecasts.
The area-specific data and computations used to calculate proposed
FY 2011 FMRs and FMR area definitions can be found at http://www.huduser.org/datasets/fmr/fmrs/index.asp?data=fmr11.
E. Large Bedroom Rents
HUD's principal FMR estimate is for two-bedroom units. This
generally is the most common size of rental units, and therefore the
most reliable to survey and analyze. After each decennial census, HUD
calculates rent relationships between two-bedroom units and other unit
sizes and uses these relationships 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. This was
last done using 2000 Census data. A publicly releasable version of the
data file used that permits derivations of rent ratios is available at
http://www.huduser.org/datasets/fmr/CensusRentData/index.html. Rent
ratio derivations are also shown in the FMR documentation system at
http://www.huduser.org/datasets/fmr/fmrs/index.asp?data=fmr11.
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, who 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. HUD's 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.,
large numbers of luxury efficiency apartments 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 samples to permit accurate bedroom ratio determinations.
These ranges are: efficiency FMRs are constrained to fall between 0.65
and 0.83 of the two-bedroom FMR; one-bedroom FMRs must be between 0.76
and 0.90 of the two-bedroom FMR; three-bedroom FMRs must be between
1.10 and 1.34 of the two-bedroom FMR; and four-bedroom FMRs must be
between 1.14 and 1.63 of the two-bedroom FMR. Bedroom rents for a given
FMR area were then adjusted if the differentials between bedroom-size
FMRs were inconsistent with normally observed patterns (i.e.,
efficiency rents were not allowed to be higher than one-bedroom rents
and four-bedroom rents were not allowed to be lower than three-bedroom
rents).
For low-population, nonmetropolitan counties with small census
recent-mover rent samples, HUD uses census-defined county group data in
determining rents for each bedroom size. This adjustment was made to
protect against unrealistically high or
[[Page 61257]]
low FMRs due to insufficient sample sizes. The areas covered by this
estimation method had less than the HUD standard of 200 two-bedroom
census-tabulated observations.
V. Public Comments
A total of 16 public comments were received on the proposed FY 2011
FMRs. Seven of the comments filed concerned the 4.1 percent decline in
FMRs for the Pittsburgh, PA HUD Metro FMR Area. According to the
commenters, within the city there are high vacancy rates, high
abandonment and condemnation rates and high percentages of substandard
housing in the older, denser communities. A 2004 study of the city
determined that 70 percent to 90 percent of the housing stock is
considered below average in certain districts of the city, which is a
major factor in the affordability of the City's housing market. The
market for voucher holders is further constrained by refusal by
landlords to accept vouchers and the changing nature of neighborhoods
of choice. As a solution to this problem, it was suggested HUD
institute a hold-harmless policy for FMRs; that is the FY 2011 FMRs
should not be allowed to decline, but should be left at the higher
level from FY 2010, at a minimum. It was also suggested that the FMR
area be split into smaller areas to produce more accurate results. HUD
will not institute a hold-harmless for Pittsburgh or any other FMR
area. The FY 2011 FMR for the Pittsburgh, PA HUD Metro FMR Area is
calculated using the most recent data available, based on local surveys
from both the ACS and CPI. If smaller areas will help Public Housing
Agencies (PHAs) operating the Housing Choice Voucher program within the
city manage the program, these PHAs should consider applying for
participation in HUD's small area FMR demonstration project.
Information on the structure of the demonstration project and
instructions for application will be announced in early 2011 by
publication of a Federal Register notice.
A commenter in the Washington-Arlington-Alexandria, DC-VA-MD HUD
Metro FMR Area also requested a hold harmless policy be instituted to
prevent declines in FMRs. Even under the small area FMR demonstration
project, FMRs will be allowed to decline from year to year. Small area
FMRs used in the demonstration project will continue to include a rent
floor (based on the state minimum as is currently in place); however,
the methodology for calculating the current year metropolitan area rent
has not been proposed to be changed from the current methodology.
There were several comments filed addressing the small area FMR
demonstration project and much confusion about HUD's failure to respond
to the comments filed with respect to the May 18, 2010 Federal Register
notice (75 FR 27808). Comments on small area FMRs were received from
the Montgomery County Housing Authority of Norristown, PA; the Public
Housing Authorities Directors Association, and, in part, the National
Association of Home Builders. Internally, all of the comments to the
small area FMR demonstration project notice have been discussed and a
notice with this discussion and decisions and further details on the
program will be published in early 2011. Including a general discussion
of the comments filed in response to the May 18, 2010 notice in this
notice finalizing FY 2011 FMRs is likely to exacerbate the confusion.
