[Federal Register Volume 65, Number 195 (Friday, October 6, 2000)]
[Proposed Rules]
[Pages 60084-60091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25679]



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Part VII





Department of Housing and Urban Development





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24 CFR Part 888



Fair Market Rents for Fiscal Year 2001 for Certain Areas; Proposed Rule

  Federal Register / Vol. 65, No. 195 / Friday, October 6, 2000 / 
Proposed Rules  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 888

[Docket No. FR-4589-N-03]


Fair Market Rents for Fiscal Year 2001 for Certain Areas

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of Proposed FMRs for Certain Areas.

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SUMMARY: This notice proposes revised FMRs that reflect the 50th 
percentile rent levels for 39 areas, as determined by applying the 
criteria of HUD's interim rule amending its FMR regulations published 
on October 2, 2000, and trended to April 1, 2001.

DATES: Comments Due Date: November 6, 2000.

ADDRESSES: Interested persons are invited to submit comments regarding 
HUD's estimates of the FMRs as published in this Notice to the Office 
of the General Counsel, Rules Docket Clerk, Room 10276, Department of 
Housing and Urban Development, 451 Seventh Street SW., Washington, DC 
20410. Communications should refer to the above docket number and title 
and should contain the information specified in the ``Request for 
Comments'' section. To ensure that the information is fully considered 
by all of the reviewers, each commenter is requested to submit two 
copies of its comments, one to the Rules Docket Clerk and the other to 
the Economic and Market Analysis Staff in the appropriate HUD Field 
Office. A copy of each communication submitted will be available for 
public inspection and copying during regular business hours (7:30 a.m.-
5:30 p.m. Eastern Time) at the above address.

FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Operations Division, 
Office of Rental Assistance, telephone (202) 708-0477. For technical 
information on the development of schedules for specific areas or the 
method used for the rent calculations, contact Lynn Rodgers, Economic 
and Market Analysis Division, Office of Economic Affairs, telephone 
(202) 708-0590, Extension 5735 (e-mail: [email protected]). 
Hearing -or speech-impaired persons may use the Telecommunications 
Devices for the Deaf (TTY) by contacting the Federal Information Relay 
Service at 1-800-877-8339. (Other than the ``800'' TTY number, 
telephone numbers are not toll free.)

SUPPLEMENTARY INFORMATION:
    Section 8(c)(1) of the United States Housing Act of 1937 (42 U.S.C. 
1473f(c)) requires the Secretary to publish FMRs periodically, but not 
less than annually to be effective on October 1 of each year. FMRs are 
used (1) to establish payment standards for the Housing Choice Voucher 
program; (2) to determine initial contract rents in new commitments for 
Section 8 project-based assistance (e.g., the project-based voucher 
program); (3) to determine whether comparability applies to adjustment 
of contracts rents for substantial rehabilitation and moderate 
rehabilitation programs; (4) as a limit on renewal rents for certain 
Section 8 projects (including mark-up-to-market projects); and (5) to 
determine maximum subsidy levels for HOME tenant-based rental 
assistance, and maximum rent levels in HOME multifamily rental housing. 
The FMRs also apply to any other programs requiring their use. Today's 
notice proposes revised FMRs that reflect the 50th percentile rent 
levels for 39 areas, as determined by applying the criteria of HUD's 
interim rule, published on October 2, 2000, and trended to April 1, 
2001.
    Raising FMRs for certain areas, which is part of HUD's new FMR 
policy, being implemented through HUD's interim rule, published on 
October 2, 2000, is designed to ensure that low-income families have 
access to a broad range of housing opportunities throughout a 
metropolitan area. FMRs will be increased to the 50th percentile in 
those metropolitan areas where a FMR increase is most needed to promote 
residential choice, help families move closer to areas of job growth, 
and deconcentrate poverty.

Publication of FMRs

    Section 8(c) of the U.S. Housing Act of 1937 requires the Secretary 
of HUD to publish FMRs periodically, but not less frequently than 
annually. HUD's regulations reflect this statutorily required process. 
Section 888.115 provides that HUD will publish FMRs at least annually. 
Section 888.115 also provides that HUD first publish proposed FMRs and 
that HUD provide a comment period for the proposed FMRs of at least 30 
days. After evaluating the public comments, HUD will publish the final 
FMRs (see 24 CFR 888.115).
    New paragraph (c) of Sec. 888.113, as added by the interim rule, 
published on October 2, 2000, provides as follows:

