[Federal Register Volume 71, Number 30 (Tuesday, February 14, 2006)]
[Notices]
[Pages 7832-7841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1361]



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Part II





Department of Housing and Urban Development





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Fair Market Rents for Fiscal Year 2006 for Housing Choice Voucher, 
Moderate Rehabilitation Single Room Occupancy and Certain Other HUD 
Programs; Supplemental Notice on 50th Percentile Designation; Notice

  Federal Register / Vol. 71, No. 30 / Tuesday, February 14, 2006 / 
Notices  

[[Page 7832]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4995-N-04]


Fair Market Rents for Fiscal Year 2006 for Housing Choice 
Voucher, Moderate Rehabilitation Single Room Occupancy and Certain 
Other HUD Programs; Supplemental Notice on 50th Percentile Designation

AGENCY: Office of the Secretary, HUD.

ACTION: Notice.

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
(USHA) requires the Secretary to publish fair market rents (FMRs) 
periodically, but not less than annually, to be effective on October 1 
of each year. On October 3, 2005, HUD published final FMRs for Fiscal 
Year (FY) 2006. This notice identified 58 areas at 50th percentile 
FMRs, which consists of 48 areas previously eligible for 50th 
percentile FMRs plus 10 areas that are newly eligible. The 48 existing 
50th percentile FMR areas were evaluated in a notice published August 
25, 2005 (70 FR 50138) and it was determined that only 14 of these 
areas would remain eligible to participate in the 50th percentile FMR 
program. This notice confirms the eligibility of the 24 areas 
identified as having continuing or new eligibility for 50th percentile 
FMRs. Following a review of public comments, this notice confirms and 
implements elimination of 50th percentile FMRs for the 34 areas 
identified as no longer eligible in the August 25, 2005, notice.
    HUD has special exception procedures to adjust voucher payment 
standards in areas affected by natural disasters. Areas directly or 
indirectly impacted by Hurricanes Katrina or Rita are either already 
qualified to use exception payment standards or can submit a documented 
request to do so. In areas directly affected by the two recent 
hurricanes, public housing agencies are authorized to use voucher 
payment standards of up to 120 percent of published FMRs, which is 
significantly higher than the standards permitted for 50th percentile 
areas. In addition, public housing agencies in these areas may request 
higher exception payment standards if justified by local rent 
increases.

DATES: Effective Date: The FMRs published in this notice are effective 
March 1, 2006.

FOR FURTHER INFORMATION CONTACT: For technical information on the 
methodology used to develop FMRs or a listing of all FMRs, please call 
the HUD USER information line at 800-245-2691 or access the information 
on the HUD Web site at http://www.huduser.org/datasets/fmr.html. FMRs 
are listed at the 40th or 50th percentile in Schedule B of this notice. 
For informational purposes, a table of 40th percentile recent mover 
rents for the areas with 50th percentile FMRs will be provided on the 
same Web site noted above. Any questions related to use of FMRs or 
voucher payment standards should be directed to the respective local 
HUD program staff. Questions on how to conduct FMR surveys or further 
methodological explanations may be addressed to Marie L. Lihn or Lynn 
A. Rodgers, Economic and Market Analysis Division, Office of Economic 
Affairs, Office of Policy Development and Research, telephone (202) 
708-0590. Persons with hearing or speech impairments may access this 
number through TTY by calling the toll-free Federal Information Relay 
Service at (800) 877-8339. (Other than the HUD USER information line 
and TTY numbers, telephone numbers are not toll free.) Electronic Data 
Availability: This Federal Register notice is available electronically 
from the HUD news page: http://www.hudclips.org. Federal Register 
notices also are available electronically from the U.S. Government 
Printing Office Web site at http://www.gpoaccess.gov/fr/index.html.

