Federal Register, Volume 59 Issue 66 (Wednesday, April 6, 1994)

[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X94-10406]

[[Page Unknown]]

[Federal Register: April 6, 1994]

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Part XII

Department of Housing and Urban Development

_______________________________________________________________________

Office of the Secretary

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24 CFR Part 888

Section 8 Housing Assistance Payments Program; Fair Market Rent
Schedules for Use in the Rental Certificate Program; Final Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 888

[Docket No. N-94-3616; FR-3510-N-05]

Section 8 Housing Assistance Payments Program; Fair Market Rent
Schedules for Use in the Rental Certificate Program, Loan Management
and Property Disposition Programs, Moderate Rehabilitation Program and
Rental Voucher Program

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of final fair market rents; amendment.

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
requires the Secretary to publish Fair Market Rents (FMRs)
periodically, but not less frequently than annually, to be effective on
October 1 of each year. FMRs are used for the Section 8 Rental
Certificate program (part 882, subparts A and B), including space
rentals by owners of manufactured homes under the Section 8 Rental
Certificate program (part 882, subpart F); the Section 8 Moderate
Rehabilitation program (part 882, subparts D and E); Section 8 housing
assisted under part 886, subparts A and C (Section 8 Loan Management
and Property Disposition programs); and are used to determine payment
standard schedules in the Rental Voucher program (part 887).
HUD published proposed Fiscal Year (FY) 1994 FMRs for the Section 8
Rental Certificate program on May 6, 1993 (58 FR 27062) and solicited
public comments for a 60-day period. The FY 1994 FMRs were the first to
be developed with revisions based on use of the 1990 Census data; they
also included post-Census American Housing Surveys (AHSs) and Random
Digit Dialing (RDD) telephone surveys. Because of the large number of
requests in response to changes in the FMRs caused by the Census data
rebenchmarking, the public comment period was extended to August 31,
1993 by notice on July 6, 1993 (58 FR 36175).
On October 1, 1993, HUD published final FMRs for all areas,
including over 600 areas that still had comments under review. The FMRs
for those areas were retained at the levels of the previous year (FY
1993) pending completion of the review of the comments. This review has
now been completed and today's notice announces final FY 1994 FMR
schedules for the areas under review. The FMR schedules for all areas
are included in this notice to avoid the confusion of having more than
one publication of FY 1994 FMRs.

EFFECTIVE DATE: The FMRs published in this notice are effective on
April 6, 1994.

FOR FURTHER INFORMATION CONTACT: Shirley C. Stone, Rental Assistance
Division, Office of Public and Indian Housing, telephone (202) 708-
0477. For technical information on the development of schedules for
specific areas or the method used for the rent calculations, contact
Michael R. Allard, Economic and Market Analysis Division, Office of
Economic Affairs, telephone (202) 708-0577. The TDD number for the
hearing impaired is (202) 708-0770. (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: Section 8 of the United States Housing Act
of 1937 (the Act) (42 U.S.C. 1437f) authorizes a housing assistance
program to aid lower income families in renting decent, safe, and
sanitary housing. Assistance payments are limited by Fair Market Rents
(FMRs), or payment standards in the Rental Voucher Program, established
by HUD for different areas. In general, the FMR for an area is the
amount that would be needed to rent privately owned, decent, safe, and
sanitary rental housing of a modest (non-luxury) nature with suitable
amenities. Section 8(c) of the Act requires the Secretary of HUD to
publish FMRs periodically, but not less frequently than annually, to be
effective on October 1 of each year. The FMRs must reflect changes
based on the most recent available data so FMRs will be current for the
year in which they apply.

