[Federal Register Volume 84, Number 169 (Friday, August 30, 2019)]
[Notices]
[Pages 45789-45798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18608]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6161-N-02]
Fair Market Rents for the Housing Choice Voucher Program,
Moderate Rehabilitation Single Room Occupancy Program, and Other
Programs Fiscal Year 2020
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of Fiscal Year (FY) 2020 Fair Market Rents (FMRs) and
Response to Public Comments on the June 5, 2019 Federal Register notice
announcing two method changes in the calculation of FMRs.
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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
(USHA), as amended by the Housing Opportunities Through Modernization
Act of 2016 (HOTMA), requires the Secretary to publish FMRs not less
than annually, adjusted to be effective on October 1 of each year. This
notice describes the methods used to calculate the FY 2020 FMRs and
enumerates the procedures for Public Housing Agencies (PHAs) and other
interested parties to request reevaluations of their FMRs as required
by HOTMA. This notice also discusses the comments received on the
Notice of Proposed Changes to the Methodology Used for Estimating Fair
Market Rents (84 FR 26141).
DATES: Comment Due Date: September 30, 2019.
Effective Date: October 1, 2019 unless HUD receives a valid request
for reevaluation of specific area FMRs as described below.
[[Page 45790]]
ADDRESSES: HUD invites interested persons to submit comments regarding
the FMRs and to request reevaluation of the FY 2020 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/Request for Reevaluation'' section. There are two methods for
submitting public comments.
1. Submission of Comments by Mail. Comments or requests for
reevaluation 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 or reevaluation requests, HUD recommends that
comments or requests submitted by mail be submitted at least two weeks
in advance of the deadline. HUD will make all comments or reevaluation
requests received by mail available to the public at https://www.regulations.gov.
2. Electronic Submission of Comments. Interested persons may submit
comments or reevaluation requests electronically through the Federal
eRulemaking Portal at https://www.regulations.gov. HUD strongly
encourages commenters to submit comments or reevaluation requests
electronically. Electronic submission of comments or reevaluation
requests allows the author maximum time to prepare and submit a comment
or reevaluation request, ensures timely receipt by HUD, and enables HUD
to make them immediately available to the public. Comments or
reevaluation requests submitted electronically through the https://www.regulations.gov website can be viewed by other submitters and
interested members of the public. Commenters or reevaluation requestors
should follow instructions provided on that site to submit comments or
reevaluation requests electronically.
Note: To receive consideration as public comments or reevaluation
requests, comments or requests must be submitted through one of the two
methods specified above. Again, all submissions must refer to the
docket number and title of the notice.
No Facsimile Comments or Reevaluation Requests. Facsimile (FAX)
comments or requests for FMR reevaluation are not acceptable.
Public Inspection of Public Comments and Reevaluation Requests. All
properly submitted comments and reevaluation requests and
communications regarding this notice 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 and
reevaluation requests 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 (toll-free
number). Copies of all comments and reevaluation requests submitted are
available for inspection and downloading at https://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 website https://www.huduser.gov/portal/datasets/fmr.html. FMRs are listed at the 40th percentile in Schedule B. For
informational purposes, 50th percentile rents for all FMR areas will be
published at https://www.huduser.gov/portal/datasets/50per.html.
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 may be addressed to Marie L. Lihn or
Peter B. Kahn of the Program Parameters and Research Division, Office
of Economic Affairs, Office of Policy Development and Research at HUD
headquarters, 451 7th Street SW, Room 8208, Washington, DC 20410;
telephone number 202-402-2409 (this is not a toll-free number), or they
may be reached at [email protected]. Persons with hearing or speech
impairments may access HUD numbers through TTY by calling the Federal
Relay Service at 800-877-8339 (toll-free number).
