[Federal Register Volume 60, Number 157 (Tuesday, August 15, 1995)]
[Rules and Regulations]
[Pages 42230-42288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19835]




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Part III





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Secretary



_______________________________________________________________________



24 CFR Part 888



Section 8 Housing Assistance Payments Program, Fair Market Rent 
Schedules; Final Rule

  Federal Register / Vol. 60, No. 157 / Tuesday, August 15, 1995 / 
Rules and Regulations  
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Secretary

24 CFR Part 888

[Docket No. FR-3699-N-04]


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 Single Room 
Occupancy Program and Rental Voucher Program

AGENCY: Office of the Secretary, HUD.

ACTION: Final fiscal year (FY) 1995 fair market rents.

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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) 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) and project-based 
Certificate assistance (part 882, subpart G); 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 to determine payment standard 
schedules in the Rental Voucher program (part 887).
    There have been several Federal Register publications leading to 
this final publication of the FY 1995 FMRs at the 40th percentile rent 
level. On June 23, 1994, HUD published separate sets of proposed FMRs 
at the 45th and the 40th percentile rent levels. The proposed 40th 
percentile FMRs were included in that publication to alert the public 
that the Administration was considering lowering the FMR standard as a 
cost saving measure. On July 13, the FMR comment period was extended to 
October 14 to give small PHAs in nonmetropolitan areas the opportunity 
to use HUD's recently issued rental housing survey guide. Because of 
the extended comment period, HUD could not review the comments in time 
to meet the October 1 deadline for publishing the final FMRs. On 
September 28, therefore, HUD published final 45th percentile FMRs for 
all areas at the proposed FMR levels and announced that there would be 
a later publication that would include revised FMRs for the areas whose 
rental housing surveys were still being evaluated.
    On March 2, 1995, HUD published the proposed rule to revise 24 CFR 
part 888 to change the FMR rent standard from the 45th to 40th 
percentile rent level. The comment period ended on April 3, 1995, and, 
in a separate Federal Register publication on August 15, 1995, the 
changes were published.
    This document concludes the process by providing final FY 1995 FMRs 
at the 40th percentile level. Included in this publication are 
increased FMRs for 131 areas that submitted rental housing surveys that 
HUD determined provided a sufficient basis for revising the FMRs. Five 
areas also are being added to Schedule D on the basis of surveys 
submitted on manufactured home space rentals in these areas. In 
addition, HUD has increased the FMRs for 325 nonmetropolitan counties 
after discovering that the original analysis of 1990 Census data 
comparing low rent nonmetropolitan counties with minimum rent values 
computed for States had led to an unintended result. HUD is continuing 
to study this issue, and is considering a further change in the way the 
State minimums are determined in the FY 1996 proposed FMRs.

EFFECTIVE DATE: The FMRs published in this document are effective on 
September 14, 1995.

FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Rental Assistance 
Division, Office of Elderly and Assisted Housing, telephone (202) 708-
0477 or TDD: (202) 708-0850. For technical information on the 
development of schedules for specific areas or the method used for the 
rent calculations, contact Michael R. Allard, Economic and Market 
Analysis Division, Office of Economic Affairs, telephone (202) 708-0577 
or TDD: (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 housing assistance to 
aid lower income families in renting decent, safe, and sanitary 
housing. Assistance payments are limited by FMRs established by HUD for 
different areas. In general, the FMR for an area is the amount that 
would be needed to pay the gross rent (shelter rent plus utilities) of 
privately owned, decent, safe, and sanitary rental housing of a modest 
(non-luxury) nature with suitable amenities.

Method Used to Develop FMRs

FMR Standard

    The FMRs are gross rent estimates; they include shelter rent and 
the cost of utilities, except telephone. HUD sets FMRs to assure that a 
sufficient supply of rental housing is available to program 
participants. To accomplish this objective, FMRs must be both high 
enough to permit a selection of units and neighborhoods and low enough 
to serve as many families as possible. The level at which FMRs are set 
is expressed as a percentile point within the rent distribution of 
standard quality rental housing units. The current definition used is 
the 40th percentile rent, the dollar amount below which 40 percent of 
the standard quality rental housing units rent. The 40th percentile 
rent is drawn from the distribution of rents of units which are 
occupied by recent movers (renter households who moved into their unit 
within the past 15 months). 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 for the base-
year estimates. They are: (1) the 1990 Census; (2) RDD telephone 
surveys conducted of individual FMR areas since the 1990 Census; and 
(3) the post-1990 Census American Housing Surveys (AHSs) available at 
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 103 metropolitan 
FMR areas. RDD regional rent change factors are developed annually for 
the metropolitan and nonmetropolitan parts of each of the 10 HUD 
geographic 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 the largest metropolitan areas on a revolving schedule. 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.