Metropolitan Area Definitions

In the May 6, 1993 publication of the proposed FMRs, HUD announced
that the FMR area definitions, with several exceptions, incorporated
the changes made in the definitions of metropolitan areas by the Office
of Management and Budget (OMB Bulletin No. 93-05). The HUD exceptions
were for nine large metropolitan areas whose revised OMB definitions
encompassed areas larger than what HUD considers appropriate for FMR
area definitions.
At that time, the metropolitan area definitions for both the Boston
and New York-Northern New Jersey areas were still under review by OMB.
HUD decided, therefore, to continue using the previous definitions
until OMB made its final decisions and HUD could evaluate them. On June
30, 1993, OMB announced its revised definitions in OMB Bulletin NO. 93-
17.
OMB's final decisions were, with minor differences, to return to
the pre-1993 definitions for both the Boston and New York-Northern New
Jersey areas. For the Boston area, the only significant change was to
combine the former Salem-Gloucester PMSA with the former Boston PMSA to
form the new Boston MA-NH PMSA. This change increased the FMRs for the
Salem-Glouchester area, but did not change the Boston area FMRs. For
the New York-Northern New Jersey area, Pike County, Pennsylvania was
combined with Orange County, New York to form the Newburgh NY-PA PMSA.
This had the effect of increasing the FMRs for Pike County but did not
change those for Orange County. Because these changes had no
significant impact on HUD's existing FMR areas, the October 1
publication adopted the revised OMB definitions of the Primary
Metropolitan Statistical Areas (PMSAs) that comprise the greater Boston
and the greater New York metropolitan areas as the area definitions for
the final FY 1994 FMRs.
HUD also proposed in the May 6, 1993 publication to modify the FMR
area definitions for seven other metropolitan areas by deleting
counties that OMB had added to its revised definitions. The decision to
delete these counties was based on an evaluation conducted by HUD
headquarters and field staff. The counties deleted from the FMR areas
are those that are the most remote from the central cities/counties of
the metropolitan area and have the lowest rents, in most cases
significantly below the FMR area rent averages. They are as follows:

FMR Area and Changes in FMR Area

Atlanta, GA--Deleted Carroll, Pickens, Spalding, and Walton Counties.
Chicago, IL--Deleted DeKalb, Grundy and Kendall Counties.
Cincinnati-Hamilton, OH-KY-IN--Deleted Brown County, Ohio; Gallatin,
Grant and Pendleton Counties in Kentucky; and Ohio County, Indiana.
Dallas, TX--Deleted Henderson County.
Lafayette, LA--Deleted St. Landry and Acadia Parishes.
New Orleans, LA--Deleted St. James Parish.
Washington, DC--Deleted Berkeley and Jefferson Counties in West
Virginia; and Clarke, Culpeper, King George and Warren counties in
Virginia.

The counties deleted from the FMR areas are included in Schedule B
within their respective states as separate metropolitan FMR areas. The
only comments received concerning the revised FMR areas for the above
areas were several from Lake County, Illinois, requesting that it be
designated a separate FMR area independent of the Chicago FMR area. On
the basis of its analysis, HUD has determined that Lake County is
appropriately categorized as part of the Chicago housing market area
and should remain a part of the Chicago FMR area. HUD, therefore, has
not changed the definition.
OMB also modified the definitions of four other metropolitan areas
in its final Bulletin. The four are: Augusta-Aiken, GA-SC; Baton Rouge,
LA; Huntington-Ashland, WV-KY-OH; Wilmington, NC. HUD is implementing
the new definitions because the changes involved adding small counties
that did not affect the FMRs or significantly alter the FMR area
definitions.
HUD also proposed in the May 6, 1993 Notice that the FMRs for the
independent cities and surrounding counties in Virginia be established
by combining the city and county data, rather than having separate FMRs
for the cities and counties. The final FY 1994 FMRs are based on the
following FMR areas:

------------------------------------------------------------------------
FMR area (county) Independent cities included
------------------------------------------------------------------------
Allegheny.......................... Clifton Forge and Covington.
Augusta............................ Staunton and Waynesboro.
Carroll............................ Galax.
Frederick.......................... Winchester.
Greensville........................ Emporia.
Halifax............................ South Boston.
Henry.............................. Martinsville.
Montgomery......................... Radford.
Rockbridge......................... Buena Vista and Lexington.
Rockingham......................... Harrisonburg.
Southampton........................ Franklin.
Wise............................... Norton.
------------------------------------------------------------------------

Method Used To Develop the FY 1994 FMRs

FMR Standard: The FMRs are gross rent estimates; they include
shelter rent and the cost of utilities, except telephone. HUD sets FMRs
to assure that a sufficient supply of rental housing is available to
program participants. To accomplish this objective, FMRs must be both
high enough to permit a selection of units and neighborhoods and low
enough to serve as many families as possible. The level at which FMRs
are set is expressed as a percentile point within the rent distribution
of standard quality rental housing units. The current definition used
is the 45th percentile rent, the dollar amount below which 45 percent
of the standard quality rental housing units rent. The 45th percentile
rent is drawn from the distribution of rents of units are occupied by
recent movers (renter households who moved into their unit within the
past 15 months). Public housing units and newly built units less than
two years old are excluded.
Data Sources: HUD used the most accurate and current data available
to develop the FMR estimates. Three sources of survey data were used as
the basis for the base-year estimates. They are: (1) The 1990 Census;
(2) the RDD telephone surveys conducted since the Census; and (3) the
post-1990 Census American Housing Surveys (AHSs) available up to the
time the FMR estimates were prepared. The base-year FMRs were then
updated using Consumer Price Index (CPI) data for rents and utilities
or the HUD Regional rent change factors developed from RDD surveys.
Annual average CPI data are available individually for 95 metropolitan
FMR areas. RDD Regional rent change factors are developed annually for
the metropolitan and nonmetropolitan parts of each of the 10 HUD
Regions (a total of 20 separate factors). The RDD factors are used to
update the base year estimates for all FMR areas that do not have their
own local CPI survey.
The decennial Census provides statistically reliable rent data for
use in establishing base-year FMRs. AHSs are conducted by the Bureau of
the Census for HUD and have accuracy comparable to the decennial
Census. These surveys enable HUD to develop between-census revisions
for 44 of the largest metropolitan areas on a revolving schedule of 11
areas annually. The RDD telephone survey technique is based on a
sampling procedure that uses computers to select random samples of
rental housing, dial and keep track of the telephone numbers and
tabulate the responses. RDD surveys are designed to produce FMR
estimates that are within two to four percent of the actual 45th
percentile rent.