Electronic Data Availability. This Federal Register notice will be
available electronically from the HUD User page at https://www.huduser.gov/portal/datasets/fmr.html. Federal Register notices also
are available electronically from https://www.federalregister.gov/ the
U.S. Government Printing Office website. Complete documentation of the
methods and data used to compute each area's FY 2020 FMRs is available
at https://www.huduser.gov/portal/datasets/fmr.html#2020_query. FY 2020
FMRs are available in a variety of electronic formats at https://www.huduser.gov/portal/datasets/fmr.html. FMRs may be accessed in PDF
as well as in Microsoft Excel. Small Area FMRs for all metropolitan FMR
areas are available in Microsoft Excel format at: https://www.huduser.gov/portal/datasets/fmr/smallarea/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 geographic areas. In the Housing Choice Voucher (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. HUD also uses the FMRs to determine initial
renewal rents for some expiring project-based Section 8 contracts,
initial rents for housing assistance payment contracts in the Moderate
Rehabilitation Single Room Occupancy program, rent ceilings for rental
units in both the HOME Investment Partnerships program and the
Emergency Solution Grants program, calculation of maximum award amounts
for Continuum of Care recipients and the maximum amount of rent a
recipient may pay for property leased with Continuum of Care funds, and
calculation of flat rents in Public Housing units. 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
and is typically set at the 40th percentile of the distribution of
gross rents. HUD's FMR calculations represent HUD's best effort to
estimate the 40th percentile gross rent paid by recent movers into
standard quality units in each FMR area. In addition, all rents
subsidized under the HCV program must meet reasonable rent standards.
On November 16, 2016 (81 FR 80567), HUD published a Final Rule
entitled ``Establishing a More Effective Fair Market Rent System; Using
Small Area Fair Market Rents in the Housing Choice Voucher Program
Instead of the Current 50th Percentile FMRs'' (Small Area FMR final
rule), with an effective date of
[[Page 45791]]
January 17, 2017. The Small Area FMR final rule eliminated the 50th
percentile FMR provisions in the FMR regulations (24 CFR 888.113) \1\
and for the first time since FY 2001, there are no designated 50th
percentile areas in FY 2020 FMRs. There were three areas still
designated as 50th percentile FMRs in FY 2019. Two of the areas,
Bergen-Passaic, NJ HUD Metro FMR Area, San Diego-Carlsbad-San Marcos,
CA MSA, were identified as Small Area FMR required areas in the
November 2016 rulemaking and are required to use Small Area FMRs in the
administration of their Housing Choice Voucher programs. PHAs in the
Spokane, WA HUD Metro FMR area that meet the deconcentration criteria
specified in 24 CFR 982.503(f), available at: https://www.gpo.gov/fdsys/pkg/CFR-2016-title24-vol4/pdf/CFR-2016-title24-vol4-sec982-503.pdf may obtain HUD Field Office approval to maintain payment
standards based on 50th percentile rents on that basis.
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\1\ Separately from the Small Area FMR regulations, HUD also
calculates and posts 50th percentile rent estimates for the purposes
of Success Rate Payment Standards as defined at 24 CFR 982.503(e)
(estimates available at: https://www.huduser.gov/portal/datasets/50per.html), which policy was not changed by the Small Area FMR
rule.
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The FMRs values published in Schedule B will be 40th percentile
values for FY 2020 for the Bergen-Passaic, NJ HUD Metro FMR Area, San
Diego-Carlsbad-San Marcos, CA MSA, and Spokane, WA HUD Metro FMR Area.
II. Procedures for the Development of FMRs
Section 8(c)(1) of the USHA, as amended by HOTMA (Pub. L. 114-201,
approved July 29, 2016), requires the Secretary of HUD to publish FMRs
not less than annually. Section 8(c)(1)(A) states that each FMR ``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. . .'' Section
8(c)(1)(B) requires that HUD publish, not less than annually, new FMRs
on the World Wide Web or in any other manner specified by the
Secretary, and that HUD must also notify the public of when it
publishes FMRs by Federal Register notice. After notification, the FMRs
``shall become effective no earlier than 30 days after the date of such
publication,'' and HUD must provide a procedure for the public to
comment and request a reevaluation of the FMRs in a jurisdiction before
the FMRs become effective. Consistent with the statute, HUD is issuing
this notice to notify the public that FY 2020 FMRs are available at
https://www.huduser.gov/portal/datasets/fmr.html and will become
effective on October 1, 2019. This notice also provides procedures for
FMR reevaluation requests.
