[Federal Register Volume 78, Number 150 (Monday, August 5, 2013)]
[Notices]
[Pages 47339-47408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18792]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5725-N-01]


Proposed Fair Market Rents for the Housing Choice Voucher 
Program, Moderate Rehabilitation Single Room Occupancy Program and 
Other Programs Fiscal Year 2014

AGENCY: Office of the Assistant Secretary for Policy Development and 
Research, HUD.

ACTION: Notice of Proposed Fiscal Year (FY) 2014 Fair Market Rents 
(FMRs).

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
(USHA) requires the Secretary to publish FMRs periodically, but not 
less than annually, adjusted to be effective on October 1 of each year. 
The primary uses of FMRs are to determine payment standards for the 
Housing Choice Voucher (HCV) program, to determine initial renewal 
rents for some expiring project-based Section 8 contracts, to determine 
initial rents for housing assistance payment contracts in the Moderate 
Rehabilitation Single Room Occupancy program, and to serve as rent 
ceilings in the HOME program. FMRs are also used in the calculation of 
maximum award amounts for Continuum of Care grantees. Today's notice 
provides proposed FY 2014 FMRs for all areas that reflect the estimated 
40th and 50th percentile rent levels trended to April 1, 2014. The FY 
2014 FMRs are based on 5-year, 2007-2011 data collected by the American 
Community Survey (ACS). These data are updated by one-year ACS data for 
areas where statistically valid one-year ACS data is available. The 
Consumer Price Index (CPI) rent and utility indexes are used to further 
update the data from 2011 to the end of 2012. HUD continues to use ACS 
data in different ways according to the statistical reliability of rent 
estimates for areas of different population sizes and counts of rental 
units.
    The proposed FY 2014 FMR areas are based on Office of Management 
and Budget (OMB) metropolitan area definitions as updated through 
December 1, 2009 and include HUD modifications that were first used in 
the determination of FY 2006 FMR areas. The February 28, 2013 OMB Area 
definition update has not been incorporated in the FMR process due to 
the timing of the release and the availability of ACS data. HUD will 
work toward incorporating these new area definitions into the Proposed 
FY 2015 FMR calculations; however, this is dependent on the 
availability of ACS data conforming to the new area definitions.
    The proposed FY 2014 FMRs in this notice reflect several updates to 
the methodology used to calculate FMRs. HUD has updated the information 
used to calculate FMRs in Puerto Rico. Puerto Rico FMRs are now based 
on 2007-2011 Puerto Rico Community Survey (PRCS) data (the PRCS is a 
part of the ACS program). Moreover, HUD is using Consumer Price Index 
data calculated specifically for Puerto Rico rather than using South 
Census Region CPI data. Additionally, these FMRs continue to use the 
annually updated trend factor calculation methodology. This trend 
factor for the FY2014 FMRs is based on the change in national gross 
rents from 2006 to 2011.

DATES: Comment Due Date: September 4, 2013.

ADDRESSES: Interested persons are invited to submit comments regarding 
the proposed FMRs to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 Seventh 
Street SW., Room 10276, Washington, DC 20410-0001. Communications must 
refer to the above docket number and title and should contain the 
information specified in the ``Request for Comments'' section. There 
are two methods for submitting public comments.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500. Due to security measures at all federal 
agencies, however, submission of comments by mail often results in 
delayed delivery. To ensure timely receipt of comments, HUD recommends 
that comments submitted by mail be submitted at least two weeks in 
advance of the public comment deadline.

[[Page 47340]]

    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number through TTY by calling the Federal Relay Service 
at 800-877-8339. Copies of all comments submitted are available for 
inspection and downloading at http://www.regulations.gov.