Public Comments

In response to the proposed FY 1994 FMRs, HUD received over 2,500
comments covering more than 1,100 FMR areas. The first publication on
October 1, 1993 included final FMRs (held at the FY 1993 levels) for
the areas for which the review of public comments had not been
completed. HUD announced in that publication that there would be a
second publication of FMRs for those areas and for those with RDD
surveys still under review. The final count of FMR areas under
consideration was 669, including 40 FMR areas for which both public
comments and RDD surveys were submitted. The areas under review are
identified in this publication with a ``+'' symbol next to the FMR
schedule for the areas that had both comments and RDD surveys; and with
an ``*'' next to the FMR schedule for all other areas with comments.
HUD carefully evaluated all information submitted with the public
comments. Based on this evaluation, the FMRs for 572 areas have been
revised. This total includes revised FMRs for: 165 areas that were
increased based on the survey data submitted by the commenters; 39
areas that were increased as the result of RDD surveys; and 368 areas
that submitted incomplete information but that HUD was able to
supplement with available information. The amount of the FMR increase
was not always the same as the amount requested by the commenters. For
the 165 areas notified with survey data, the increases sometimes
differed because commenters requested a return to the FY 1993 FMRs even
though their surveys showed something different. In other cases, the
survey data had to be re-tabulated and corrected; this resulted in
revised FMRs that are sometimes higher and sometimes lower than the
requested modifications. The increases approved for the 368 areas, with
incomplete but usable data, generally were smaller than those requested
by the commenter and generally applied only to the one- and two-bedroom
unit sizes. The information submitted for 97 FMR areas was not
sufficient to provide a basis for revising the FMRs.
Many commenters expressed their concern that owners would have to
accept the reduced FMRs and would not renew leases at a lower rent, and
families would be forced to move. The Department wants to assure the
PHAs administering the program and the families that are currently
participating in the Section 8 program that current participants will
not be forced to move or have to pay a higher portion of the rent. The
rents specified in the housing assistance contract between the owner
and the PHA will continue to be paid by the PHA unless the owner
requests a rent increase in accordance with the provisions of the
housing assistance contract. In such cases, the rent increase will be
calculated using the annual adjustment factors and will be approved by
the PHA if the new rent does not exceed the amount of rent charged for
comparable unassisted units. The amount of rent the family pays will
continue to be based on the family's income, and for families in the
rental voucher program the applicable payment standard. The new FMRs
will be used for new families entering the program or for current
participants when they move to a new unit.
In addition, PHA officials expressed concern about the impact that
the reduced FMRs would have on administrative fees and, therefore,
their continuing capacity to administer the program. The calculation of
PHA administrative fees for FY 1994 is subject to a recent statutory
change. FY 1994 administrative fees are calculated using the FY 1993
FMRs if there was a decrease in the FMRs. However, if the FY 1994 FMRs
are higher, the law limited the fee increase to 3.5 percent above the
FY 1993 fee. HUD Notice PIH-93-66(HA), which was issued on December 16,
1993, contains detailed information on how FY 1994 administrative fees
should be calculated.