III. FMR Methodology
This section provides a brief overview of how HUD computes the FY
2020 FMRs. HUD is making changes to the estimation methodology for FMRs
as discussed in the June 5, 2019 Federal Register notice, ``Proposed
Changes to the Methodology Used for Estimating FMRs'' (84 FR 26141),
see the online documents tab at https://www.huduser.gov/portal/datasets/fmr.html#2020. HUD is replacing the national trend factor with
local and regional trend factors in order to improve the accuracy of
the FMRs. In addition, for Small Area FMRs, HUD is including the
``neighboring policy'' as the next step when a ZIP Code Tabulation Area
(ZCTA) does not have reliable data. This improvement determines if
there is reliable data for bordering ZCTAs and uses this data before
going to county-based Small Area FMRs.
In conjunction with the use of 2017 American Community Survey (ACS)
data, HUD has implemented the following geography changes: Bedford
City, VA is no longer an incorporated city in the Lynchburg, VA MSA, so
it is not listed separately in either the Schedule B table or the EXCEL
data files; it continues to receive the FMR for Lynchburg, VA MSA.
A. Base Year Rents
For FY 2020 FMRs, HUD uses the U.S. Census Bureau's 5-year ACS data
collected between 2013 and 2017 (released in December of 2018) as the
base rents for the FMR calculations. HUD pairs a ``margin of error''
test \2\ with an additional test based on the number of survey
observations supporting the estimate in order to improve the
statistical reliability of the ACS data used in the FMR calculations.
The Census Bureau does not provide HUD with an exact count of the
number of observations supporting the ACS estimate; rather, the Census
Bureau provides HUD with categories of the number of survey responses
underlying the estimate, including whether the estimate is based on
more than 100 observations. Using these categories, HUD requires that,
in addition to the ``margin of error'' test, ACS rent estimates must be
based on at least 100 observations in order to be used as base rents.
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\2\ HUD's margin of error test requires that the margin of error
of the ACS estimate is less than half the size of the estimate
itself.
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For areas in which the 5-year ACS data for two-bedroom, standard
quality gross rents do not pass the statistical reliability tests
(i.e., have a margin of error ratio greater than 50 percent or fewer
than 100 observations), HUD will use an average of the base rents over
the three most recent years (provided that there is data available for
at least two of these years),\3\ or if such data is not available,
using the two-bedroom rent data within the next largest geographic
area, which for a non-metropolitan area would be the state non-metro
area rent data.
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\3\ For FY 2020, the three years of ACS data in question are
2015, 2016 and 2017. The 2015 data are adjusted to be denominated in
2017 dollars using the growth in Consumer Price Index (CPI)-based
gross rents measured between 2015 and 2017. Similarly, the 2016
gross rent data is adjusted to 2017 denominated dollars using the
growth in CPI-based gross rents measured between 2016 and 2017.
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HUD has updated base rents each year based on new 5-year data since
FY 2012, for which HUD used 2005-2009 ACS data. HUD is also updating
base rents for Puerto Rico FMRs using data collected between 2013 and
2017 through the Puerto Rico Community Survey (PRCS); HUD first updated
the Puerto Rico base rents in FY 2014 based on 2007-2011 PRCS data
collected through the ACS program.