SUPPLEMENTARY INFORMATION

I. Background

    Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing 
assistance to aid lower income families in renting safe and decent 
housing. Housing assistance payments are limited by FMRs established by 
HUD for different areas. In the Housing Choice Voucher program, the FMR 
is the basis for determining the ``payment standard amount'' used to 
calculate the maximum monthly subsidy for an assisted family (see 24 
CFR 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, and safe rental housing of a modest (non-
luxury) nature with suitable amenities. In addition, all rents 
subsidized under the Housing Choice Voucher program must meet 
reasonable rent standards. The interim rule published on October 2, 
2000 (65 FR 58870), established 50th percentile FMRs for certain areas.
    Section 8(c) of the USHA requires the Secretary of HUD to publish 
FMRs periodically, but not less frequently than annually. HUD's 
regulations implementing section 8(c), codified at 24 CFR part 888, 
provide that HUD will develop proposed FMRs, publish them for public 
comment, provide a public comment period of at least 30 days, analyze 
the comments, and publish final FMRs. (See 24 CFR 888.115.) HUD 
published its notice on proposed FY2006 FMRs on June 2, 2005 (70 FR 
32402), and provided a 60-day public comment period. In the June 2, 
2005, notice, HUD advised that it would publish a separate notice to 
identify any areas that may be newly eligible for 50th percentile FMRs 
as well as any areas that remain eligible or no longer remain eligible 
for 50th percentile FMRs, as provided in HUD's regulations. A 
supplemental notice on 50th percentile designations was published on 
August 25, 2005 (70 FR 50138), with comments due by September 26, 2005.
    Fiftieth percentile FMRs were established by a rule published on 
October 2, 2000, that also established the eligibility criteria used to 
select areas that would be assigned 50th rather than the normal 40th 
percentile FMRs. The objective was to give PHAs a tool to assist them 
in de-concentrating voucher program use patterns. The three FMR area 
eligibility criteria were:
    1. FMR Area Size: the FMR area had to have at least 100 census 
tracts.
    2. Concentration of Affordable Units: 70 percent or fewer of the 
tracts with at least 10 two-bedroom units had at least 30 percent of 
these units with gross rents at or below the 40th percentile two-
bedroom FMR; and,
    3. Concentration of Participants: 25 percent or more of the tenant-
based rental program participants in the FMR area resided in the 5 
percent of census tracts with the largest number of program 
participants.
    The rule also specified that areas assigned 50th percentile FMRs 
were to be re-evaluated after three years, and that the 50th percentile 
rents would be rescinded unless an area has made at least a fraction of 
a percent progress in reducing concentration and otherwise remains 
eligible. (See 24 CFR 888.113.) The three-year period has now passed. 
As noted in the June 2, 2005, notice, the three-year period for the 
first areas determined eligible to receive the 50th percentile FMRs, 
following promulgation of the regulation in Sec.  888.113, has come to 
a close. The notice issued on August 25, 2005 identified 24 areas that 
will be eligible to use 50th percentile FMRs.

II. 50th Percentile FMR Areas for FY2006

    In making FY2006 FMRs effective on October 1, 2005, HUD did not 
terminate 50th percentile eligibility for areas designated to lose this 
status in the

[[Page 7833]]

August 25, 2005, notice. Instead, it implemented 50th percentile FMRs 
for newly identified areas and postponed implementation of all 
terminations until it had had the opportunity to review all related 
public comments. Based on its review, HUD has not found sufficient 
reason to change any of its initial determinations and is rescinding 
50th percentile FMRs for the 34 areas identified in Table 1.

               Table 1.--Areas Losing 50th Percentile FMRs
------------------------------------------------------------------------
 
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Allegan County, MI
Ashtabula County, OH
Atlanta-Sandy Springs-Marietta, GA HMFA
Baton Rouge, LA HMFA*
Bergen-Passaic, NJ HMFA
Buffalo-Niagara Falls, NY MSA
Cleveland-Elyria-Mentor, OH MSA
Dallas, TX HMFA
Detroit-Warren-Livonia, MI HMFA
Holland-Grand Haven, MI MSA
Hood County, TX
Miami-Fort Lauderdale-Miami Beach, FL
Minneapolis-St. Paul-Bloomington, MN-WI
Mohave County, AZ
Monroe, MI MSA
Muskegon-Norton Shores, MI MSA
Newark, NJ HMFA
Nye County, NV
Oakland-Fremont, CA HMFA
Ogden-Clearfield, UT MSA
Oklahoma City, OK HMFA
Oxnard-Thousand Oaks-Ventura, CA MSA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
Pottawatomie County, OK
Sacramento--Arden-Arcade--Roseville, CA
Salt Lake City, UT HMFA
San Antonio, TX HMFA
San Diego-Carlsbad-San Marcos, CA MSA
San Jose-Sunnyvale-Santa Clara, CA HMFA
St. Louis, MO-IL HMFA
Tampa-St. Petersburg-Clearwater, FL MSA
Tulsa, OK HMFA
Warren County, NJ HMFA
Wichita, KS HMFA
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*Under the general waiver notice published on October 3, 2005 (70 FR
  57716), PHAs in FEMA-designated Hurricane Katrina disaster areas may
  establish separate payment standards as high as 120 percent of the
  published 40th percentile rent to expand the supply of housing
  available to families displaced by Hurricane Katrina. This means that
  Baton Rouge is permitted to use payment standards much higher than its
  50th percentile rents. In addition, it may request payment standards
  above 120 percent of published FMRs, but such requests must be
  justified by data.

III. Procedures for Determining 50th Percentile FMRs

    This section describes the procedure HUD followed in evaluating 
which new and currently designated areas are eligible for 50th 
percentile FMRs under HUD's regulations in 24 CFR part 888. 
Additionally, in accordance with HUD's Information Quality Guidelines 
(published at 67 FR 69642), certain FMR areas were deemed ineligible 
for 50th percentile FMRs because the information on concentration of 
voucher program participants needed to make the eligibility 
determination was of inadequate quality as described in this section. 
Table 2 lists the 48 FMR areas that were assigned proposed FY2006 FMRs 
set at the 50th percentile based on new FMR area definitions. Table 2 
includes the 39 areas originally determined eligible for 50th 
percentile FMRs (following the October 2000 final rule that allowed 
50th percentile FMRs) plus subparts of these areas that were separated 
from the original areas in accordance with the new Office of Management 
and Budget (OMB) metropolitan area definitions. Those areas marked by 
an asterisk (*) in Table 2 failed to meet one or more eligibility 
criteria as described below, including measurable deconcentration. 
Those areas marked by a plus sign (+) in Table 2 had insufficient 
information, as described below, upon which to determine concentration 
of voucher program participants and are deemed ineligible for 50th 
percentile FMRs. Only 14 of these areas met all of the eligibility 
criteria including information quality requirements and had measurable 
deconcentration.