RDD Surveys

Both HUD and PHAs used RDD telephone surveys to test the
reliability of the proposed FY 1994 FMRs in areas with large decreases
proposed in FY 1994 FMRs. Of the 46 HUD RDD surveys completed since the
proposed FMRs were published, 21 had results that were higher than the
proposed FMRs and 24 had results that were lower or not statistically
different. FMRs for eighteen areas were increased based on the results
of PHA-funded RDD surveys. PHAs that funded surveys which produced FMR
estimates below those proposed opted not to comment, so comparative
data are not available.
For the areas where RDD survey FMRs are higher than the proposed
FMRs, the FMRs published for effect are based on the RDD surveys. The
FY 1993 FMRs and the proposed and final FY 1994 FMRs for these areas
are as follows:

----------------------------------------------------------------------------------------------------------------
Two-bedroom FMRs
--------------------------------------
HUD RDD Surveys with increases State Proposed RDD-based
FY 93 FMR FY94 FMR FY94 FMR
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Humboldt Co................................................ CA $583 $503 $552
Bannock Co................................................. ID 478 345 377
Boise...................................................... ID 594 440 485
Kootenai Co................................................ ID 478 403 501
Peoria..................................................... IL 552 426 450
Duluth..................................................... MN 466 382 422
Beaufort Co................................................ NC 410 331 363
Baker Co................................................... OR 552 336 389
Deschutes Co............................................... OR 584 504 543
Eugene..................................................... OR 608 521 536
Grant Co................................................... OR 552 352 400
Malheur Co................................................. OR 527 336 389
Odessa-Midland............................................. TX 550 402 425
Provo...................................................... UT 462 388 409
Bellingham................................................. WA 619 540 618
Ferry Co................................................... WA 424 362 382
Pend Oreille Co............................................ WA 424 362 382
Spokane.................................................... WA 501 432 491
Stevens Co................................................. WA 424 358 379
Yakima..................................................... WA 523 418 503
Walla Walla................................................ WA 552 381 407

PHA RDD Surveys with increases

Mobile..................................................... AL 447 338 401
Phoenix.................................................... AZ 505 502 512
Tucson..................................................... AZ 490 486 501
Colorado Springs........................................... CO 504 472 477
Ft. Collins-Loveland....................................... CO 581 472 530
Greeley.................................................... CO 501 420 466
Grand Rapids............................................... MI 505 505 510
Flathead Co................................................ MT 495 382 419
Gallatin Co................................................ MT 544 418 436
Great Falls................................................ MT 487 394 395
Lewis & Clark Co........................................... MT 564 398 413
Missoula Co................................................ MT 495 415 476
Santa Fe................................................... NM 657 627 665
Tulsa...................................................... OK 396 397 467
Austin..................................................... TX 538 509 613
Bryan-College St........................................... TX 572 486 497
Killeen-Temple............................................. TX 386 387 429
Janesville-Beloit.......................................... WI 476 459 496
----------------------------------------------------------------------------------------------------------------

RDD survey results that are lower than the proposed FY 1994 FMRs
are not being used this year, but will be used in developing the
proposed FY 1995 FMRs. For such areas, this publication makes effective
the proposed FY 1994 FMRs published on May 6, 1993.

RDD Surveys With No Change or Decreases

Albuquerque, NM
Baton Rouge, LA
Beaumont-Port Arthur, TX
Billings, MT
Bismarck, ND
Boston, MA
Charleston, WV
Dimmit Co., TX
Drew Co., AR
Duval Co., TX
Frio Co., TX
Gage Co., NE
Harrisburg, PA
Holmes Co., FL
Imperial Co., CA
Indiana Co., PA
Jamestown, NY
LaSalle Co., TX
Live Oak Co., TX
McMullen Co., TX
Miami, FL
New Bedford, MA
Park Co., MT
Raleigh Co., WV
Washington, Co., FL
Zavala Co., TX

HUD continues to recommend use of RDD 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 $12,000-$20,000. Areas with 500 or more
units meet this criterion, and areas with fewer units may meet it if
the actual two-bedroom FMR rent standard is significantly different
than that proposed by HUD. Interested organizations concerned about FMR
accuracy may wish to begin contracting for an RDD survey in the next
few months to assure that the results will be available in time to be
incorporated into the FY 1995 FMRs. It takes two to three months to
obtain survey rent estimates after contract award. The ``PHA Guide To
Conducting A Fair Market Rent Telephone Survey'' is available from HUD
USER by calling 1-800-245-2691. This guide provides information on
whether a PHA should consider using this approach, and it includes a
draft contractor solicitation letter and a Contract Statement of Work.

