[Federal Register Volume 66, Number 1 (Tuesday, January 2, 2001)]
[Rules and Regulations]
[Pages 162-220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33374]



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Part III





Department of Housing and Urban Development





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24 CFR Part 888



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50th Percentile and 40th Percentile Fair Market Rents for Fiscal Year 
2001; Final Rule

  Federal Register / Vol. 66, No. 1 / Tuesday, January 2, 2001 / Rules 
and Regulations  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 888

[Docket No. FR-4589-N-04]


50th Percentile and 40th Percentile Fair Market Rents for Fiscal 
Year 2001

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of Fair Market Rents (FMRs) for Fiscal Year (FY) 2001.

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
requires the Secretary of HUD to publish FMRs periodically, but not 
less frequently 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 (currently available 
chiefly in the project-based voucher program); (3) to determine whether 
comparability applies to adjustment of contract rents during the term 
of existing HAP contracts for the former new construction, 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. Other programs may also require the use of 
FMRs.
    This notice sets final FMRs that reflect the 50th percentile rent 
levels for 39 areas, as determined by applying the criteria specified 
in HUD's interim rule amending the HUD regulation that establishes the 
methodology for setting FMRs for existing housing (24 CFR 888.113). The 
interim was published on October 2, 2000 (65 FR 58870), and became 
effective on December 1, 2000. To combine final Fiscal Year 2001 FMRs 
for all areas in one publication, this notice also re-publishes the 
40th percentile rents for all other areas.

EFFECTIVE DATE: The 50th percentile FMRs published in this notice are 
effective on January 2, 2001. The 40th percentile FMRs were previously 
effective on October 1, 2000.
    Electronic Data Availability: This Federal Register Notice is 
available electronically from the HUD news page: http://www.hudclips.org/cgi/index.cgi. Federal Register Notices also are 
available electronically from the U.S. Government Printing Office web 
site: http://www.access.gpo.gov/su_docs/aces/aces140.html.
    The data set of the 50th percentile FMRs is available 
electronically on the HUD web page: http://www.huduser.org/datasets/pdrdatas.html.

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 Marie L. Lihn, Economic and Market Analysis 
Division, Office of Economic Affairs, telephone (202) 708-0590, 
Extension 5866 (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 of the United States Housing Act 
of 1937 (the Act) (42 U.S.C. 1437f) authorizes housing assistance to 
help lower income families rent decent, safe, and sanitary housing. The 
amounts of the housing assistance payments are limited by ``fair market 
rents'' (FMRs) established by HUD for all areas, and for different size 
units (expressed as number of bedrooms in a unit).
    In the HUD voucher program, the FMR is used to determine the 
``payment standard'' (the maximum monthly subsidy) for assisted 
families (see Section 982.503.) 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.
    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 
geographic area in which rental housing units are in competition.
    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 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.

50th Percentile FMRs

    Raising FMRs for certain areas to the 50th percentile rent level as 
provided in the interim rule, effective December 1, 2000, is designed 
to give lower-income families who participate in the voucher program 
access to a broader range of housing opportunities throughout a 
metropolitan area. FMRs have been increased to the 50th percentile rent 
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. New paragraph (c) Of Section 888.113 
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.

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    (iii) FMR areas that do not meet the test for continued use of FMRs 
set at the 50th percentile will be ineligible to use FMR 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 Section 982.503 (f).
    Schedule B of this document lists the FMRs for all areas. Schedule 
B includes FMRs set at the 50th percentile rent for 39 FMR areas in 
accordance with Section 888.113 (c), and at the 40th percentile rent 
for all other FMR areas. In Schedule B, an asterisk identifies each of 
the 39 FMR areas for which HUD has determined 50th percentile FMRs.
    HUD has set 50th percentile FMRs for the following metropolitan FMR 
areas:

Albuquerque, NM
Atlanta, GA
Austin-San Marcos, TX
Baton Rouge, LA
Bergen-Passaic, NJ
Buffalo-Niagara Falls, NY
Chicago, IL
Cleveland-Lorain-Elyria, OH
Dallas, TX
Denver, CO
Detroit, MI
Fort Lauderdale, FL
Fort Worth-Arlington, TX
Grand Rapids-Muskegon-Holland, MI
Houston, TX
Kansas City, MO-KS
Las Vegas, NV-AZ
Miami, FL
Minneapolis-St. Paul, MN-WI
Newark, NJ
Norfolk-Virginia Beach-Newport News, VA-NC
Oakland, CA
Oklahoma City, OK
Orange County, CA
Philadelphia, PA-NJ
Phoenix-Mesa, AZ
Richmond-Petersburg, VA
Sacramento, CA
Salt Lake City-Ogden, UT
San Antonio, TX
San Diego, CA
San Jose, CA
St. Louis, MO-IL
Tampa-St. Petersburg-Clearwater, FL
Tulsa, OK
Ventura, CA
Washington, DC-MD-VA
West Palm Beach-Boca Raton, FL
Wichita, KS