HUD historically based FMRs on gross rents for recent movers (those
who have moved into their current residence in the last 24 months)
measured directly. However, due to the way Census constructs the 5-year
ACS data, HUD developed a new method for calculating recent-mover FMRs
in FY 2012, which HUD continues to use in FY 2020: HUD assigns all
areas a base rent, which is the two-bedroom standard quality 5-year
gross rent estimate from the ACS; then, because HUD's regulations
mandate that FMRs must be published as recent mover gross rents, HUD
applies a recent mover factor to the base rents assigned from the 5-
year ACS data.\4\ The calculation of the recent mover factor is
described below.
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\4\ HUD's regulations incorporate recent mover data into FMR
calculations because the gross rents of those who most recently
moved into their units likely depicts the most current market
conditions observable through the ACS. Rents paid by renters
renewing existing leases may not reflect the most current market
conditions, in part because these renters may have clauses within
their leases that predetermine the annual increases in rents paid
(i.e., rent escalator clauses).
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B. Recent Mover Factor
Following the assignment of the standard quality two-bedroom rent
described above, HUD applies a recent
[[Page 45792]]
mover factor to these rents. HUD calculates the recent mover factor as
the change between the 5-year 2013-2017 standard quality two-bedroom
gross rent and the 1-year 2017 recent mover gross rent for the recent
mover factor area. HUD does not allow recent mover factors 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 so the base rent is updated and trended. When
the recent mover factor is greater than one, the base rent is
effectively replaced with the recent mover rent for that area and that
is what is updated and trended. For virtually all metropolitan areas,
one-year recent mover data is the basis for the updated and trended
FMRs.
The calculation of the recent mover factor for FY 2020 continues to
use statistical reliability requirements that are similar to those for
base rents. That is, for a recent mover gross rent estimate to be
considered statistically reliable, the estimate must have a margin of
error ratio that is less than 50 percent, and the estimate must be
based on 100 or more observations.
When an FMR area does not have statistically reliable two-bedroom
recent mover data, the ``all-bedroom'' \5\ 1-year recent mover ACS data
for the FMR area is tested for statistical reliability. An ``all-
bedroom'' recent mover factor from the FMR area will be used, if
statistically reliable, before substituting a two-bedroom recent mover
factor from the next larger geography. Incorporating ``all-bedroom''
rents into the recent mover factor calculation when statistically
reliable two-bedroom data is not available preserves the use of local
information to the greatest extent possible.
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\5\ ``All-bedroom'' refers to estimates aggregated together
regardless of the number of bedrooms in the dwelling unit.
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However, where statistically reliable ``all-bedroom'' data is not
available, HUD will continue to base FMR areas' recent mover factors on
larger geographic areas, following the same procedures used
historically: HUD tests data from differently sized geographic areas in
the following order (from small to large), and bases the recent mover
factor on the first statistically reliable recent mover rent estimate
in the geographic hierarchy listed below.
For metropolitan areas that are subareas of larger
metropolitan areas, the order is the FMR area, metropolitan area,
aggregated metropolitan parts of the state, and state.
For metropolitan areas that are not divided, the order is
the FMR area, aggregated metropolitan parts of the state, and state.
In non-metropolitan areas, the order is the FMR area,
aggregated non-metropolitan parts of the state, and state.
The process for calculating each area's recent mover factor is
detailed in the FY 2020 FMR documentation system available at: https://www.huduser.gov/portal/datasets/fmr.html#2020_query. Applying the
recent mover factor to the standard quality base rent produces an ``as
of'' 2017 recent mover two-bedroom gross rent for the FMR area.
C. Other Rent Survey Data
HUD calculated base rents for the insular areas using the 2010
decennial census of American Samoa, Guam, the Northern Mariana Islands,
and the Virgin Islands beginning with the FY 2016 FMRs.\6\ This 2010
base year data is updated through 2017 for the FY 2020 FMRs using
national ACS data.
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\6\ The ACS is not conducted in the Pacific Islands (Guam,
Northern Marianas and American Samoa) or the US Virgin Islands. As
part of the 2010 Decennial Census, the Census Bureau conducted
``long-form'' sample surveys for these areas. The results gathered
by this long form survey have been incorporated into the FY 2020
FMRs.
