[Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
[Rules and Regulations]
[Pages 52858-52917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26291]


      

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Part VI





Department of Housing and Urban Development





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24 CFR Part 888



Fair Market Rents for the Section 8 Housing Assistance Payments 
Program--Fiscal Year 1999; Final Rule

  Federal Register / Vol. 63, No. 190 / Thursday, October 1, 1998 / 
Rules and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 888

[Docket No. FR-4362-N-02]


Fair Market Rents for the Section 8 Housing Assistance Payments 
Program--Fiscal Year 1999

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of Final Fiscal Year (FY) 1999 Fair Market Rents (FMRs).

-----------------------------------------------------------------------

SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
requires the Secretary to publish FMRs annually to be effective on 
October 1 of each year. FMRs are used for the Section 8 Rental 
Certificate Program (including space rentals by owners of manufactured 
homes under that program); the Moderate Rehabilitation Single Room 
Occupancy program; housing assisted under the Loan Management and 
Property Disposition programs; payment standards for the Rental Voucher 
program; and any other programs whose regulations specify their use.
    Today's notice provides final FY 1999 FMRs for all areas. It 
includes increased FMRs for nine areas that submitted public comments 
and for two areas as a result of HUD-contracted Random Digit Dialing 
(RDD) surveys conducted through July 1998. In addition, it includes 
increases for mobile home space FMRs in the five areas that submitted 
comments.
    Today's notice also makes effective FMR reductions for 12 areas 
that were proposed for reduction in the May 5, 1998 notice (63 FR 
24846), based on the results of recent RDD and American Housing Surveys 
(AHSs).

EFFECTIVE DATE: The FMRs published in this notice are effective on 
October 1, 1998.

FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Director, Real Estate 
and Housing Performance Division, Office of Public and Assisted Housing 
Delivery, telephone (202) 708-0477. For technical information on the 
development of schedules for specific areas or the method used for the 
rent calculations, contact Alan Fox, Economic and Market Analysis 
Division, Office of Economic Affairs, telephone (202) 708-0614, 
Extension 5863 (e-mail: [email protected]). Hearing-or speech-
impaired persons may contact the Federal Information Relay Service at 
1-800-877-8339 (TTY). (Other than the ``800'' TTY number, telephone 
numbers are not toll free.)

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

    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 
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). Newly built units less than two years old are 
excluded, and adjustments have been made to correct for the below 
market rents of public housing units included in the data base.

Data Sources

    HUD used the most accurate and current data available to develop 
the FMR estimates. The sources of survey data used for the base-year 
estimates are:
    (1) The 1990 Census, which provides statistically reliable rent 
data for all FMR areas;
    (2) The Bureau of the Census' American Housing Surveys (AHSs), 
which are used to develop between-Census revisions for the largest 
metropolitan areas and which have accuracy comparable to the decennial 
Census; and
    (3) Random Digit Dialing (RDD) telephone surveys of individual FMR 
areas, which are based on a sampling procedure that uses computers to 
select statistically random samples of rental housing.
    The base-year FMRs are updated using trending factors based on 
Consumer Price Index (CPI) data for rents and utilities or HUD regional 
rent change factors developed from RDD surveys. Annual average CPI data 
are available individually for 99 metropolitan FMR areas. RDD regional 
rent change factors are developed annually for the metropolitan and 
nonmetropolitan parts of each of the 10 HUD regions. The RDD factors 
are used to update the base year estimates for all FMR areas that do 
not have their own local CPI survey.

State Minimum FMRs

    FMRs are established at the higher of the local 40th percentile 
rent level or the Statewide average of nonmetropolitan counties, 
subject to a ceiling rent cap. The State minimum also affects a small 
number of metropolitan areas whose rents would otherwise fall below the 
State minimum.

Bedroom Size Adjustments

    FMRs have been calculated separately for each bedroom size 
category. For areas whose FMRs are based on the State minimums, the 
rents for each bedroom size are the higher of the rent for the area or 
the Statewide average of nonmetropolitan counties for that bedroom 
size. For all other FMR areas, the bedroom intervals are based on data 
for the specific area. Exceptions have been made for some areas with 
local bedroom size rent intervals below an acceptable range. For those 
areas the intervals selected were the minimums determined after 
outliers had been excluded from the distribution of bedroom intervals 
for all metropolitan areas. Higher ratios continue to be used for 
three-bedroom and larger size units than would result from using the 
actual market relationships. This is done to assist the largest, most 
difficult to house families in finding program-eligible units. The FMRs 
for unit sizes larger than 4 bedroom are calculated by adding 15 
percent to the 4 bedroom FMR for each extra bedroom. For example, the 
FMR for a 5 bedroom unit is 1.15 times the 4 bedroom FMR, and the FMR 
for a 6 bedroom unit is 1.30 times the 4 bedroom FMR. FMRs for single-
room-occupancy (SRO) units are 0.75 times the 0 bedroom FMR.