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 USER Web site http://www.huduser.org/portal/datasets/fmr.html. FMRs are listed at the 40th or 50th percentile in Schedule B. 
For informational purposes, 40th percentile recent-mover rents for the 
areas with 50th percentile FMRs will be provided in the HUD FY 2014 FMR 
documentation system at http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr14 and 50th percentile rents for all FMR areas 
will be published at http://www.huduser.org/portal/datasets/50per.html 
after publication of final FY 2014 FMRs.
    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 concerning further methodological 
explanations may be addressed to Marie L. Lihn or Peter B. Kahn, 
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 Relay Service at 800-877-
8339. (Other than the HUD USER information line and TDD numbers, 
telephone numbers are not toll-free.)

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 geographic areas. In the HCV 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 
HCV program must meet reasonable rent standards. HUD's regulations at 
24 CFR 888.113 permit it to establish 50th percentile FMRs for certain 
areas.
    Electronic Data Availability: This Federal Register notice will be 
available electronically from the HUD User page at http://www.huduser.org/datasets/fmr.html. Federal Register notices also are 
available electronically from http://www.gpoaccess.gov/fr/index.html, 
the U.S. Government Printing Office Web site. Complete documentation of 
the methodology and data used to compute each area's proposed FY 2014 
FMRs is available at http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr14. Proposed FY 2014 FMRs are available in a 
variety of electronic formats at http://www.huduser.org/portal/datasets/fmr.html. FMRs may be accessed in PDF format as well as in 
Microsoft Excel. Small Area FMRs based on proposed FY 2014 Metropolitan 
Area Rents are available in Microsoft Excel format at the same web 
address. Please note that these Small Area FMRs are for reference only, 
except where they are used by public housing agencies (PHAs) 
participating in the Small Area FMR demonstration.

II. Procedures for the Development of FMRs

    Section 8(c) of the USHA requires the Secretary of HUD to publish 
FMRs periodically, but not less frequently than annually. Section 8(c) 
states, in part, as follows:

    Proposed fair market rentals for an area shall be published in 
the Federal Register with reasonable time for public comment and 
shall become effective upon the date of publication in final form in 
the Federal Register. Each fair market rental in effect under this 
subsection shall be adjusted to be effective on October 1 of each 
year to reflect changes, based on the most recent available data 
trended so the rentals will be current for the year to which they 
apply, of rents for existing or newly constructed rental dwelling 
units, as the case may be, of various sizes and types in this 
section.

    HUD's regulations 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.)
    In addition, HUD's regulations at 24 CFR 888.113 set out procedures 
for HUD to assess whether areas are eligible for FMRs at the 50th 
percentile. Minimally qualified areas \1\ are reviewed each year unless 
not qualified to be reviewed. Areas are not qualified to be reviewed if 
they have been made a 50th-percentile area within the last three years 
or have lost 50th-percentile status for failure to de-concentrate 
within the last three years.
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    \1\ As defined in 24 CFR 888.113(c), a minimally qualified area 
is an area with at least 100 census tracts where 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. This continues to be evaluated with 2000 
Decennial Census information. Although the 5-year ACS tract level 
data is available, HUD plans to implement new 50th percentile areas 
in conjunction with the implementation of new OMB area definitions.
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    In FY 2013 there were 20 areas using 50th-percentile FMRs. Of these 
20 areas, only one area, the Bergen-Passaic, NJ HMFA, has completed 
three years of program participation and is due for re-evaluation. 
Voucher tenant concentration in the Bergen-Passaic, NJ HMFA has 
decreased below what is required to be eligible for a 50th percentile 
FMR and the area has ``graduated'' from the 50th percentile program. 
Under current 50th percentile regulations, the Bergen-Passaic, NJ

[[Page 47341]]

HMFA will be evaluated annually and may return to the program in the 
future.
    In summary, there will be 19 50th-percentile FMR areas in FY 2014. 
These areas are indicated by an asterisk in Schedule B, where all FMRs 
are listed by state. The following table lists the FMR areas along with 
the year of their next evaluation.