    (c) Setting FMRs at the 50th percentile rent to provide a broad 
range of housing opportunities throughout a metropolitan area.
    (1) HUD will set the FMRs at the 50th percentile rent for all 
unit sizes in each metropolitan FMR area that meets all of the 
following criteria at the time of annual publication of the FMRs:
    (i) The FMR area contains at least 100 census tracts;
    (ii) 70 percent or fewer of the census tracts with at least 10 
two bedroom rental units are census tracts in which at least 30 
percent of the two bedroom rental units have gross rents at or below 
the two bedroom FMR set at the 40th percentile rent; and
    (iii) 25 percent or more of the tenant-based rental program 
participants in the FMR area reside in the 5 percent of the census 
tracts within the FMR area that have the largest number of program 
participants.
    (2) If the FMRs are set at the 50th percentile rent in 
accordance with paragraph (c)(1) of this section, HUD will set the 
FMRs at the 50th percentile rent for a total of three years.
    (i) At the end of the three-year period, HUD will continue to 
set the FMRs at the 50th percentile rent only so long as the 
concentration measure for the current year is less than the 
concentration measure at the time the FMR area first received an FMR 
set at the 50th percentile rent. HUD will publish FMRs based on the 
40th percentile rent for FMR areas that do not qualify for continued 
use of the 50th percentile rent.
    (ii) For purposes of this section, the term ``concentration 
measure'' means the percentage of tenant-based rental program 
participants in the FMR area who reside in the 5 percent of the 
census tracts within the FMR area that have the largest number of 
program participants.
    (iii) FMR areas that do not meet the test for continued use of 
FMRs set at the 50th percentile will be ineligible to use FMRs set 
at the 50th percentile for a period of three years.
    (iv) A PHA whose jurisdiction includes one or more FMR areas 
that are no longer eligible to use FMRs set at the 50th percentile 
may be eligible for a higher payment standard under Sec. 982.503(f).

    Schedule B of this document lists 39 areas for which HUD is 
proposing to adopt 50th percentile FMRs for all unit sizes on the basis 
of the criteria specified in Sec. 888.113(c).

Method Used to Develop 50th Percentile FMRs

    FMRs are estimates of rent plus the cost of utilities, except 
telephone. FMRs are housing market-wide estimates of rents that provide 
opportunities to rent standard quality housing throughout the area. The 
level at which FMRs are set is expressed as a percentile point within 
the rent distribution of standard quality rental housing units in the 
FMR area. FMRs are set at either the 40th or 50th percentile rent--the 
dollar amount below which the rent for 40 or 50 percent of standard 
quality rental housing units falls. The 40th or 50th percentile rent is 
drawn from the

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distribution of rents of all units that are occupied by recent movers. 
Adjustments are made to exclude public housing units, newly built units 
and substandard units.
    Specifically, HUD is proposing to increase FMRs to the 50th 
percentile rent for all unit sizes in the 39 metropolitan FMR areas 
that HUD determined met the criteria in Sec. 888.113(c) of the interim 
rule, published on October 2, 2000.

Manufactured Home Space FMRs

    FMRs for the rental of manufactured home spaces in the Housing 
Choice Voucher program are now 40 percent of the applicable Section 8 
existing housing program FMRs for two-bedroom units. This is unchanged, 
except that the manufactured home space rental FMRs for the 39 areas 
now are based on the 50th percentile two-bedroom FMR rather than the 
40th percentile FMR. HUD will consider public comments requesting 
modifications of manufactured home space rental FMRs where the 40 
percent FMRs are thought to be inadequate. To be considered as a basis 
for revising the FMRs, comments must contain statistically valid survey 
data that show the 50th percentile manufactured home space rent 
(including the cost of utilities) for the entire FMR area. Manufactured 
home space FMR revisions are published as final FMRs in Schedule D of 
this document. 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 other FMRs, until they are superseded by 
rising FMRs for other housing assisted under the housing choice voucher 
program.