  Table 2.--Proposed FY2006 50th Percentile FMR Areas Listed in June 2,
                              2005, Notice
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Albuquerque, NM MSA
*Allegan County, MI
*Ashtabula County, OH
*Atlanta-Sandy Springs-Marietta, GA HMFA
Austin-Round Rock, TX MSA
*Baton Rouge, LA HMFA
*Bergen-Passaic, NJ HMFA
*Buffalo-Niagara Falls, NY MSA
Chicago-Naperville-Joliet, IL HMFA
*Cleveland-Elyria-Mentor, OH MSA
+Dallas, TX HMFA
Denver-Aurora, CO MSA
*Detroit-Warren-Livonia, MI HMFA
Fort Worth-Arlington, TX HMFA
Grand Rapids-Wyoming, MI HMFA
*Holland-Grand Haven, MI MSA
*Hood County, TX
Houston-Baytown-Sugar Land, TX HMFA
Kansas City, MO-KS HMFA
Las Vegas-Paradise, NV MSA
+Miami-Fort Lauderdale-Miami Beach, FL MSA
*Minneapolis-St. Paul-Bloomington, MN-WI MSA
*Mohave County, AZ
*Monroe, MI MSA
*Muskegon-Norton Shores, MI MSA
+Newark, NJ HMFA
*Nye County, NV
*Oakland-Fremont, CA HMFA
*Ogden-Clearfield, UT MSA
*Oklahoma City, OK HMFA
Orange County, CA HMFA
*Oxnard-Thousand Oaks-Ventura, CA MSA
+Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA
Phoenix-Mesa-Scottsdale, AZ MSA
*Pottawatomie County, OK
Richmond, VA HMFA
*Sacramento--Arden-Arcade--Roseville, CA HMFA
*Salt Lake City, UT HMFA
*San Antonio, TX HMFA
*San Diego-Carlsbad-San Marcos, CA MSA
*San Jose-Sunnyvale-Santa Clara, CA HMFA
*St. Louis, MO-IL HMFA
*Tampa-St. Petersburg-Clearwater, FL MSA
*Tulsa, OK HMFA
Virginia Beach-Norfolk-Newport News, VA-NC MSA
*Warren County, NJ HMFA
Washington-Arlington-Alexandria, DC-VA-MD HMFA
*Wichita, KS HMFA
------------------------------------------------------------------------

    The following subsections describe HUD's application of the 
eligibility criteria for 50th percentile FMRs, set forth in 24 CFR 
888.113, to the proposed FY2006 50th percentile FMR areas, and explain 
which areas lost eligibility for the 50th percentile FMR based on each 
criterion. The application of HUD's Information Quality Guidelines and 
findings of ineligibility of FMR areas on the basis of inadequate 
information on concentration of participants are described in the 
``concentration of participants'' subsection. The final section 
identifies 10 additional FY2006 FMR areas assigned proposed 40th 
percentile FMRs in the June 2, 2005, notice, that are eligible, under 
the regulatory criteria and information quality guidelines, for 50th 
percentile FMRs.

Continued Eligibility: FMR Area Size Criterion

    Application of the modified new OMB metropolitan area definitions 
results in several peripheral counties of FY2005 50th percentile FMR 
areas being separated from their core areas. The separated areas become 
either non-metropolitan counties, parts of different metropolitan 
areas, or form entirely new metropolitan areas. Table 3 shows proposed 
FY2006 FMR areas that are ineligible to receive 50th percentile FMRs 
because, as a result of the new metropolitan area definitions, they 
each have fewer than 100 census tracts and therefore fail to meet the 
FMR area size criterion.

[[Page 7834]]



 Table 3.--Proposed FY2006 50th Percentile FMR Areas With Fewer Than 100
                              Census Tracts
------------------------------------------------------------------------
                                                                 Tracts
------------------------------------------------------------------------
Allegan County, MI............................................        21
Ashtabula County, OH..........................................        22
Holland-Grand Haven, MI MSA...................................        36
Hood County, TX...............................................         5
Mohave County, AZ.............................................        30
Monroe, MI MSA................................................        39
Muskegon-Norton Shores, MI MSA................................        45
Nye County, NV................................................        10
Ogden-Clearfield, UT MSA......................................        93
Pottawatomie County, OK.......................................        15
Warren County, NJ HMFA........................................        23
------------------------------------------------------------------------