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HUD does not use ACS data to establish the base rent or recent
mover factor for 19 areas where the FY 2020 FMR was adjusted based on
survey data:
Survey data from 2017 is used to adjust the FMRs for
Seattle-Bellevue, WA HMFA; Hood River County, OR; Wasco County, OR;
Hawaii County, HI; Jonesboro, AR HMFA; Santa Maria-Santa Barbara, CA
MSA; and Urban Honolulu, HI MSA.
Survey data from 2018 is used to adjust the FMR for Santa
Cruz-Watsonville, CA MSA; Portland-Vancouver-Hillsboro, OR-WA;
Burlington-South Burlington, VT; Coos County, OR; Curry County, OR;
Oakland-Fremont, CA HUD Metro FMR Area; San Francisco, CA HUD Metro FMR
Area; San Jose-Sunnyvale-Santa Clara, CA HUD Metro FMR Area; Boston-
Cambridge-Quincy, MA-NH HUD Metro FMR Area; Douglas County, OR; and San
Diego-Carlsbad, CA MSA.
Survey data from 2019 is used to adjust the FMRs for Kauai
County, HI.
For larger metropolitan areas that have valid ACS one-year recent
mover data, survey data may not be any older than the midpoint of the
calendar year for the ACS one-year data. Since the ACS one-year data
used for the FY 2020 FMRs is from 2017, larger areas may not use survey
data collected before June 30, 2017 for the FY 2020 FMRs. Smaller areas
without 1-year ACS data, may continue to use local survey data until
the mid-point of the 5-year ACS data is more recent than the local
survey.
D. Updates From 2017 to 2018
HUD updates the ACS-based ``as of'' 2017 rent through the end of
2018 using the annual change in gross rents measured through the
Consumer Price Index (CPI) from 2017 to 2018 (CPI update factor). As in
previous years, HUD uses local CPI data coupled with Consumer
Expenditure Survey data for FMR areas within Class A metropolitan areas
covered by local CPI data. In 2018, the Bureau of Labor Statistics
(BLS) changed the area definitions of its Class A metropolitan areas
from the 1990 definition of Primary Metropolitan Statistical Areas
(PMSA) to smaller CBSA-based MSAs. In addition, BLS eliminated some
areas from this Class A collection: Pittsburgh, PA MSA; Cleveland-
Elyria, OH MSA; Cincinnati, OH-KY-IN MSA; Kansas City, MO-KS MSA;
Milwaukee-Waukesha-West Allis, WI MSA; and Portland-Vancouver-
Hillsboro, OR-WA MSA. HUD will estimate these areas' FMRs using
regional CPI beginning with the FY 2020 FMRs. HUD uses CPI data
aggregated at the Census region level for all Class B and C size
metropolitan areas and non-metropolitan areas. Additionally, HUD uses
CPI data collected locally in Puerto Rico as the basis for CPI
adjustments from 2017 to 2018 for all Puerto Rico FMR areas.
E. Trend Factor Forecasts
Following the application of the appropriate CPI update factor, HUD
trends the gross rent estimate from 2018 to FY 2020 using local and
regional forecasts of the CPI gross rent data as proposed in the June
5, 2019 Federal Register notice (84 FR 26141). Riverside-San
Bernardino-Ontario, CA MSA as a newly designated Class A city (it was
previously part of the Los Angeles PMSA) has data for a 2018 CPI
update, but does not have enough data for a trend factor forecast;
therefore, its trend factor is the regional (West) trend factor. The
actual model used for each trend factor has been chosen based on which
model generates the lowest Root Mean Square Error (RMSE) statistic. As
detailed in the June 5 notice, the trend factors were selected from a
series of time series models based on national inputs (National Input
Model or NIM), local inputs (Local Input Model or LIM) and historical
values of the predicted series (Pure Time Series--PTS). HUD will hold
the type of model selected (NIM, LIM, or PTS) constant for 5 years and
will reassess the model selections during the calculation of the FY
2025 FMRs. For instances when HUD changes
[[Page 45793]]
the functional form of the model (NIM, PTS, LIM) for a geographic area
that is different from the previous model selection, HUD will ensure
the change is not due to overfitting the model or outliers in the data.