Public Comments

    In response to the May 5, 1998 proposed FMRs, HUD received public 
comments covering 38 FMR areas. Rental housing survey information was 
provided for 17 of those FMR areas. All of the survey information 
submitted was evaluated and, based on that review, the FMRs for 9 areas 
are being revised. The

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information submitted for the other FMR areas was not considered 
sufficient to provide a basis for revising the FMRs.
    Areas with approved FMR revisions:

Tucson, AZ
San Diego, CA
Carbon County, MT
LaSalle County, IL
Marshall County, IA
Fayette County, IN
Lawrence, MA-NH
Portsmouth-Rochester, NH-ME
Hood River County, OR

    Areas with approved manufactured home space FMR revisions:

Los Angeles, CA
Riverside-San Bernardino, CA
San Jose, CA
Reno, NV
Deschutes County, OR

    HAs and other interested parties should be aware that FMR comments 
received too late for adjusting the current year's final FMRs will be 
held for use in the following year. In such cases HUD will trend the 
survey results to the date of the FMR estimate. If the HA is concerned 
that rents are changing rapidly, surveys should be timed to be received 
as close as possible to HUD's deadline for public comments.

AHS and RDD Surveys

    This notice makes effective the FMRs for the 12 areas proposed with 
reductions based on recent RDD or AHS surveys:

Late-1997 RDD

Chicago, IL
Bergen-Passaic, NJ
Newark, NJ
Buffalo-Niagara Falls, NY

Early-1998 RDD

Fresno, CA
Santa Cruz-Watsonville, CA
Bridgeport, CT
Honolulu, HI
Jersey City, NJ
Newburgh, NY-PA
McAllen-Edinburg-Mission, TX

American Housing Survey

Sacramento, CA

    HUD is increasing FMRs for the following 2 areas, based on HUD-
sponsored RDDs that were completed after the date of the proposed FMR 
notice:

Franklin County, KS
Clinton County, OH

FMR Area Definition Changes

    This notice includes FMRs for one new metropolitan FMR area based 
on new metropolitan statistical area definitions made effective by OMB 
on June 30, 1998. It is the Missoula, Montana FMR area, which consists 
of Missoula County.

Manufactured Home Space Surveys

    FMRs for the rental of manufactured home spaces are 30 percent of 
the applicable Section 8 existing housing program FMR for two-bedroom 
unit. HUD accepts public comments requesting modifications of these 
FMRs where the 30 percent FMRs are thought to be inadequate. In order 
to be accepted as a basis for revising the FMRs, such comments must 
contain statistically valid survey data that show the 40th percentile 
space rent (excluding the cost of utilities) for the entire FMR area. 
However, the sampling requirements for manufactured home space rent 
surveys are easier to meet than for regular FMR comments, and 
interested parties should contact HUD for suggestions. HUD uses the 
same FMR area definitions for manufactured home space rental as for the 
Section 8 existing housing FMRs shown in Schedule B. 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 Section 8 existing housing program FMRs.

HUD Rental Housing Survey Guides

    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 
$10,000-$12,000. Areas with 500 or more program units usually meet this 
criterion, and areas with fewer units may meet it if local two-bedroom 
rents are thought to be significantly different than that proposed by 
HUD. In addition, HUD has developed a simplified version of the RDD 
survey methodology for smaller, nonmetropolitan HAs. This methodology 
is designed to be simple enough to be done by the HA itself, rather 
than by professional survey organizations, at a cost of about $5,000.
    HAs in nonmetropolitan areas may, in certain circumstances, do 
surveys of groups of counties. All grouped county surveys must be 
approved in advance by HUD. HAs 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 its relationship to the combined 
rent of the group of FMR areas.
    HAs that plan to use the RDD survey technique may obtain a copy of 
the appropriate survey guide by calling HUD USER on 1-800-245-2691. 
Larger HAs should request ``Random Digit Dialing Surveys; A Guide to 
Assist Larger Housing Agencies in Preparing Fair Market Rent 
Comments.'' Smaller HAs should obtain ``Rental Housing Surveys; A Guide 
to Assist Smaller Housing Agencies in Preparing Fair Market Rent 
Comments.'' These guides are also available on the Internet at http://
www.huduser.org/publications/publicassist/assisted/fmrsurvey.html.
    HUD prefers, but does not mandate, the use of RDD telephone 
surveys, or the more traditional method described in the small HA 
survey guide. Other survey methodologies are acceptable as long as they 
provide statistically reliable, unbiased estimates of the 40th 
percentile 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 so as to be 
statistically representative of the entire rental housing stock of the 
FMR area. In particular, surveys must include units of 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 starting 
point and means of verification for determining whether the sample is 
representative of the FMR area's rental housing stock. All survey 
results must be fully documented.
    The cost of an RDD survey may vary, depending on the 
characteristics of the telephone system used in the FMR area. RDDs (and 
simplified telephone surveys) of some non-metropolitan areas have been 
unusually expensive because of telephone system characteristics. An HA 
or contractor that cannot obtain the recommended number of sample 
responses after reasonable efforts should consult with HUD before 
abandoning its survey; in such situations HUD is prepared to relax 
normal sample size requirements.