Continued Eligibility: Concentration of Affordable Units

    The original 50th percentile FMR determination in 2000 measured the 
Concentration of Affordable Units criterion with data from the 1990 
Census because 2000 Census data were not available. According to 2000 
Census data, the FMR areas, shown in Table 4, and assigned proposed 
FY2006 50th percentile FMRs have more than 70 percent of their tracts 
containing 10 or more rental units where at least 30 percent of rental 
units rent for the 40th percentile two-bedroom FMR or less. These areas 
therefore fail to meet the Concentration of Affordable Units criterion 
and are not eligible for 50th percentile FMRs (FMR areas that are 
listed above as too small and also fail to meet this criterion are not 
listed here). In Table 4, the percentages following each FMR area name 
are, respectively, the 1990 Census and 2000 Census percent of tracts 
containing 10 or more rental units where at least 30 percent of rental 
units rent for the 40th percentile two-bedroom FMR or less. This number 
must be no greater than 70 percent for an FMR area to qualify for 50th 
percentile FMRs.

  Table 4.--Proposed FY2006 50th Percentile FMR Areas Where Affordable
                       Units Are Not Concentrated
------------------------------------------------------------------------
                                             1990 \1\          2000
                FMR area                     (percent)       (percent)
------------------------------------------------------------------------
Atlanta-Sandy Springs-Marietta, GA HMFA.            69.5            72.8
Baton Rouge, LA HMFA....................            69.2            80.3
Buffalo-Niagra Falls, NY MSA............            67.7            75.4
Cleveland-Elyria-Mentor, OH MSA.........            62.3            70.3
Detroit-Warren-Livonia, MI HMFA.........            65.7            72.7
Minneapolis-St. Paul, MN-WI MSA.........            65.0            73.1
Oakland-Fremont, CA HMFA................            67.8            74.4
Oklahoma City, OK HMFA..................            63.1            71.5
Oxnard-Ventura, CA MSA..................            68.1            71.8
St. Louis, MO-IL HMFA...................            69.9            71.1
Salt Lake City, UT HMFA.................            66.3            70.6
San Antonio, TX HMFA....................            66.0            70.7
San Jose-Santa Clara, CA HMFA...........            67.5            74.8
Tampa-St. Petersburg, FL MSA............            63.9            74.1
Tulsa, OK HMFA..........................            67.5            70.4
Witchita, KS HMFA.......................            68.4            70.2
------------------------------------------------------------------------

Continued Eligibility: Concentration of Participants

    The \1\ Concentration of Participants criterion requires that 25 
percent or more of voucher program participants be located in the five 
percent of census tracts with the highest number of voucher 
participants. Otherwise, an area is not eligible for 50th percentile 
FMRs. The data for evaluating the Concentration of Participants 
criterion comes from HUD's Public Housing Information Center (PIC). All 
public housing authorities (PHAs) that administer Housing Choice 
Voucher (HCV) programs must submit, on a timely basis, family records 
to HUD's PIC as set forth by 24 CFR part 908 and the consolidated 
annual contributions contract (CACC). PIC is the Department's official 
system to track and account for HCV family characteristics, income, 
rent, and other occupancy factors. PHAs must submit their form HUD-
50058 records electronically to HUD for all current HCV families. Under 
HUD Notice PIH 2000-13 (HA), PHAs were required to successfully submit 
a minimum of 85 percent of their resident records to PIC during the 
measurement period covered by this notice (this requirement was raised 
to 95 percent by HUD Notice PIH 2005-17 (HA), but this higher reporting 
rate requirement is not used for purposes of this notice because it did 
not become effective until December 31, 2005, data submissions by 
PHAs).
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    \1\ The 1990 percent of tracts containing 10 or more rental 
units where at least 30 percent of rental units rent for the 40th 
percentile 2-bedroom FMR or less is the figure computed for the 
original old-definition FMR area that was assigned the 50th 
percentile FMR in 2000. The 2000 figure may differ both because of 
change between the two decennial censuses as well as change in the 
geographic definition of the FMR areas.
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    Under HUD's Information Quality Guidelines,\2\ the data used to 
determine eligibility for 50th percentile FMRs qualifies as 
``influential'' and is therefore subject to a higher ``level of 
scrutiny and pre-dissemination review'' including ``robustness checks'' 
because ``public access to data and methods will not occur'' due to 
HUD's statutory duty to protect private information.\3\ HUD cannot 
reasonably base the eligibility decision on inadequate data.
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    \2\ Section 515 of the Treasury and General Government 
Appropriations Act for FY2001 (Pub. L. 106-554) directed the OMB to 
issue government-wide guidelines that ``provide policy and 
procedural guidance to federal agencies for ensuring and maximizing 
the quality, objectivity, utility, and integrity of information 
(including statistical information) disseminated by federal 
agencies.'' Within one year after OMB issued its guidelines, 
agencies were directed to issue their own guidelines that described 
internal mechanisms by which agencies ensure that their information 
meets the standards of quality, objectivity, utility, and integrity. 
The mechanism also must allow affected persons to seek and obtain 
correction of information maintained and disseminated by the agency 
that does not comply with the guidelines. OMB issued its final 
guidelines on September 28, 2001 (66 FR 49718), but requested 
additional comment on one component of the OMB guidelines. The OMB 
guidelines addressing additional public comment were published on 
January 3, 2002 (67 FR 369), and republished on February 22, 2002 
(67 FR 6452). HUD issued its Final Information Quality Guidelines on 
November 18, 2002 (67 FR 69642), which follow public comment on 
proposed guidelines published on May 30, 2002 (67 FR 37851).
    \3\ Note that 13 U.S.C. 9 governs the confidentiality of census 
data. The Privacy Act (5 U.S.C. 552) governs confidentiality of the 
data used to evaluate the Concentration of Participants criterion.
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    The information used to determine which FMR areas are assigned 50th 
percentile FMRs is ``influential''