     FY 2014 50th-Percentile FMR Areas and Year of Next Reevaluation
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Austin-Round Rock-San Marcos, TX MSA.......................         2015
Fort Worth-Arlington, TX HUD Metro FMR Area................         2015
Hartford-West Hartford-East Hartford, CT HUD Metro FMR Area         2015
Honolulu, HI MSA...........................................         2015
Houston-Baytown-Sugar Land, TX HUD Metro FMR Area..........         2015
Las Vegas-Paradise, NV MSA.................................         2015
North Port-Bradenton-Sarasota, FL MSA......................         2015
Orange County, CA HUD Metro FMR Area.......................         2015
Phoenix-Mesa-Glendale, AZ MSA..............................         2015
Riverside-San Bernardino-Ontario, CA MSA...................         2015
Sacramento--Arden-Arcade--Roseville, CA HUD Metro FMR Area.         2015
Tucson, AZ MSA.............................................         2015
Virginia Beach-Norfolk-Newport News, VA-NC MSA.............         2015
Baltimore-Towson, MD HUD Metro FMR Area....................         2016
Fort Lauderdale, FL HUD Metro FMR Area.....................         2016
New Haven-Meriden, CT HUD Metro FMR Area...................         2016
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA............         2016
Richmond, VA HUD Metro FMR Area............................         2016
West Palm Beach-Boca Raton, FL HUD Metro FMR Area..........         2016
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III. FMR Methodology

    This section provides a brief overview of how the FY 2014 FMRs are 
computed. For complete information on how FMR areas are determined, and 
on how each area's FMRs are derived, see the online documentation at 
http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr14.
    The proposed FY 2014 FMRs are based on OMB metropolitan area 
definitions and standards that were first used in the FY 2006 FMRs. 
OMB's changes to the area definitions through December 2009 are 
incorporated as are non-metropolitan county changes published by the 
Census Bureau through December 2011. The updated metropolitan area 
definitions published by OMB on February 28, 2013 were published after 
HUD contracted with the Census Bureau for the special tabulations of 
ACS data necessary to calculate FMRs; therefore, the FY 2014 area 
definitions are the same as those used in FY 2013. HUD anticipates that 
the new OMB area definitions will be incorporated into the FY 2015 or 
FY 2016 proposed FMRs, depending on the year that the Census Bureau 
incorporates these area definitions in its ACS data tabulations.

A. Base Year Rents

    The U.S. Census Bureau released standard tabulations of 5-year ACS 
data collected between 2007 through 2011 in December of 2012. For FY 
2014 FMRs, HUD used the 2007-2011 5-year ACS data to update the base 
rents as was done in FY 2012 using 2005-2009 ACS data and again in FY 
2013, using 2006-2010 data. HUD is also implementing new base rents for 
Puerto Rico FMRs based on 2007-2011 Puerto Rico Community Survey data 
collected through the American Community Survey program. HUD has not 
implemented the Puerto Rico Community Survey data as base rents in 
prior years due to concerns expressed about the adequacy of the survey 
results; however, when HUD implements the new OMB metropolitan area 
definitions, the Department will have no choice but to use the ACS data 
for determining FMRs in Puerto Rico. Consequently, the Department is 
implementing the new base rent data in FY 2014 rather than try to 
implement both base rent data and new area definitions at the same 
time.
    FMRs are historically based on gross rents for recent movers (those 
who have moved into their current residence in the last 24 months). 
However, due to the way the 5-year ACS data are constructed, HUD 
developed a new methodology for calculating recent-mover FMRs in FY 
2012. As in FY 2012, all areas are assigned as a base rent the 
estimated two-bedroom standard quality 5-year gross rent from the 
ACS.\2\ Because HUD's regulations mandate that FMRs must be published 
as recent mover gross rents, HUD continues to apply a recent mover 
factor to the standard quality base rents assigned from the 5-year ACS 
data. Calculation of the recent mover factor is described below.
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    \2\ For areas with a two-bedroom standard quality gross rent 
from the ACS that have a margin of error greater than the estimate 
or no estimate due to inadequate sample in the 2007-2011 5-year ACS, 
HUD uses the two-bedroom state non-metro rent for non-metro areas.
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    The ACS is not used as the base rent for seven areas where the FY 
2013 FMR was adjusted based on survey data conducted by the PHA (for 
Hood River, OR) and by HUD (for Cheyenne, WY, Odessa, TX, Burlington, 
VT, Mountrail County, ND, Ward County, ND, and Williams County, ND). In 
addition, the ACS will not be the base rent for two additional areas 
surveyed by HUD where the FY 2013 FMR was not adjusted (Flagstaff, AZ 
and Rochester, MN) and for an additional PHA-surveyed area (Oakland, 
CA). HUD has commissioned local area surveys in Danbury, CT, Barnes 
County, ND, Lamoure County, ND, Ransom County, ND and Stutsman County, 
ND and will replace ACS base rents with survey generated base rents if 
the survey results provide evidence that the base rents require 
adjustments.