FMRs for Flood Damaged Areas in the Midwest

Under the authority granted in 24 CFR part 899, the Secretary finds
good cause to waive the regulatory requirements that govern requests
for geographic area FMR exceptions for the flood areas that were
declared Federal disaster areas. Recognizing that there are a large
number of FMR areas that experienced substantial losses as a result of
the floods of the past summer in the midwestern states which will have
a direct effect on local rent levels, HUD is prepared to grant FMR
exceptions under the following conditions. FMR exceptions up to 10
percent above the final FY 1994 FMRs may be approved for single-county
FMR areas and for individual county parts of multi-county FMR areas.
The flood-related FMR exceptions will be approved by the HUD field
office with jurisdiction on the grounds that: (1) The affected counties
qualify as disaster areas under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act; and (2) the PHA certifies that demand
pressures and/or damage to the rental housing stock is so substantial
that it has resulted in an increase in the prevailing rent levels. Such
exceptions must be requested in writing by the responsible PHAs. The
exceptions approved for this special disaster-related purpose will
remain in effect until superseded by final FY 1995 FMRs.

Manufactured Home Space FMRs

The FMRs for manufactured home spaces are the same as those
published on October 1, 1993, and are reprinted here for the
convenience of the program administrators.

Other Matters

A Finding of No Significant Impact with respect to the environment
as required by the National Environmental Policy Act (42 U.S.C. 4321-
4374) is unnecessary, since the Section 8 Rental Certificate program is
categorically excluded from the Department's National Environmental
Policy Act procedures under 24 CFR 50.20(d).
The undersigned, in accordance with the Regulatory Flexibility Act
(5 U.S.C. 605(b)), hereby certifies that this notice does not have a
significant economic impact on a substantial number of small entities,
because FMRs do not change the rent from that which would be charged if
the unit were not in the Section 8 program.
The General Counsel, as the Designated Official under Executive
Order No. 12606, The Family, has determined that this notice will not
have a significant impact on family formation, maintenance, or well-
being. The notice amends Fair Market Rent schedules for various Section
8 assisted housing programs, and does not affect the amount of rent a
family receiving rental assistance pays, which is based on a percentage
of the family's income.
The General Counsel, as the Designated Official under section 6(a)
of Executive Order No. 12611, Federalism, has determined that this
notice will not involve the preemption of the State law by Federal
statute or regulation and does not have Federalism implications. The
Fair Market Rent schedules do not have any substantial direct impact on
States, on the relationship between the Federal government and the
States, or on the distribution of power and responsibility among the
various levels of government.
The Catalog of Federal Domestic Assistance program number is
14.156, Lower-Income Housing Assistance Program (section 8).
Accordingly, the Fair Market Rent Schedules, which will not be
codified in 24 CFR Part 888, are amended as follows:

Dated: March 17, 1994.
Henry G. Cisneros,
Secretary.

Schedules B and D--General Explanatory Notes

1. Geographic Coverage
a. FMRs for the Section 8 Rental Certificate program (Schedule B)
are established for Metropolitan Statistical Areas (MSAs), Primary
Metropolitan Statistical Areas (PMSAs), other HUD-designated
metropolitan FMR areas. FMRs also are established for nonmetropolitan
counties and county equivalents in the United States, Puerto Rico, the
Virgin Islands and the Pacific Islands and for nonmetropolitan parts of
counties in the New England states.
b. FMRs for the areas in Virginia shown in the table below are
established by combining the 1990 Census data for the nonmetropolitan
counties with the data for the independent cities that are located
within the county borders. Because of space limitations, the FMR
listing in Schedule B includes only the name of the nonmetropolitan
County. The full definitions of these areas including the independent
cities are as follows:

Virginia Nonmetropolitan County FMR Area
Allegheny
Augusta
Carroll
Frederick
Greensville
Halifax
Henry
Montgomery
Rockbridge
Rockingham
Southhampton
Wise
Virginia Independent Cities Included with County
Clifton Forge and Covington
Staunton and Waynesboro
Galax
Winchester
Emporia
South Boston
Martinsville
Radford
Buena Vista and Lexington
Harrisonburg
Franklin
Norton

c. FMRs for Manufactured Home spaces in the Section 8 Certificate
program (Schedule D) are established for MSAs, PMSAs, HUD-designated
metropolitan counties, and for selected nonmetropolitan counties and
the residual nonmetropolitan part of each State.
2. Arrangement of FMR Areas and Identification of Constituent Parts
a. The FMR areas in Schedules B and D are listed alphabetically by
metropolitan FMR area and by nonmetropolitan county within each State.
b. The constituent counties (and New England towns and cities)
included in each metropolitan FMR area are listed immediately following
the listings of the FMR dollar amounts. All constituent parts of a
metropolitan FMR area that are in more than one State can be identified
by consulting the listings for each applicable State.
c. Two nonmetropolitan counties are listed alphabetically on each
line of the nonmetropolitan county listings.
d. The New England towns and cities included in a nonmetropolitan
part of a county are listed immediately following the county name.
e. The FMRs are listed by dollar amount on the first line beginning
with the FMR area name.

BILLING CODE 4210-32-M