Manufactured Home Space FMRs Based on 50th Percentile Rent

    As in the past, FMRs for the rental of manufactured home spaces in 
the tenant-based Housing Choice Voucher program are set at 40 percent 
of the applicable Section 8 existing housing program FMRs for two-
bedroom units (section 888.113(e)). The manufactured home space FMR for 
each of the 39 areas for which HUD has set 50th percentile FMR, is set 
a 40 percent of the two-bedroom 50th percentile FMR.

Consideration of Public Comment

    In response to the October 6, 2000 proposed 50th percentile FMRs 
for 39 areas, HUD received six public comments. No rental housing 
survey information was submitted with any of the comments. Two comments 
specifically discussed the implementation of the provisions under the 
interim rule and were not related to FMR areas. The six comments 
received and responses are summarized below:
    Comment: The Housing Authority of the City of New Braunfels, Texas 
says its jurisdiction has high rents that are more comparable to Austin 
than San Antonio and that it has a very high turn-back rate for its 
Housing Choice Voucher program.
    Response: The New Braunfels PHA does not appear to have taken 
advantage of its discretion to raise payment standards to 110 percent 
of the FMR. If the PHA were to continue to experience high turn-back 
rates, despite having increased its payment standard to 110 percent of 
the FMR, it could qualify for the success rate payment standard based 
on a 50th percentile rent. HUD also provides several additional 
mechanisms for obtaining exception payment standards above 110 percent 
of the 40th percentile FMR. (See 24 CFR 982.503.)
    Comment: Two Public Housing Authorities (PHAs), The Housing 
Authority of the City of New Braunfels, Texas and the Oklahoma City 
Housing Authority request additional funding from HUD for their voucher 
programs. The New Braunfels PHA requests additional funding for a 
higher payment standard, the Oklahoma City PHA requests additional 
funding for the new 50th percentile FMRs.
    Response: HUD's current procedures provide sufficient funding for 
PHAs to cover the increased costs resulting from higher payment 
standards or an FMR increase. Any additional costs resulting from the 
higher payment standard or higher FMR would be reflected in the PHA's 
costs per unit for the current year. Under HUD's renewal regulations 
(see 24 CFR 982.102), a PHA experiencing increased per-unit costs in 
year 1 will generally receive an increase in its funding in the 
following year in light of these higher per-unit costs. This enables 
PHAs to increase payment standards where necessary to ensure the 
successful use of Housing Choice Vouchers.
    Comment: Foothill-West Associates, the administrator of a senior 
apartment complex, notes that rents in Butte County, California have 
increased countywide by an average of 12-13 percent and requests a 
survey by HUD.
    Response: HUD is currently developing a list of potential areas 
that will be surveyed during the upcoming winter and summer. Chico-
Paradise MSA (Butte County) will be placed on this list as a potential 
candidate and its need for a survey will be evaluated in comparison 
with the needs of other FMR areas.
    Comment: The Council of Large Public Housing Authorities finds that 
the proposed rule is too restrictive in that it limits increasing the 
FMRs to only 39 metropolitan market areas. CLPHA also is concerned that 
the proposed rule lacks transparency because HUD has not identified the 
sources of information used to determine eligibility and has not 
established a method to appeal the designation of ineligibility.
    Response: These comments go to the merits of the interim rule that 
provides for increased FMRs and success rate payment standards, rather 
than to HUD's calculations of the 50th percentile rent in accordance 
with the rule.
    Comment: The Dallas Housing Authority supports the efforts of HUD 
to increase FMRs.

Calculation Errors

    This notice corrects the 3-bedroom FMR for Utica-Rome, NY and makes 
it $626.

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 50th percentile FMRs do not change the rent from that which 
would be charged if the unit were not in the Section 8 Program.

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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 not be 
codified in 24 CFR part 888, are amended as follows:

    Dated: December 21, 2000.
Andrew M. 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 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 counties 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 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
    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 is 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.
5. 50th Percentile FMRs
    All 50th percentile FMRs are designated by an asterisk to 
differentiate them from the 40th percentile FMRs.
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[FR Doc. 00-33374 Filed 12-29-00; 8:45 am]
BILLING CODE 4210-62-C