B. Recent Mover Factor

    Following the assignment of the standard quality two-bedroom rent 
described above, HUD applies a recent mover factor to these rents. The 
calculation of the recent mover factor for FY 2014 is similar to the 
methodology used in FY 2013, with the only difference being the use of 
updated ACS data. As described below, HUD calculates a similar 
percentage increase as the FY 2013 factor using data from the smallest 
geographic area containing the FMR area where the recent mover

[[Page 47342]]

gross rent is statistically reliable.\3\ The following describes the 
process for determining the appropriate recent mover factor.
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    \3\ For the purpose of the recent mover factor calculation, 
statistically reliable is where the recent mover gross rent has a 
margin of error that is less than the estimate itself.
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    In general, HUD uses the 1 year ACS-based two-bedroom recent mover 
gross rent estimate from the smallest geographic area encompassing the 
FMR area for which the estimate is statistically reliable to calculate 
the recent mover factor. HUD calculates some areas' recent mover 
factors using data collected just for the FMR area. Other areas' recent 
mover factors are based on larger geographic areas. For metropolitan 
areas that are sub-areas of larger metropolitan areas, the order is 
subarea, metropolitan area, state metropolitan area, and state. 
Metropolitan areas that are not divided follow a similar path from FMR 
area, to state metropolitan areas, to state. In nonmetropolitan areas 
the recent mover factor is based on the FMR area, the state 
nonmetropolitan area, or if that is not available, on the basis of the 
whole state. The recent mover factor is calculated as the percentage 
change between the 5-year 2007-2011 standard quality two-bedroom gross 
rent and the 1 year 2011 recent mover two-bedroom gross rent for the 
recent mover factor area. Recent mover factors are not allowed to lower 
the standard quality base rent; therefore, if the 5-year standard 
quality rent is larger than the comparable 1 year recent mover rent, 
the recent mover factor is set to 1. The process for calculating each 
area's recent mover factor is detailed in the FY 2014 Proposed FMR 
documentation system available at: http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr14.
    This process produces an ``as of'' 2011 recent mover two-bedroom 
base gross rent for the FMR area.\4\
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    \4\ The ACS is not conducted in the Pacific Islands (Guam, 
Northern Marianas and American Samoa) or the U.S. Virgin Islands. As 
part of the 2010 Decennial Census, the Census Bureau conducted a 
``long-form'' sample surveys for these areas. The results gathered 
by this long form survey were expected to be available late in 2012; 
however, these data have not yet become available. Therefore, HUD 
uses the national change in gross rents, measured between 2010 and 
2011 to update last year's FMRs for these areas.
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C. Updates From 2011 to 2012

    The ACS-based ``as of'' 2011 rent is updated through the end of 
2012 using the annual change in CPI from 2011 to 2012. As in previous 
years, HUD uses Local CPI data coupled with Consumer Expenditure Survey 
(CEX) data for FMR areas with at least 75 percent of their population 
within Class A metropolitan areas covered by local CPI data. HUD uses 
Census region CPI data for FMR areas in Class B and C size metropolitan 
areas and nonmetropolitan areas without local CPI update factors. 
Additionally, HUD is using CPI data collected locally in Puerto Rico as 
the basis for CPI adjustments from 2011 to 2012 for all Puerto Rico FMR 
areas. Following the application of the appropriate CPI update factor, 
HUD converts the ``as of'' 2012 CPI adjusted rents to ``as of'' 
December 2012 rents by multiplying each rent by the national December 
2012 CPI divided by the national annual 2012 CPI value. HUD does this 
in order to apply an exact amount of the annual trend factor to place 
the FY 2014 FMRs as of the mid-point of the 2014 fiscal year.