[[Page 7835]]

because it has ``a clear and substantial impact,'' namely because it 
can potentially affect how voucher subsidy levels will be set in up to 
108 large FMR areas containing about 59 percent of voucher tenants, 
thereby affecting ``a broad range of parties.'' PHA voucher payment 
standards are set according to a percentage of the FMR, so the setting 
of 50th percentile FMRs ``has a high probability'' of affecting subsidy 
levels for tenants in the affected FMR areas. An ``important'' public 
policy is affected by the decisions rendered from the information, 
namely the goal of deconcentrating voucher tenants and improving their 
access to jobs and improved quality of life.
    Under HUD's Final Information Quality Guidelines, influential 
information that is developed using data that cannot be released to the 
public under Title XIII or for ``other compelling interests'' is 
subject to ``robustness checks'' to address, among other things, 
``sources of bias or other error'' and ``programmatic and policy 
implications.'' The typical reason for a low overall reporting rate in 
an FMR area is very low reporting rates by the largest PHAs in the FMR 
area. Unless it could be shown that underreporting is essentially 
random (which would be difficult and impose a major administrative 
burden on HUD), low reporting rates render any results derived from the 
data inaccurate, unreliable, and biased.
    The setting of a reporting rate threshold for consideration of 
eligibility for 50th percentile FMRs is, therefore, justified because 
it constitutes a ``robustness check'' on ``influential information'' as 
defined in HUD's Final Information Quality Guidelines. HUD sets the 
overall FMR area minimum reporting rate standard at 85 percent based on 
the minimum requirements established for PHA reporting rates.
    Of the 21 areas passing the FMR Area Size and Concentration of 
Affordable Units criteria, the four listed below in Table 5 have data 
quality issues in measuring Concentration of Participants in 2005 
because of low reporting by PHAs in the FMR area.

  Table 5.--Proposed FY2006 50th Percentile FMR Areas Meeting FMR Area
     Size and Concentration of Affordable Units Criteria, but Having
   Reporting Rates Below 85 Percent as Derived From the May 31, 2005,
                         Delinquency Report \4\
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Dallas, TX HMFA..............................................       83.2
Miami-Fort Lauderdale-Miami Beach, FL MSA....................       83.5
Newark, NJ HMFA..............................................       79.9
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA..............       54.0
------------------------------------------------------------------------

    There \4\ are two areas with a proposed FY2006 50th percentile FMR 
that met the first two eligibility criteria, had adequate data to 
measure Concentration of Participants, but failed to meet 25 percent 
concentration criterion. These two areas are the Sacramento-Arden-
Arcade-Roseville, CA HMFA and the San Diego-Carlsbad-San Marcos, CA 
MSA.
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    \4\ For most PHAs the reporting rate comes directly from the 
Delinquency Report and is the ratio of form 50058 received to 
required units. In some cases, the number of 50058 required units 
was inconsistent with other figures on the number of HCV 
participants served by the PHA and was replaced with either the 
December 2004 leased units (if available) or Annual Contribution 
Contracts (ACC) units. The two significant instances where this 
procedure was used and negatively affected FMR area reporting rates 
in this table because the resulting PHA rates were below 85 percent 
are as follows: Dallas, TX HA (15,975 ACC units, PHA Report Rate 
78.3%) and Philadelphia, PA HA (15,641 leased units, PHA Report Rate 
0.0%).
---------------------------------------------------------------------------