For this reason, the small area FMR methodology section is not included
in this Notice, though it is unchanged from the proposed FY 2011 FMR
publication for the Dallas, TX HUD Metro FMR Area, and may be accessed
at http://www.huduser.org/portal/datasets/fmr/fmr2011p/Preamble_FY2011P_FMRs.pdf. One commenter noticed that the Small Area FMRs for
Dallas did not incorporate the 10 dollar rounding protocol identified
in the methodology and posted in the Web site. This has been corrected
in this publication, so that the published Small Area FMRs that will be
used for the voucher program in Dallas, TX HMFA beginning on October 1,
2010 show a 10 dollar rounding protocol instead of an earlier proposed
25 dollar protocol. These Small Area FMRs are provided in the Schedule
B Addendum, which lists the FMRs by county and ZIP code. All PHAs
operating in the Dallas must use these Small Area FMRs for the Housing
Choice Voucher program. The area-wide FMRs for the Dallas, TX HMFA,
listed in Schedule B, continue to be used for all other programs.
Another commenter questioned how the demonstration project could be
considered voluntary, when it is not so for Dallas. While all other
participation in the demonstration project will be voluntary and will
not begin until early 2011 after discussion of all comments and further
description of the program, the Dallas demonstration project and its
timing reflects a court settlement between HUD and the Inclusive
Communities Project, Inc. and the timing cannot be changed, nor can
other aspects of the program. Therefore, the demonstration project
being conducted in the Dallas, TX HUD Metropolitan FMR Area may differ
in other ways (other than the start date) from what is decided for
voluntary participants of the demonstration project.
The National Association of Housing and Redevelopment Officials
(NAHRO) discusses eight issues in its comments to the FY 2011 FMRs,
although most are reiterations of positions that NARO has expressed
consistently since the publication of the FY 2006 FMRs. Foremost among
those concerns is the use by HUD of metropolitan area definitions based
on 2000 Census data as opposed to the area definitions from FY 2005
FMRs based on 1990 data. HUD modified the metropolitan area definitions
based on rent and income relationships comparing old (FY 2005) FMR
areas to new FMR areas, but NAHRO specifically opposes the inclusion of
formerly nonmetropolitan counties into metropolitan areas. Under HUD's
current methodology for calculating FMRs and median family income
estimates, these non-metropolitan subareas would be given their own FMR
and designated a HUD Metro FMR Area (HMFA) if either their rent or
income was more than five percent different from the rent or income of
the new area and there is sufficient Census data available to provide
statistically reliable rent and income estimates. For the former
nonmetropolitan counties that did not have enough data to make this
comparison, HUD determined it could not dilute the FMR for the
metropolitan area. Overall, HUD does not agree with the premise of the
argument, that metropolitan FMR areas have been diluted by the change
in the area definitions. Furthermore, NAHRO's argument does not allow
for the growth and change of metropolitan areas over time. Moreover,
unlike in past years where FMR base-year data was updated every 10
years with the decennial census, FMRs are updated with ACS data
annually, and can be rebenchmarked using ACS data if enough recent
mover observations exist for the area. ACS data is aggregated using the
new area definitions. The fewer changes HUD has to these definitions,
the more transparent the FMR calculation process, since it is not
dependent on special tabulation of data.
The request by NAHRO to re-institute the 10 regional surveys of
metropolitan and nonmetropolitan areas used for the Annual Adjustment
Factors (AAFs) and the FMRs is also being denied. These 20 factors were
based on longitudinal surveys from around FY 1996 to FY 2005. HUD
determined, through analysis of 2000 Census data, that these
[[Page 61258]]
20 surveys did not improve estimates of rent changes, so HUD reverted
to using CPI rent and utility surveys for the 4 Census regions. The CPI
data provided better results while saving the Department the cost of
the 20 surveys. Based on the analysis of the 2000 Census data, HUD
concluded there was a valid statistical reason for the elimination of
the 20 regional surveys. The regional AAFs are also based on the same
data (CPI for rent and utilities--aggregated to the 4 Census Regions)
that is used for the local AAFs.
NAHRO request that HUD publish the utility component of FMRs. HUD
cannot do this because, as discussed in the methodology and emphasized
here, HUD establishes FMRs based on gross rent data from the census.