D. Trend From 2012 to 2014

    As in FY 2013, HUD continues to calculate the trend factor as the 
annualized change in median gross rents as measured across the most 
recent 5 years of available 1 year ACS data. The national median gross 
rent in 2006 was $763 and $871 in 2011. The overall change between 2006 
and 2011 is 14.15 percent and the annualized change is 2.68 percent. 
Over a 15-month time period, the effective trend factor is 3.365 
percent.

E. Bedroom Rent Adjustments

    HUD calculates the primary FMR estimates for two-bedroom units. 
This is generally the most common sized rental unit and, therefore, the 
most reliable to survey and analyze. Formerly, after each Decennial 
Census, HUD calculated rent relationships between two-bedroom units and 
other unit sizes and used them to set FMRs for other units. HUD did 
this because it is much easier to update two-bedroom estimates and to 
use pre-established cost relationships with other bedroom sizes than it 
is to develop independent FMR estimates for each bedroom size. When 
calculating FY 2013 FMRs, HUD updated the bedroom ratio adjustment 
factors using 2006-2010 5-year ACS data using similar methodology to 
what was implemented when calculating bedroom ratios using 2000 Census 
data to establish rent ratios. The bedroom ratios used in the 
calculation of FY 2014 FMRs were updated this year using the 2006-2010 
ACS data in conjunction with the update of base rents to ACS based 
data. HUD will continue to use the same bedroom ratios until the 5-year 
ACS from 2011-2015 is released, probably in time for the FY 2018 FMRs.
    HUD established bedroom interval ranges based on an analysis of the 
range of such intervals for all areas with large enough samples to 
permit accurate bedroom ratio determinations. These ranges are: 
Efficiency FMRs are constrained to fall between 0.59 and 0.81 of the 
two-bedroom FMR; one-bedroom FMRs must be between 0.74 and 0.84 of the 
two-bedroom FMR; three-bedroom FMRs must be between 1.15 and 1.36 of 
the two-bedroom FMR; and four-bedroom FMRs must be between 1.24 and 
1.64 of the two-bedroom FMR. (The maximums for the three-bedroom and 
four-bedroom FMRs are irrespective of the adjustments discussed in the 
next paragraph.) HUD adjusts bedroom rents for a given FMR area if the 
differentials between bedroom-size FMRs were inconsistent with normally 
observed patterns (i.e., efficiency rents are not allowed to be higher 
than one-bedroom rents and four-bedroom rents are not allowed to be 
lower than three-bedroom rents). The bedroom ratios for Puerto Rico 
follow these constraints.
    HUD further adjusts the rents for three-bedroom and larger units to 
reflect HUD's policy to set higher rents for these units than would 
result from using unadjusted market rents. This adjustment is intended 
to increase the likelihood that the largest families, who have the most 
difficulty in leasing units, will be successful in finding eligible 
program units. The adjustment adds 8.7 percent to the unadjusted three-
bedroom FMR estimates and adds 7.7 percent to the unadjusted four-
bedroom FMR estimates. The FMRs for unit sizes larger than four 
bedrooms are calculated by adding 15 percent to the four-bedroom FMR 
for each extra bedroom. For example, the FMR for a five-bedroom unit is 
1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 
1.30 times the four-bedroom FMR. FMRs for single-room occupancy units 
are 0.75 times the zero-bedroom (efficiency) FMR.
    For low-population, nonmetropolitan counties with small or 
statistically insignificant 2006-2010 5-year ACS recent-mover rents, 
HUD uses state non-metropolitan data to determine bedroom ratios for 
each bedroom size. HUD made this adjustment to protect against 
unrealistically high or low FMRs due to insufficient sample sizes.