Continued Eligibility: Deconcentration of Participants

    HUD's regulations in 24 CFR 888.113 specify that areas assigned 
50th percentile rents are to be reviewed at the end of three years, and 
that the 50th percentile rents will be rescinded if no progress has 
been made in deconcentrating voucher tenants. FMR Areas that failed 
this test are ineligible for 50th percentile FMRs for the subsequent 
three years. One FMR area with proposed FY2006 50th percentile FMRs 
that passed the other 50th percentile eligibility tests, had sufficient 
data to accurately evaluate tenant concentration and measure 
deconcentration progress between 2000 and 2005, and failed to show 
deconcentration--the Bergen-Passaic, NJ HMFA.
    The Newark, NJ HMFA and the Philadelphia-Camden-Wilmington, PA-NJ-
DE-MD MSA are ineligible for 50th percentile FMRs because neither 
concentration nor deconcentration progress can be measured accurately 
based on data provided by PHA reporting. In addition, as discussed in 
the review of public comments, the Philadelphia PHA is exempt from FMR 
constraints in setting voucher payment standards, and it was this part 
of the metropolitan area that had the high levels of concentration that 
resulted in the initial 50th percentile FMR status. If reporting in any 
of these FMR areas has increased sufficiently when future evaluations 
of deconcentration are made, and eligibility can be established with 
increased reporting rates, the 50th percentile FMRs could be reinstated 
before the end of a three-year hiatus in these two areas.
    Since the Bergen-Passaic, NJ HMFA has not demonstrated progress in 
deconcentrating voucher participants and this measurement is made with 
data of adequate quality (85.7 percent reporting rate), the Bergen-
Passaic, NJ HMFA is ineligible for FY2006 50th percentile FMRs and 
shall remain so for 3 years. Bergen-Passaic's 40th percentile rents are 
within 5 percent of those of the New York City metropolitan area to 
which it is assigned under current OMB metropolitan area definitions, 
so under HUD's policies for establishing the FY2006 FMR areas it would 
become part of the New York City FMR area. However, as outlined in 
Federal Register Notice of Proposed Metropolitan Area Definitions for 
FY2006 Income Limits, published on December 16, 2005 (70 FR 74988), HUD 
has proposed creating four new FMR areas, including Bergen-Passiac, by 
splitting larger FY2006 FMR areas along the lines of FY2005 FMR areas. 
These new FMR areas were proposed because they have very large 
differences in median incomes and income limits from those of the 
larger areas of which they were originally part. Public comments on 
these proposed changes are pending, but comments to date have supported 
this proposal, so this notice maintains Bergen-Passiac as an 
independent FMR area on an interim basis pending completion of the 
comment process.
    Table 6 lists the areas, originally assigned 50th percentile FMRs, 
and also assigned proposed FY2006 50th percentile FMRs, that have 
sufficient Reporting Rates as derived from the May 31, 2005, 
Delinquency Report to make an accurate assessment of participant 
concentration, that meet all eligibility criteria, and have shown 
evidence of participant deconcentration. These areas continue to be 
eligible for 50th percentile FMRs.

[[Page 7836]]



  Table 6.--Proposed FY2006 50th Percentile FMR Areas That Continue as
                          50th Percentile Areas
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Albuquerque, NM MSA
Austin-Round Rock, TX MSA
Chicago-Naperville-Joliet, IL HMFA
Denver-Aurora, CO MSA
Fort Worth-Arlington, TX HMFA
Grand Rapids-Wyoming, MI HMFA
Houston-Baytown-Sugar Land, TX HMFA
Kansas City, MO-KS HMFA
Las Vegas-Paradise, NV MSA
Orange County, CA HMFA
Phoenix-Mesa-Scottsdale, AZ MSA
Richmond, VA HMFA
Virginia Beach-Norfolk-Newport News, VA-NC MSA
Washington-Arlington-Alexandria, DC-VA-MD HMFA
------------------------------------------------------------------------

Newly Eligible Areas

    Table 7 lists the FY2006 FMR areas not originally assigned proposed 
50th percentile FMRs that have sufficient Reporting Rates as derived 
from the May 31, 2005, Delinquency Report (more than 85 percent overall 
for the FMR area) to evaluate the Concentration of Participants and 
meet the eligibility requirements for 50th percentile FMRs. There were 
no FY2006 FMR areas originally assigned proposed 40th percentile FMRs 
that otherwise met the eligibility requirements for 50th percentile 
FMRs, but were deemed ineligible by having insufficient Reporting Rates 
as derived from the May 31, 2005, Delinquency Report.

            Table 7.--New Assigned 50th Percentile FMR Areas
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Baltimore-Towson, MD MSA
Hartford-West Hartford-East Hartford, CT HMFA
Honolulu, HI MSA
Milwaukee-Waukesha-West Allis, WI MSA
New Haven-Meriden, CT HMFA
Providence-Fall River, RI-MA HMFA
Riverside-San Bernardino-Ontario, CA MSA
Sarasota-Bradenton-Venice, FL MSA
Tacoma, WA HMFA
Tucson, AZ MSA
------------------------------------------------------------------------