HUD does not collect utility data to update the FMRs. The base FMR and
the ACS updates are generated using data collected on a gross rent
basis. Only the CPI update is split between rent and utilities and this
split, as discussed in the methodology, uses the percentage of those
who pay for heat (again not utility data) to determine the percentage
of utilities in the gross rent to apply the CPI utility index. HUD does
not collect utility data and therefore cannot provide it.
Several of NAHRO's issues concern the adjustment for housing
quality standards and suggestions for improvement of this determination
for the FMRs. HUD is also concerned with adjustments for housing
quality standards and will continue to evaluate this issue. At this
time, however, no changes will be made.
NAHRO requests changes to the re-qualification process for 50th
percentile FMRs including an automatic extension for areas that lose
50th percentile status and an unspecified change in the criteria used
to evaluate the program. The automatic extension goes against the
intent of the program, which is only available to a select number of
areas, and any changes would require a rulemaking process. At this
point HUD is focusing its efforts to expand opportunities to voucher
holders through small area FMRs rather than changes to the 50th
percentile FMR program.
The request for data to determine the median rent method (which HUD
would not have to provide if the 2000 Census metropolitan area
definitions were not modified since this data would be available
through the Census Bureau's American Factfinder) has been available
internally for some time. This is now posted on our Web site at http://www.huduser.org/portal/datasets/fmr.html.
NAHRO also comments on random digit dialing surveys (RDDs), in
terms of the limited time to conduct them and the current methodology.
HUD will accept RDDs conducted by areas and make revisions at any time
during the fiscal year. Currently, HUD is conducting several RDDs and
plans a revised Final FY2011 FMR notice following the completion of the
surveys and processing of the data. Additionally, HUD is investigating
ways of revising its survey methodology to include other less expensive
ways to collect rent data, under a contract that will begin early next
year. HUD's current survey methodology collects recent mover rents to
determine if adjustments to FMRs are needed. The recent mover period
has ranged from as little as 6 months to 24 months depending on the
economic climate of the survey area. The fifteen-month designation for
recent mover rents is the definition used in the decennial census.
Under the ACS, however, the recent mover rent is a 24-month period and
this is what is used most often in current RDD surveys. The current
random digit dialing methodology collects enough recent-mover rents in
an area to provide a statistically significant rent, which is generally
200 cases, though the results of the survey are compared to the current
FMR to determine if a statistically significant difference exists. If
so, the RDD survey result replaces the current FMR. Rents for stayers
are also collected for purposes of comparison and further validity
tests of the survey data.
A comment from Minot, ND states that this area continues to
struggle with a very tight rental market, despite the increased FMRs
provided from a RDD survey conducted by HUD last year. Rents continue
to increase at a rapid rate. Another informal comment from Williams
County, ND also shows significant rental increases. The causes of these
increases are somewhat the same, and are attributed to increased jobs
in oil and gas exploration, although in Minot, the Air Force base is
also expanding, with estimated growth in personnel of 900 to 1,000.
Small and rapidly changing markets, such as these, for which the ACS
provides less timely data do require rent surveys, but it may be
worthwhile for Minot to partner with Williams and other counties in the
area to conduct a joint survey. Local agencies can conduct surveys at
substantially less cost than HUD. Under HUD's current procedures, the
timing of Minot's survey is crucial. Surveys are too expensive, even if
conducted by small agencies, to be administered annually. The full
extent of the expansion of the Air Force base cannot be measured until
at least 6 months after it has occurred, and then the survey must limit
the definition of recent movers as those moved in the past 6 months.
HUD will contact Minot and Williams County to determine how and when to
proceed with collecting updated rent information.
The Oklahoma City Housing Authority commented that the proposed
increase in FMRs for the Oklahoma City, OK MSA is appropriate.
A comment filed by the National Association of Home Builders (NAHB)
requested that HUD institute a floor to prevent any FY 2011 FMRs from
declining by more than five percent, or else conduct RDD surveys of
these areas. HUD considers it an inappropriate use of scarce resources
to survey all areas that have FMR declines of more than 5 percent. In
order to be effective, FMRs must follow the market, both up and down,
in accordance with the most recent data available. HUD has attempted to
mitigate the impact of annual changes, with the implementation of
statistical significance testing for changes measured in annual ACS
data, but HUD is committed to allowing changing market conditions to be
reflected in the FMRs.
VI. 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. For FY 2011, HUD received no comments or data
concerning manufactured home space rents.