Manufactured Home Space FMRs

    Manufactured home space FMRs are established at 30 percent of the 

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    applicable Section 8 Rental Certificate program two-bedroom FMR. HUD 
accepts public comments requesting modifications of manufactured home 
space FMRs. To be accepted for approval, such comments must contain 
statistically valid survey data that show the 40th percentile space 
rent (excluding the cost of utilities) for the FMR area. This program 
uses the same FMR area definitions as the Section 8 Rental Certificate 
program. Manufactured home space FMR revisions are published as final 
FMRs in Schedule D. Once approved, the revised manufactured home space 
FMRs establish new base year estimates that are updated annually using 
the same data used to update the Rental Certificate program FMRs.

Public Comments

    In response to the June 23 proposed FMRs, HUD received 175 comments 
covering 267 FMR areas, for which rental housing survey information was 
included for 188 areas. HUD carefully evaluated all information 
submitted and, based on this review, revised the FMRs for 131 areas. 
The information submitted for the 57 other areas was not considered 
sufficient to provide a basis for revising the FMRs.
    The 131 FMR areas with approved FMR revisions included 87 areas for 
which RDD surveys were conducted either by the Public Housing Agency or 
by a professional survey firm. Successful surveys were submitted for 18 
areas using the more traditional landlord/owner type surveys. FMR 
increases were also approved for 26 other areas that submitted 
incomplete survey information but for which HUD was able to make 
adjustments using available information on assisted housing.

AHS and HUD Sponsored RDD Surveys

    HUD received public comments with survey data from two of the eight 
areas identified in the September 28 FMR publication with RDD or AHS 
surveys indicating FMR reductions. Based on the rental housing survey 
conducted for Gage County, NE, the FMRs have been increased. The survey 
data provided for the Memphis metropolitan area was not sufficient to 
provide a basis for revising the FMRs.
    Based on RDD survey results obtained since the last publication of 
final FMRs on September 28, 1994, the FMRs for the following 14 
additional areas are being increased in today's notice:

Allentown-Bethlehem-Easton, PA
Corpus Christi, TX
Davenport-Moline-Rock Island, IA-IL
Greensboro-Winston Salem-Highpoint, NC
Greenville-Spartanburg-Anderson, SC
Louisville, KY-IN
Medford-Ashland, OR
Olympia, WA
Pensacola, FL
Salem, OR
Shreveport-Bossier City, LA
Syracuse, NY
Utica-Rome, NY
Columbus County, NC

HUD Rental Housing Survey Guides

    HUD recommends use of professionally-conducted Random Digit Dialing 
(RDD) telephone surveys to test the accuracy of FMRs for areas where 
there is a sufficient number of Section 8 units to justify the survey 
cost of $10,000-$15,000. Areas with 500 or more program units usually 
meet this criterion, and areas with fewer units may meet it if the 
actual two-bedroom FMR rent standard is significantly different than 
that proposed by HUD. In addition, HUD has developed a simplified 
version of the RDD survey methodology for smaller, nonmetropolitan 
PHAs. This methodology is designed to be simple enough to be done by 
the PHA itself, rather than by professional survey organizations, at a 
cost of around $6,000. In addition, PHAs in nonmetropolitan areas may, 
in certain circumstances, do surveys of clusters of counties. All 
clustered surveys must be approved in advance by HUD. PHAs are 
cautioned that the resultant FMRs will not be identical within the 
cluster: each individual FMR area will have a separate FMR based on its 
relationship to the combined rent of the cluster of FMR areas. HUD does 
not mandate the use of either the RDD telephone survey or the modified 
RDD telephone survey methodology. Other survey methodologies are 
acceptable as long as they provide statistically reliable unbiased 
estimates of the 40th percentile gross rent. All survey results must be 
fully documented.
    Because it takes two months to obtain survey estimates, interested 
organizations concerned about FMR accuracy may wish to begin their FMR 
surveys in the next few months to assure that the results will be 
available in time to be incorporated into the FY 1996 FMRs. The 
starting point is to carefully review one of the two following 
publications, both obtainable from HUD USER at 1-800-245-2691. Larger 
PHAs should obtain ``Random Digit Dialing Surveys; A Guide to Assist 
Larger Public Housing Agencies in Preparing Fair Market Rent 
Comments.'' Smaller PHAs should obtain ``Rental Housing Surveys; A 
Guide to Assist Smaller Public Housing Agencies in Preparing Fair 
Market Rent Comments.''