IV. Public Comments

    A total of 32 comments were received and reviewed by HUD. Many of 
the comments submitted raised FMR issues that are not directly related 
to this notice and therefore are not discussed in detail. Several 
comments, for instance, gave rationales for 50th percentile FMRs that 
were unrelated to implementation of the regulatory criteria. The 
decision as to the percentile level at which FMRs should be set 
involves a complex trade-off between serving more households versus 
providing a higher level of assistance to those in the program, and is 
one that has been an on-going source of discussion and change over the 
life of the program but which, ultimately, is a wider Congressional and 
Administration policy decision.
    Comments received from the Sacramento PHA and the San Diego Housing 
Commission questioned the accuracy of the PIC system tenant data used 
in the determinations. An error in the PIC data was discovered for 
Sacramento that resulted in double-counting of vouchers for one housing 
authority. Although Sacramento is no longer ineligible for the 50th 
percentile FMR program based on a low reporting rate, it still remains 
ineligible for continued use of 50th percentile FMRs because it fails 
to meet the concentration of participants criteria (25 percent or more 
of voucher program participants must be located in the five percent of 
census tracts with the highest number of voucher participants). No 
errors were found in the tenant reporting data used for San Diego. The 
San Diego Housing Commission comment had based its conclusions on data 
from the city and not included or considered data for the balance of 
the metropolitan area.
    The Philadelphia Housing Authority, Mayor of Cherry Hill Township, 
the Wisler Pearlstine law firm (on behalf of the Montgomery County 
Housing Authority), Legal Services of New Jersey and the Council of 
Large Public Housing Authorities (CLPHA) oppose the removal of the 
Philadelphia metropolitan area from the 50th percentile FMR program 
based on its low reporting rate. They cite the designation of the 
Philadelphia HA as a Moving-to-Work (MTW) demonstration site as a 
waiver of HUD reporting requirements and note that other PHAs in the 
metropolitan area met or exceeded the 85 percent reporting rate. The 
Philadelphia metropolitan area's 50th percentile designation was based 
on the heavy concentration of program participants in a small number of 
census tracts within the city of Philadelphia. Under its MTW agreement, 
the Philadelphia PHA is not subject to FMRs and has the discretion to 
set its own payment standards, so FMRs are no longer relevant to its 
voucher program management. The MTW contract with the Philadelphia HA 
specifically states that it must report to the PIC system, and the lack 
of data prevents HUD from evaluating for purposes of the 50th 
percentile program in the same way that every other area is evaluated. 
Several comments stated that HUD should evaluate the area based on the 
data from the areas that did report but, aside from being inconsistent 
with the relevant regulations, this grouping of areas would not meet 
the regulatory eligibility criteria. It would be both inequitable and 
inconsistent with the regulations to permit PHAs outside the city 
limits to use 50th percentile FMRs when other areas that fail to meet 
the regulatory criteria are not allowed to do so.
    Newark and Miami also protest the loss of the 50th percentile FMR 
based on insufficient data. The Miami-Dade Housing Agency and Florida 
Legal Services, Inc. note that there is no reporting requirement in the 
50th percentile regulation. The Miami-Dade Housing Agency also noted 
that HUD used May 2005 data for its 50th percentile determination. They 
believed that use of September 30, 2004, data would have allowed the 
PHA to meet the reporting requirement. The Rahway Housing Authority, 
part of the Newark metropolitan area, points out that the new HUD 
requirement in Notice PIH 2005-17(HA) will sanction PHAs that do not 
submit data and that reporting is therefore likely to improve. Rahway 
asks HUD to defer determinations of 50th percentile eligibility for one 
year, at which time more data may be available. HUD's response to the 
above comments is based on the Final Information Quality Guidelines 
published in the Federal Register on November 18, 2002 (67 FR 69642), 
which are previously discussed in the section on ``Continued 
Eligibility.'' The reporting requirement is covered in each PHA's 
Annual Contribution Contract with HUD, and has been a requirement for 
over two decades. This submission requirement and the 85 percent 
standard have also been part of the Section 8 Management Assessment 
Program (SEMAP) regulatory standards under which PHA voucher program 
performance is evaluated. HUD's compliance with the Information Quality 
Guidelines is required by a statute passed subsequent to the issuance 
of the 50th percentile rule, and reporting compliance is required under 
PHAs' contractual agreements with HUD. Allowing PHAs to select when or 
how compliance should be measured is inconsistent with the letter and 
intent of these information quality guidelines.
    The Public Housing Authorities Directors Association (PHADA) 
assumes that under-reporting is random and requests a further 
investigation by HUD. HUD does not accept this as a basis for over-
ruling its information quality guidelines. Aside from violating the 
provisions of the guidelines, HUD has no basis for assuming that under-
reporting is random. Under-reporting tends to be concentrated in one or 
a few