FMRs for Federal Disaster Areas

    Under the authority granted in 24 CFR part 899, the Secretary of 
HUD finds good cause to waive and hereby waives the regulatory 
requirements that govern requests for geographic area exception rents 
for areas that are declared disaster areas by the Federal Emergency 
Management Agency (FEMA). HUD is prepared to grant disaster-related 
exceptions up to 10 percent above the applicable FMRs for those areas. 
HUD field offices are authorized to approve such exceptions for (1) 
single-county FMR areas and for individual county

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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 HA certifies that damage to the rental housing stock as a 
result of the disaster is so substantial that it has increased the 
prevailing rent levels in the affected area. Such exception rents must 
be requested in writing by the responsible HAs. Exception rents 
approved by HUD during FY 1999 will remain in effect until superseded 
by the publication of the final FY 2001 FMRs.

Other Matters

Environmental Impact

    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).

Regulatory Flexibility Act

    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.

Federalism Impact

    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 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: September 25, 1998.
Andrew M. Cuomo,
Secretary.

Fair Market Rents for the Section 8 Housing Assistance Payments 
Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage

    a. Metropolitan Areas--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. The FMRs shown in Schedule B incorporate OMB's 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.
    b. Exceptions to OMB Definitions--The exceptions are counties 
deleted from several large metropolitan areas whose revised OMB 
metropolitan area 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

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
Flagstaff, AZ-UT--Kane County, UT
New Orleans, LA--St. James Parish
Washington, DC-MD-VA-WV--Berkeley and Jefferson Counties in West 
Virginia; and Clarke, Culpeper, King George and Warren Counties in 
Virginia

    c. Nonmetropolitan Area FMRs--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. Virginia Independent Cities--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 Independent Cities Included
                               With County
------------------------------------------------------------------------
                County                               Cities
------------------------------------------------------------------------
Allegheny.............................  Clifton Forge and Covington.
Augusta...............................  Staunton and Waynesboro.
Carroll...............................  Galax.
Frederick.............................  Winchester.
Greensville...........................  Emporia.
Henry.................................  Martinsville.
Montgomery............................  Radford.
Rockbridge............................  Buena Vista and Lexington.
Rockingham............................  Harrisonburg.
Southhampton..........................  Franklin.
Wise..................................  Norton.
------------------------------------------------------------------------

2. Bedroom Size Adjustments

    Schedule B shows the FMRs for 0-bedroom through 4-bedroom units. 
The FMRs for unit sizes larger than 4 bedrooms are calculated by adding 
15 percent to the 4-bedroom FMR for each extra bedroom. For example, 
the FMR for a 5-bedroom unit is 1.15 times the 4-bedroom FMR, and the 
FMR for a 6-bedroom unit is 1.30 times the 4 bedroom FMR. FMRs for 
single-room-occupancy (SRO) units are 0.75 times the 0 bedroom FMR.

3. FMRs for Manufactured Home Spaces

    FMRs for Section 8 manufactured home spaces are established at 30 
percent of the two-bedroom Section 8 existing housing program FMRs, 
with the exception of the areas listed in Schedule D whose FMRs have 
been modified 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 
Section 8 existing housing FMRs. The FMR area definitions used for the 
rental of manufactured home spaces are the same as the area definitions 
used for the Section 8 existing FMRs.

4. 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.

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    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.

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FR Doc. 98-26291 Filed 9-30-98; 8:45 am]
BILLING CODE 4210-32-C