IV. Manufactured Home Space Surveys

    The FMR used to establish payment standard amounts for the rental 
of manufactured home spaces in the HCV program is 40 percent of the FMR 
for a two-bedroom unit. HUD will consider modification of the 
manufactured home space FMRs where public comments present 
statistically valid survey data

[[Page 47343]]

showing the 40th-percentile manufactured home space rent (including the 
cost of utilities) for the entire FMR area.
    All approved exceptions to these rents that were in effect in FY 
2013 were updated to FY 2014 using the same data used to estimate the 
HCV program FMRs. If the result of this computation was higher than 40 
percent of the new two-bedroom rent, the exception remains and is 
listed in Schedule D. The FMR area definitions used for the rental of 
manufactured home spaces are the same as the area definitions used for 
the other FMRs.

V. Small Area Fair Market Rents

    Public housing authorities in the Dallas, TX HMFA, along with the 
Housing Authority of the County of Cook (IL), the City of Long Beach 
(CA) Housing Authority, the Chattanooga, TN Housing Authority, the Town 
of Mamaroneck (NY) Housing Authority, and the Laredo, TX Housing 
Authority continue to be the only PHAs managing their voucher programs 
using Small Area Fair Market Rents (SAFMRs). These FMRs are listed in 
the Schedule B addendum. The department is working to secure more 
housing authority participants in its Small Area FMR Demonstration 
program.
    SAFMRs are calculated using a rent ratio determined by dividing the 
median gross rent across all bedrooms for the small area (a ZIP code) 
by the similar median gross rent for the metropolitan area of the ZIP 
code. This rent ratio is multiplied by the current two- bedroom rent 
for the entire metropolitan area containing the small area to generate 
the current year two-bedroom rent for the small area. In small areas 
where the median gross rent is not statistically reliable, HUD 
substitutes the median gross rent for the county containing the ZIP 
code in the numerator of the rent ratio calculation. For proposed FY 
2014 SAFMRs, HUD continues to use the rent ratios developed in 
conjunction with the calculation of FY 2013 FMRs based on 2006-2010 5-
year ACS data.\5\
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    \5\ HUD has provided numerous detailed accounts of the 
calculation methodology used for Small Area Fair Market Rents. 
Please see our Federal Register notice of April 20, 2011 (76 FR 
22125) for more information regarding the calculation methodology. 
Also, HUD's Proposed FY 2014 FMR documentation system available at 
(http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr14) contains detailed calculations for each ZIP 
code area in participating jurisdictions.
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VI. Request for Public Comments