Request for Comments

    Through this notice, HUD is proposing to set 50th percentile FMRs 
for 39 metropolitan FMR areas. HUD seeks public comments on revised FMR 
levels for the 39 areas. Comments on FMR levels must include sufficient 
information (including local data and a full description of the rental 
housing survey methodology used) to justify any proposed changes. 
Changes may be proposed in all or any one or more of the bedroom size 
categories on the schedule. Recommendations and supporting data must 
reflect the rent levels that exist within the entire FMR area.
    HUD recommends the 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-$12,000. Areas with 500 or more program units 
usually meet this cost criterion, and areas with fewer units may meet 
it if actual two-bedroom rents are significantly different from the 
FMRs proposed by HUD. In addition, HUD has developed a version of the 
RDD survey methodology for smaller, nonmetropolitan PHAs. This 
methodology is designed to be simple enough to be done by the PHA 
itself, rather than by professional survey organizations, at a cost of 
$5,000 or less.
    PHAs that plan to use the RDD survey technique should obtain a copy 
of the survey guide entitled ``Random Digit Dialing Surveys; A Guide to 
Assist Larger Public Housing Agencies in Preparing Fair Market Rent 
Comments.'' The guide is available from HUD USER on 1-800-245-2691, or 
from HUD's Worldwide Web site, in Microsoft Word or Adobe Acrobat 
format, at the following address: http://www.huduser.org/datasets/fmr.html.
    HUD prefers, but does not mandate, the use of RDD telephone 
surveys, or the more traditional method described in the survey guide 
intended for small PHAs along with the simplified RDD methodology. 
Other survey methodologies are acceptable as long as the surveys 
submitted provide statistically reliable, unbiased estimates of the 
50th 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 to verify whether the sample is representative of the 
FMR area's rental housing stock.
    Local rental housing surveys conducted with alternative methods 
must include the following documentation:
     Identification of the 50th percentile gross rent (gross 
rent is rent including the cost of utilities) and the actual 
distribution (or distributions, if more than one bedroom size is 
surveyed) of the surveyed units, rank-ordered by gross rent.
     An explanation of how the rental housing sample was drawn 
and a copy of the survey questionnaire, transmittal letter, and any 
publicity materials.
     An explanation of how the contract rents of the individual 
units surveyed were converted to gross rents. (For RDD-type surveys, 
HUD requires use of the Section 8 utility allowance schedule.)
     An explanation of how the survey excluded units built 
within two years prior to the survey date.
     The date the rent data were collected so that HUD can 
apply a trending factor to update the estimate to the midpoint of the 
applicable fiscal year. If the survey has already been trended to this 
date, the date the survey was conducted and a description of the 
trending factor used.
     Copies of all survey sheets.
    Since FMRs are based on standard quality units and units occupied 
by recent movers, both of which are difficult to identify and survey, 
HUD will accept surveys of all rental units and apply appropriate 
adjustments.
    Most surveys cover only one- and two-bedroom units, in which case 
HUD will make the adjustments for other size units consistent with the 
differentials established on the basis of the 1990 Census data for the 
FMR area. When three- and four-bedroom units are surveyed separately to 
determine FMRs for these unit size categories, the commenter should 
multiply the 50th percentile survey rents by 1.087 and 1.077, 
respectively, to determine the FMRs. The use of these factors will 
produce the same upward adjustments in the rent differentials as those 
used in the HUD methodology.

Findings and Certifications

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 Housing Choice Voucher Program is 
categorically excluded from the Department's National Environmental 
Policy Act procedures under 24 CFR 50.19(c)(d).

Regulatory Flexibility Act

    The undersigned, in accordance with the Regulatory Flexibility Act 
(5 U.S.C. 605(b)) certifies that this notice would not have a 
significant economic impact on a substantial number of small entities 
because the proposed FMRs will not change the rent from that which 
would be charged if the rental unit were not in the housing choice 
voucher program.

Catalog of Federal Domestic Assistance

    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 be codified 
in 24

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CFR part 888, are proposed to be amended as follows:

    Dated: October 2, 2000.
Andrew Cuomo,
Secretary.

Fair Market Rents for the Housing Choice Voucher 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 three 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
Dallas, TX--Henderson County
Washington, DC-MD-VA-WV--Berkeley and Jefferson Counties in West 
Virginia; and Clarke, Culpeper, King George and Warren Counties in 
Virginia

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 manufactured home spaces in the Housing Choice Voucher 
program are 40 percent of the two-bedroom Housing Choice Voucher 
program FMRs, with the exception of the areas listed in Schedule D 
whose manufactured home space FMRs have been modified on the basis of 
public comments. Once approved, the revised manufactured home space 
FMRs establish new base-year estimates that are updated annually using 
the same data used to estimate the Housing Choice Voucher program FMRs. 
The FMR area definitions used for the rental of manufactured home 
spaces are the same as the area definitions used for the other FMRs.

4. Arrangement of FMR Areas and Identification of Constituent Parts

    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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[FR Doc. 00-25679 Filed 10-5-00; 8:45 am]
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