All approved exceptions to these rents that were in effect in FY
2010 were updated to FY 2011 using the same data used to estimate the
Housing Choice Voucher program FMRs if the respective FMR area's
definition remained the same. If the result of this computation was
higher than 40 percent of the re-benchmarked two-bedroom rent, the
exception remains 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 exceptions to their manufactured housing
space rental FMRs are requested to submit new
[[Page 61259]]
surveys to justify higher-than-standard space rental FMRs if they
believe higher space rental allowances are needed.
VII. HUD Rental Housing Survey Guides
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 $35,000. Areas with 2,000 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
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, in 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 where 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, in Microsoft Word
format, are available from HUD USER at HUD's Web site at the following
address: http://www.huduser.org/datasets/fmr.html.
Other survey methodologies are acceptable in providing data to
support comments, 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 of FMR areas cover only one- and two-bedroom units. 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 may find it appropriate
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 public
housing authority's utility schedule.
VIII. Environmental Impact
This Notice involves the establishment of fair market rent
schedules, which do not constitute a development decision affecting the
physical condition of specific project areas or building sites.
Accordingly, under 24 CFR 50.19(c)(6), this Notice is categorically
excluded from environmental review under the National Environmental
Policy Act of 1969 (42 U.S.C. 4321).
Accordingly, the Fair Market Rent Schedules, which will not be
codified in 24 CFR part 888, are amended as follows:
Dated: September 24, 2010.
Raphael W. Bostic,
Assistant Secretary for Policy Development and Research.
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 in direct competition. The FY
2011 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 the 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 FY 2011 FMRs incorporates the current OMB
definitions of metropolitan areas based on the CBSA standards as
implemented with 2000 Census data, but makes adjustments to the
definitions to separate subparts of these areas where FMRs or median
incomes 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 in the future 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 area 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 1999 definition MSAs/PMSAs, metropolitan
counties deleted from 1999 definition MSAs/PMSAs by HUD for FMR
purposes, and counties and county parts outside of 1999 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 the MSA 2000 Census Base Rent (i.e.,
by at most 95 percent or at least 105 percent), or when the 2000 Census
Median Family Income for the sub-area differs by at least 5 percent
from the MSA 2000 Census Median Family Income. 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 specific counties and New England towns and cities within each
[[Page 61260]]
state in MSAs and HMFAs are listed in Schedule B.
2. Bedroom Size Adjustments
Schedule B shows the FMRs for zero-bedroom through four-bedroom
units. 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 (SRO) units are 0.75 times
the zero-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 rents for manufactured home spaces FMRs are listed
alphabetically in Schedule D.
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.
BILLING CODE 4210-67-P
[[Page 61261]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.000
[[Page 61262]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.001
[[Page 61263]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.002
[[Page 61264]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.003
[[Page 61265]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.004
[[Page 61266]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.005
[[Page 61267]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.006
[[Page 61268]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.007
[[Page 61269]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.008
[[Page 61270]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.009
[[Page 61271]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.010
[[Page 61272]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.011
[[Page 61273]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.012
[[Page 61274]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.013
[[Page 61275]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.014
[[Page 61276]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.015
[[Page 61277]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.016
[[Page 61278]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.017
[[Page 61279]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.018
[[Page 61280]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.019
[[Page 61281]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.020
[[Page 61282]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.021
[[Page 61283]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.022
[[Page 61284]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.023
[[Page 61285]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.024
[[Page 61286]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.025
[[Page 61287]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.026
[[Page 61288]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.027
[[Page 61289]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.028
[[Page 61290]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.029
[[Page 61291]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.030
[[Page 61292]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.031
[[Page 61293]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.032
[[Page 61294]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.033
[[Page 61295]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.034
[[Page 61296]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.035
[[Page 61297]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.036
[[Page 61298]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.037
[[Page 61299]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.038
[[Page 61300]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.039
[[Page 61301]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.040
[[Page 61302]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.041
[[Page 61303]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.042
[[Page 61304]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.043
[[Page 61305]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.044
[[Page 61306]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.045
[[Page 61307]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.046
[[Page 61308]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.047
[[Page 61309]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.048
[[Page 61310]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.049
[[Page 61311]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.050
[[Page 61312]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.051
[[Page 61313]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.052
[[Page 61314]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.053
[[Page 61315]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.054
[[Page 61316]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.055
[[Page 61317]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.056
[[Page 61318]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.057
[[Page 61319]]
[GRAPHIC] [TIFF OMITTED] TN04OC10.058
[FR Doc. 2010-24465 Filed 9-28-10; 11:15 am]
BILLING CODE 4210-67-C