FMRs for Flood Damaged Areas in the Southeast and Midwest

    Under the authority granted in 24 CFR part 899, the Secretary will 
continue to waive the regulatory requirements that govern requests for 
geographic area FMR exceptions for the flood-impacted areas in the 
midwest and southeast. The flood-related FMR exceptions will be 
approved by the HUD field office with jurisdiction for: (1) Single-
county FMR areas and for individual county parts of multi-county FMR 
areas that qualify as disaster areas under the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act; if (2) the PHA certifies 
that damage to the rental housing stock is so substantial that it has 
increased the prevailing rent levels. Such exceptions must be requested 
in writing by the responsible PHAs. Once approved by HUD, they will 
remain in effect until superseded by final FY 1996 FMRs.

Other Matters

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

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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: August 4, 1995.
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 Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage
    a. The FMRs shown in Schedule B incorporate the Office of 
Management and Budget's (OMB) most current definitions of metropolitan 
areas (with the exceptions discussed in paragraph b). HUD uses the OMB 
Metropolitan Statistical Area (MSA) and Primary Metropolitan 
Statistical Area (PMSA) definitions for FMR areas because they closely 
correspond to housing market area definitions. FMRs are housing market-
wide rent estimates that are intended to provide housing opportunities 
throughout the geographic area in which rental housing units are in 
direct competition.
    b. The exceptions are counties deleted from seven large 
metropolitan areas whose revised OMB definitions were determined by HUD 
to be larger than the housing market areas. The FMRs for the following 
counties (shown by the metropolitan area) are calculated separately and 
are shown in Schedule B within their respective States under the 
``Metropolitan FMR Areas'' listing:

Metropolitan Area and Counties Deleted

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

    c. FMRs also are established for nonmetropolitan counties and for 
county equivalents in the United States, for nonmetropolitan parts of 
counties in the New England states and for FMR areas in Puerto Rico, 
the Virgin Islands and the Pacific Islands.
    d. FMRs for the areas in Virginia shown in the table below were 
established by combining the Census data for the nonmetropolitan 
counties with the data for the independent cities that are located 
within the county borders. Because of space limitations, the FMR 
listing in Schedule B includes only the name of the nonmetropolitan 
County. The full definitions of these areas including the independent 
cities are as follows:

Virginia Nonmetropolitan County FMR Area and Virginia Independent Cities
                          Included With County                          
------------------------------------------------------------------------
               County                               Cities              
------------------------------------------------------------------------
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.                      
Southhampton.......................  Franklin.                          
Wise...............................  Norton.                            
------------------------------------------------------------------------

    e. FMRs for Section 8 manufactured home spaces are established at 
30 percent of the two-bedroom Section 8 Rental Certificate program 
FMRs, with the exception of the areas listed in Schedule D whose FMRs 
have been revised on the basis of public comments. Once approved, the 
revised manufactured home space FMRs establish new base-year estimates 
that will be updated annually using the same data used to estimate the 
Rental Certificate program FMRs. The FMR area definitions used for 
manufactured home spaces are the same as for the Section 8 Certificate 
program.
2. Arrangement of FMR Areas and Identification of Constituent Parts
    a. The FMR areas in Schedule B are listed alphabetically by 
metropolitan FMR area and by nonmetropolitan county within each State. 
The exception FMRs for manufactured home spaces in Schedule D are 
listed alphabetically by State.
    b. The constituent counties (and New England towns and cities) 
included in each metropolitan FMR area are listed immediately following 
the listings of the FMR dollar amounts. All constituent parts of a 
metropolitan FMR area that are in more than one State can be identified 
by consulting the listings for each applicable State.
    c. Two nonmetropolitan counties are listed alphabetically on each 
line of the nonmetropolitan county listings.
    d. The New England towns and cities included in a nonmetropolitan 
part of a county are listed immediately following the county name.
    e. The FMRs are listed by dollar amount on the first line beginning 
with the FMR area name.

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[FR Doc. 95-19835 Filed 8-14-95; 8:45 am]
BILLING CODE 4210-32-C