[Federal Register Volume 81, Number 221 (Wednesday, November 16, 2016)]
[Notices]
[Pages 80678-80679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27112]


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 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5855-N-04]


Small Area Fair Market Rents in Housing Choice Voucher Program 
Values for Selection Criteria and Metropolitan Areas Subject to Small 
Area Fair Market Rents

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

ACTION: Notice.

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SUMMARY: On June 16, 2016, HUD sought comment on applying Small Area 
Fair Market Rents (Small Area FMRs) to certain metropolitan areas for 
administration of the Housing Choice Voucher (HCV) program based on 
certain selection criteria and selection values. Found elsewhere in 
this issue of the Federal Register is a final rule adopting the use of 
Smalls Area FMRs for the HCV program and the selection criteria. The 
final rule also requires HUD to set forth the values used to determine 
those metropolitan areas that are subject to Small Area FMRs through a 
Federal Register notice. This notice sets forth the values for the 
selection criteria and lists the metropolitan areas that will be 
subject to Small Area FMRs implemented in the Small Area FMRs final 
rule.

DATES: Effective: January 17, 2017.

FOR FURTHER INFORMATION CONTACT: For information about this rule, 
contact Peter B. Kahn, Director, Economic and Market Analysis Division, 
Office of Economic Affairs, Office of Policy Development and Research, 
U.S. Department of Housing and Urban Development, 451 7th Street SW., 
Washington, DC 20410, telephone (202) 402-2409; email: 
[email protected]. The listed telephone number is not a toll-free 
number. Persons with hearing or speech impairments may access this 
number through TTY by calling Federal Relay Service at 1-800-877-8339 
(this is a toll-free number).

SUPPLEMENTARY INFORMATION: 

I. Background

    On June 2, 2015, at 80 FR 31332, HUD published an advance notice of 
final rulemaking (ANPR) entitled ``Establishing a More Effective Fair 
Market Rent (FMR) System; Using Small Area Fair Market Rents (Small 
Area FMRs) in Housing Choice Voucher Program Instead of the Current 
50th Percentile FMRs.'' In this ANPR, HUD announced its intention to 
amend HUD's FMR regulations applicable to the HCV program and sought 
public comment on the use of certain criteria for setting Small Area 
FMRs for the HCV program within certain metropolitan areas.
    On June 16, 2016, at 81 FR 39218, HUD published a proposed rule 
that would require the use of Small Area FMRs in place of the 50th 
percentile rent to address high levels of voucher concentration. The 
proposed rule addressed the issues and suggestions raised by public 
commenters on the ANPR, and in response to public comments proposed new 
criteria for setting Small Area FMRs for the HCV program.
    The proposed regulation provided, in 24 CFR 888.113(c), to set 
Small Area FMRs for metropolitan areas where at least 2,500 HCVs are 
under lease; at least 20 percent of the standard quality rental stock, 
within the metropolitan area, is in small areas (that is ZIP codes) 
where the Small Area FMR is more than 110 percent of the metropolitan 
FMR; and the measure of the percentage of voucher holders living in 
concentrated low-income areas relative to all renters within these 
areas over the entire metropolitan area exceeds 155 percent (or 1.55).
    The proposed regulation also provided, in 24 CFR 888.113(c)(2), 
that ``concentrated low-income areas'' means those census tracts in the 
metropolitan FMR area with a poverty rate of 25 percent or more; or any 
tract in the metropolitan FMR area where more than 50 percent of the 
households earn incomes at less than 60 percent of the area median 
income (AMI) and are designated as Qualified Census Tracts in 
accordance with section 42 of the Internal Revenue Code (26 U.S.C. 42). 
Lastly, the proposed regulation provided, in 24 CFR 888.113(c)(3), that 
if a metropolitan area meets the criteria for application of Small Area 
FMRs to the area, all PHAs administering HCV programs in that area will 
be required to use Small Area FMRs.
    In addition to setting forth new proposed criteria, HUD 
specifically requested comment on whether HUD should codify in 
regulatory text the selection parameters for Small Area FMRs or if they 
should be incorporated into each annual FMR notice, subject to public 
comment, to provide HUD, PHAs, and other stakeholders with flexibility 
to offer changes to the selection parameters. HUD also asked for 
comments on the criteria that HUD selected for determining which 
metropolitan areas should be impacted by the shift to a Small Area FMR 
instead of the current 50th percentile policy.
    The final rule, found elsewhere in the Federal Register, responded 
to the