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PHAs within a metropolitan area, and it is known that levels of program 
concentration vary significantly from PHA to PHA.
    Several metropolitan areas and public interest groups cite the need 
for higher FMRs in their areas. The National Association of Home 
Builders (NAHB) and the National Association of Affordable Housing 
Lenders (NAAHL) propose increasing all FMRs to the 50th percentile 
level, or, at the very least restoring the 11 areas that lost 
designation simply as a result of adopting the new OMB metropolitan 
definitions. Those 11 areas were assigned 50th percentile FMR solely 
because they were previously grouped with central cities that had 
concentration problems. There is no basis for favoring these areas over 
other areas with similar characteristics solely because they were 
previously allowed to use higher FMRs.
    The Housing Authority of Bergen County (NJ) and the city of 
Berkeley (CA) discuss the high cost of rental housing in their areas 
and the difficulty they will find in making the program work with lower 
FMRs. The Department of Community Affairs for the State of New Jersey 
notes that a reduction in the FMRs will make it more difficult for 
families to find decent affordable housing in neighborhoods of their 
choice and that the requirement to deconcentrate will be impossible to 
satisfy. The Decatur Housing Authority (GA) states that it can ill-
afford a decrease resulting from the loss of the 50th percentile as its 
rental housing market begins to tighten, and argues that Atlanta 
metropolitan area needs higher rather than lower FMRs. HUD agrees that 
higher FMRs would permit more units to be accessed in all of the above 
areas, but past studies have shown that 40th percentile FMRs are high 
enough to permit a wide range of neighborhoods to be accessed. In 
addition, the above arguments do not address the regulatory criteria 
that govern 50th percentile FMR determinations.
    Bergen County and Berkeley also argue that they need higher FMRs 
because they have higher rents than the metropolitan areas of which 
they are a part. To the extent that this condition can be documented, 
as can be done with 2000 Census data, this need should be addressed by 
requests for exception payment standards as permitted under voucher 
program regulations. In instances where PHAs believe FMRs are 
inaccurate, they should submit public comments to that effect in 
response to proposed FMRs, and may provide survey data to support such 
requests or ask HUD to conduct a survey (which HUD will seek to do 
within its funding constraints).
    The Cuyahoga Metropolitan Housing Authority, Florida Legal 
Services, Inc., the Housing Authority of the County of Santa Clara and 
the Minnesota Housing Finance Agency state that PHAs that have been 
successful in meeting the HUD deconcentration measure should continue 
to have the necessary tools available to them and specifically request 
exception from the reduction to the 40th percentile FMR based on the 
provision set out in 24 CFR 982.503(f). They request that HUD 
immediately implement that provision of the 50th percentile regulation 
so that exceptions can be granted. Nothing in this or the August 25, 
2005 notice rescinded this provision, and requests for implementation 
should be made to the Office of Public and Indian Housing. The Livonia 
Housing Commission and the Fair Housing Center of Metropolitan Detroit 
claim that the reduction in the FMR will have a disparate impact on 
minority and disabled families and that it raises fair housing concerns 
for low-income minority and disabled citizens in Wayne County. The 
argue that the reduction will reduce housing choices, increase rent 
burdens and negatively impact quality of life issues. The Detroit area 
lost its 50th percentile status because 2000 Census data showed that it 
did not meet the concentration of affordable units standard. The 
evaluative standards used were objective, race-neutral, and applied 
uniformly to all metropolitan areas.
    The National Association of Housing and Redevelopment Officials 
(NAHRO) noted that, in its August 25th notice proposing rescission of 
some 50th percentile FMRS, HUD failed to mention the provision in HUD 
regulations (24 CFR 982.503(e)) that permits PHAs the opportunity to 
qualify for a success rate payment standard. Under the implementing 
notice for the 50th percentile notice, HUD clearly stated that PHAs may 
request these exceptions from their HUD office. Neither this notice nor 
the August 25, 2005, notice abrogate this right.
    The Housing Authority of St. Louis County protests the elimination 
of St. Louis from the 50th percentile FMR program based on its 
percentage of affordable units because it feels the percentage, at 71.1 
percent, does not represent a statistically significant difference from 
70.0 percent. The National Low Income Housing Coalition stated that the 
precision used by HUD in its analysis was inappropriate and it 
requested that standard rounding practices be employed for areas such 
as Cleveland (70.3 percent), Tulsa (70.4 percent) and Wichita, KS (70.2 
percent). These comments were considered, but rejected because the 
criteria used had been pre-specified and subject to public comment.
    All of the public interest groups urged HUD to grant a moratorium 
on any reduction of 50th percentile areas for any area impacted by 
Hurricane Katrina (and Rita). NAHRO suggested that any federally 
declared disaster area, or any of the surrounding communities providing 
housing assistance to evacuees, be eligible to receive up to 150 
percent of the existing FMR without prior HUD approval. The HUD Office 
of Public and Indian Housing (PIH) has issued a notice that provides 
exception payment standards for FEMA designated disaster areas and 
allows other areas impacted by displacement to request exception 
payment standards.
    Revised final FY2006 FMRs for the areas affected by this notice are 
listed in Schedule B.\5\ Consistent with current regulations, PHAs must 
obtain the approval of their governing board to implement use of 50th 
percentile FMRs or payment standards based on those FMRs.
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    \5\ FR-4995-N-02 listed five additional metropolitan counties as 
being affected by this policy. However, all five counties were also 
affected by the implementation of the state minimum policy in the 
final FY2006 FMRs published as FR-4995-N-03, which increased their 
FMRs above the levels proposed in FR-4995-N-02 and, therefore, this 
notice does not change published final FMRs for these areas.
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    Note 1 in the footnotes on Schedule B of the FMR tables as 
published on October 3, 2005, is incorrect. It should state the 
following: The FMRs for unit sizes larger than 4 Bedrooms are 
calculated by adding 15% to the 4 Bedroom FMR for each extra bedroom. 
Other information pertaining to the final FY2006 FMRs is unchanged from 
the October 3, 2005 notice.

    Dated: February 7, 2006.
Darlene Williams,
Assistant Secretary for Policy, Development and Research.
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[FR Doc. 06-1361 Filed 2-13-06; 8:45 am]
BILLING CODE 4210-67-C