    HUD seeks public comments on the methodology used to calculate FY 
2014 Proposed FMRs and the FMR levels for specific areas. Due to its 
current funding levels, HUD no longer has sufficient resources to 
conduct local surveys of rents to address comments filed regarding the 
FMR levels for specific areas. Commenters submitting comments on FMR 
levels must include sufficient information (including local data and a 
full description of the rental housing survey methodology used or a 
description of the methodology intended to be used to collect the 
necessary data) to justify any proposed changes.
    For small metropolitan areas without one-year ACS data and 
nonmetropolitan counties, HUD has developed a methodology using mail 
surveys that is discussed on the bottom of the FMR Web page: http://www.huduser.org/portal/datasets/fmr.html. This methodology allows for 
the collection of as few as 100 one-bedroom, two-bedroom and three-
bedroom recent mover (tenants that moved in last 24 months) units.
    While HUD has not developed a specific methodology for mail surveys 
in areas with one-year ACS data, HUD would apply the standard 
established for Random-Digit Dialing (RDD) telephone rent surveys of 
200 one-bedroom and two-bedroom recent mover units and the RDD 
confidence interval determination of the survey statistical 
significance of data from large-market mail surveys. Areas with 
statistically reliable 1 year ACS data are not considered to be good 
candidates for local surveys due to the size and completeness of the 
ACS process.
    Other survey methodologies are acceptable in providing data to 
support comments if the survey methodology can provide statistically 
reliable, unbiased estimates of the gross rent. In general, 
recommendations for FMR changes and supporting data must reflect the 
rent levels that exist within the entire FMR area and should be 
statistically reliable.
    PHAs in nonmetropolitan areas may, in certain circumstances, 
conduct surveys of groups of counties. HUD must approve all county-
grouped surveys in advance. PHAs are cautioned that the resulting FMRs 
may not be identical for the counties surveyed; each individual FMR 
area will have a separate FMR based on the relationship of rents in 
that area to the combined rents in the cluster of FMR areas. In 
addition, PHAs are advised that counties where FMRs are based on the 
combined rents in the cluster of FMR areas will not have their FMRs 
revised unless the grouped survey results show a revised FMR 
statistically different from the combined rent level.
    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 to be statistically representative of the 
entire rental housing stock of the FMR area. Surveys must include units 
at 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 2007-2011 5-year ACS data 
should be used as a means of verifying if a sample is representative of 
the FMR area's rental housing stock.
    A PHA 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 may find it 
appropriate to relax normal sample size requirements.
    HUD will consider increasing manufactured home space FMRs where 
public comment demonstrates that 40 percent of the two-bedroom FMR is 
not adequate. In order to be accepted as a basis for revising the 
manufactured home space FMRs, comments must include a pad rental survey 
of the mobile home parks in the area, identify the utilities included 
in each park's rental fee, and provide a copy of the applicable public 
housing authority's utility schedule.
    As stated earlier in this Notice, HUD is required to use the most 
recent data available when calculating FMRs. Therefore, in order to re-
evaluate an area's FMR, HUD requires more current rental market data 
than the 2011 ACS. HUD encourages a PHA or other interested party that 
believes the FMR in their area is incorrect to file a comment even if 
they do not have the resources to provide market-wide rental data. In 
these instances, HUD will use the comments, should survey funding be 
restored, when determining the areas HUD will select for HUD-funded 
local area rent surveys.

VII. Environmental Impact

    This Notice involves the establishment of fair market rent 
schedules, which do not constitute a development decision affecting the 
physical condition of specific project areas or building sites. 
Accordingly, under 24 CFR 50.19(c)(6), this Notice is categorically 
excluded from environmental review under the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321).
    Accordingly, the Fair Market Rent Schedules, which will not be 
codified in 24 CFR part 888, are proposed to be

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amended as shown in the Appendix to this notice:

    Dated: July 30, 2013.
Jean Lin Pao,
General Deputy Assistant Secretary for Policy Development and Research.

