[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



_______________________________________________________________________



24 CFR Part 888




Section 8 Housing Assistance Payments Program; Fair Market Rent 
Schedules for Use in the Rental Certificate Program; Final Rule
=======================================================================
-----------------------------------------------------------------------

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 
----------------------------------------------------------------------------------------------------------------
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.

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

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