[[Page 80679]]

public comments received on the questions posed by HUD and sets forth 
new selection criteria for HUD to use in determining which metropolitan 
areas would be impacted by the shift to a Small Area FMR and provides 
that the criteria values would be set by notice in the Federal 
Register. Specifically, HUD codified in the final rule the selection 
parameters in regulatory text for setting Small Area FMRs but provided 
that HUD would set the selection values through this Federal Register 
notice and that subsequent Small Area FMR Area designations will be 
specified through Federal Register notice with opportunity for public 
comment as new Small Area FMR designations are made.
    In response to comments, HUD also adds two new selection criteria 
to those provided in the proposed rule. First, HUD adds the vacancy 
rate of an area as a criterion to the selection parameters for Small 
Area FMRs and excludes metropolitan areas with a certain ACS vacancy 
rate from being designated a Small Area FMR area. Second, HUD adds a 
threshold for the voucher concentration ratio to better target 
communities where voucher concentration is most severe. Consequently, 
in addition to the voucher concentration ratio included in the proposed 
rule, the final rule also requires the numerator of this measure, the 
concentration of voucher holders within concentrated low income areas, 
to meet a minimum standard level.

II. Selection Values for Selecting Small Area FMRs

    Through this notice, HUD is setting the selection values to 
determine the first-set of metropolitan FMR areas subject to Small Area 
FMRs for use in the administration of tenant-based assistance under the 
HCV program. Metropolitan FMR areas that meet the following requirement 
will be subject to Small Area FMRs consistent with 24 CFR 888.113(c):
    (i) There are at least 2,500 HCV under lease;
    (ii) At least 20 percent of the standard quality rental stock, 
within the metropolitan FMR area is in small areas (ZIP codes) where 
the Small Area FMR is more than 110 percent of the metropolitan FMR;
    (iii) The percentage of voucher families living in concentrated low 
income areas relative to all renters within the area must be at least 
25 percent;
    (iv) The measure of the percentage of voucher holders living in 
concentrated low income areas relative to all renters within these 
areas over the entire metropolitan area exceeds 155 percent (or 1.55); 
and
    (v) The vacancy rate for the metropolitan area is higher than 4 
percent. The vacancy rate is calculated using data from the 1-year 
American Community Survey (ACS) tabulations, the vacancy rate is the 
number of Vacant For Rent Units divided by the sum of the number of 
Vacant For Rent Units, the number of Renter Occupied Units, and the 
number of Rented, not occupied units. The vacancy rate will be 
calculated from the 3 most current ACS 1 year datasets available and 
average the 3 values.
    The metropolitan FMR Areas that meet these requirements are as 
follows:

Atlanta-Sandy Springs-Marietta, GA HUD Metro FMR Area
Bergen-Passaic, NJ HUD Metro FMR Area
Charlotte-Gastonia-Rock Hill, NC-SC HUD Metro FMR Area
Chicago-Joliet-Naperville, IL HUD Metro FMR Area
Colorado Springs, CO HUD Metro FMR Area
Dallas-Plano-Irving, TX Metro Division
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL Metro Division
Fort Worth-Arlington, TX HUD Metro FMR Area
Gary, IN HUD Metro FMR Area
Hartford-West Hartford-East Hartford, CT HUD Metro FMR Area
Jackson, MS HUD Metro FMR Area
Jacksonville, FL HUD Metro FMR Area
Monmouth-Ocean, NJ HUD Metro FMR Area
North Port-Bradenton-Sarasota, FL MSA
Palm Bay-Melbourne-Titusville, FL MSA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA
Pittsburgh, PA HUD Metro FMR Area
Sacramento-Arden-Arcade-Roseville, CA HUD Metro FMR Area
San Antonio-New Braunfels, TX HUD Metro FMR Area
San Diego-Carlsbad-San Marcos, CA MSA
Tampa-St. Petersburg-Clearwater, FL MSA
Urban Honolulu, HI MSA
Washington-Arlington-Alexandria, DC-VA-MD HUD Metro FMR Area
West Palm Beach-Boca Raton-Delray Beach, FL Metro Division

    Dated: November 1, 2016.
Katherine M. O'Regan,
Assistant Secretary for Policy Development and Research.
[FR Doc. 2016-27112 Filed 11-15-16; 8:45 am]
 BILLING CODE 4210-67-P