Fair Market Rents for the Housing Choice Voucher Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage
    a. Metropolitan Areas--Most FMRs are market-wide rent estimates 
that are intended to provide housing opportunities throughout the 
geographic area in which rental-housing units are in direct 
competition. HUD is using the metropolitan Core-Based Statistical Areas 
(CBSAs), which are made up of one or more counties, as defined by the 
Office of Management and Budget (OMB), with some modifications. HUD is 
generally assigning separate FMRs to the component counties of CBSA 
Micropolitan Areas.
    b. Modifications to OMB Definitions--Following OMB guidance, the 
estimation procedure for the FY 2014 proposed FMRs incorporates the OMB 
definitions of metropolitan areas based on the CBSA standards as 
implemented with 2000 Census data updated through December 1, 2009, but 
makes adjustments to the definitions to separate subparts of these 
areas where FMRs or median incomes would otherwise change significantly 
if the new area definitions were used without modification. In CBSAs 
where subareas are established, it is HUD's view for programmatic 
purposes that the geographic extent of the housing markets are not yet 
the same as the geographic extent of the CBSAs, but may become so in 
the future as the social and economic integration of the CBSA component 
areas increases. Modifications to metropolitan CBSA definitions are 
made according to a formula as described below.
    Metropolitan area CBSAs (referred to as MSAs) may be modified to 
allow for subarea FMRs within MSAs based on the boundaries of old FMR 
areas (OFAs) within the boundaries of new MSAs. (OFAs are the FMR areas 
defined for the FY 2005 FMRs. Collectively they include 1999-definition 
MSAs/Primary Metropolitan Statistical Areas (PMSAs), metro counties 
deleted from 1999-definition MSAs/PMSAs by HUD for FMR purposes, and 
counties and county parts outside of 1999-definition MSAs/PMSAs 
referred to as ``formerly nonmetropolitan counties.'') Subareas of MSAs 
are assigned their own FMRs when the subarea 2000 Census Base Rent 
differs by at least 5 percent from (i.e., is at most 95 percent or at 
least 105 percent of) the MSA 2000 Census Base Rent, or when the 2000 
Census Median Family Income for the subarea differs by at least 5 
percent from the MSA 2000 Census Median Family Income. MSA subareas, 
and the remaining portions of MSAs after subareas have been determined, 
are referred to as HUD Metropolitan FMR Areas (HMFAs) to distinguish 
these areas from OMB's official definition of MSAs.
    The specific counties and New England towns and cities within each 
state in MSAs and HMFAs are listed in Schedule B.
2. Bedroom Size Adjustments
    Schedule B shows the FMRs for zero-bedroom through four-bedroom 
units. The Schedule B addendum shows Small Area FMRs for all PHAs 
operating using Small Area FMRs (please see section V of this notice 
for a list of participating PHAs). The FMRs for unit sizes larger than 
four bedrooms are calculated by adding 15 percent to the four-bedroom 
FMR for each extra bedroom. For example, the FMR for a five-bedroom 
unit is 1.15 times the four-bedroom FMR, and the FMR for a six-bedroom 
unit is 1.30 times the four-bedroom FMR. FMRs for single-room-occupancy 
(SRO) units are 0.75 times the zero-bedroom FMR.
3. Arrangement of FMR Areas and Identification of Constituent Parts
    a. The FMR areas in Schedule B are listed alphabetically by 
metropolitan FMR area and by nonmetropolitan county within each state. 
The exception FMRs for manufactured home spaces in Schedule D are 
listed alphabetically by state.
    b. The constituent counties (and New England towns and cities) 
included in each metropolitan FMR area are listed immediately following 
the listings of the FMR dollar amounts. All constituent parts of a 
metropolitan FMR area that are in more than one state can be identified 
by consulting the listings for each applicable state.
    c. Two nonmetropolitan counties are listed alphabetically on each 
line of the non-metropolitan county listings.
    d. The New England towns and cities included in a nonmetropolitan 
county are listed immediately following the county name.
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Schedule D--FY 2014 Fair Market Rents for Manufactured Home Spaces in 
the Section 8 Housing Choice Voucher Program

----------------------------------------------------------------------------------------------------------------
                                                                                                      Space rent
                      State                                           Area name                          ($)
----------------------------------------------------------------------------------------------------------------
California......................................  Orange County, CA HUD Metro FMR Area*............          818
                                                  Riverside-San Bernardino-Ontario, CA MSA*........          532
                                                  Los Angeles-Long Beach, CA HUD Metro FMR Area....          674
                                                  San Diego-Carlsbad-San Marcos, CA MSA............          819
                                                  Santa Rosa-Petaluma, CA MSA......................          738
                                                  Vallejo-Fairfield, CA MSA........................          594
Colorado........................................  Boulder, CO MSA..................................          479
Maryland........................................  St. Mary's County................................          500
Oregon..........................................  Bend, OR MSA.....................................          355
                                                  Salem, OR MSA....................................          506
Pennsylvania....................................  Adams County.....................................          568
Washington......................................  Olympia, WA MSA..................................          603
                                                  Seattle-Bellevue, WA HUD Metro FMR Area..........          664
West Virginia...................................  Logan County.....................................          453
                                                  McDowell County..................................          453
                                                  Mercer County....................................          453
                                                  Mingo County.....................................          453
                                                  Wyoming County...................................          453
----------------------------------------------------------------------------------------------------------------
* 50th percentile FMR areas.

[FR Doc. 2013-18792 Filed 8-2-13; 8:45 am]
BILLING CODE 4210-67-C