HUD will update and run the gross rent forecast models annually with
updated actual data and newly created input forecasts.
E. Bedroom Rent Adjustments
HUD updates the bedroom ratios used in the calculation of FMRs
annually. The bedroom ratios which HUD used in the calculation of FY
2020 FMRs have been updated using average data from three five-year ACS
data series (2011-2015, 2012-2016, and 2013-2017). The bedroom ratio
methodology used in this update is unchanged from previous calculations
using 2000 Census data. HUD only uses estimates with a margin of error
ratio of less than 50 percent. If an area does not have reliable
estimates in at least two of the previous three ACS releases, bedroom
ratios for the area's larger parent geography are used.
HUD uses two-bedroom units for its primary calculation of FMR
estimates. This is generally the most common size of rental unit and,
therefore, the most reliable to survey and analyze. After estimating
two-bedroom FMRs, HUD calculates bedroom ratios for each FMR area which
relate the prices of smaller and larger units to the cost of two-
bedroom units. To prevent illogical results in particular FMR areas,
HUD establishes bedroom interval ranges which set upper and lower
limits for bedroom ratios nationwide, based on an analysis of the range
of such intervals for all areas with large enough samples to permit
accurate bedroom ratio determinations.
In the calculation of FY 2020 FMR estimates, HUD set the bedroom
interval ranges as follows: Efficiency FMRs are constrained to fall
between 0.65 and 0.85 of the two-bedroom FMR; one-bedroom FMRs must be
between 0.76 and 0.88 of the two-bedroom FMR; three-bedroom FMRs (prior
to the adjustments described below) must be between 1.15 and 1.33 of
the two-bedroom FMR; and four-bedroom FMRs (again, prior to adjustment)
must be between 1.26 and 1.63 of the two-bedroom FMR. Given that these
interval ranges partially overlap across unit bedroom counts, HUD
further adjusts bedroom ratios for a given FMR area, if necessary, to
ensure that higher bedroom-count units have higher rents than lower
bedroom-count units within that area. The bedroom ratios for Puerto
Rico follow these constraints.
HUD also further adjusts the rents for three-bedroom and larger
units to reflect HUD's policy to set higher rents for these units.\7\
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.
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\7\ As mentioned above, HUD applies the interval ranges for the
three-bedroom and four-bedroom FMR ratios prior to making these
adjustments. In other words, the adjusted three- and four-bedroom
FMRs can exceed the interval ranges, but the unadjusted FMRs cannot.
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HUD derives FMRs for units with more than four bedrooms 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.
Similarly, HUD derives FMRs for single-room occupancy units by
subtracting 25 percent from the zero-bedroom FMR (i.e., they are set at
0.75 times the zero-bedroom (efficiency) FMR).\8\
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\8\ As established in the interim rules implementing the
provisions of the Quality Housing and Work Responsibility Act of
1998 (Title V of the FY 1999 HUD Appropriations Act; Pub. L. 105-
276). In 24 CFR 982.604.
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F. Limit on FMR Decreases
Within the Small Area FMR final rule published on November 16,
2016, HUD amended 24 CFR 888.113 to include a limit on the amount that
FMRs may annually decrease. The current year's FMRs resulting from the
application of the bedroom ratios, as discussed in section (E) above,
may be no less than 90 percent of the prior year's FMRs for units with
the same number of bedrooms. Accordingly, if the current year's FMRs
are less than 90 percent of the prior year's FMRs as calculated by the
above methodology, HUD sets the current year's FMRs equal to 90 percent
of the prior year's FMRs. For areas where use of Small Area FMRs in the
administration of their voucher programs is required, the FY 2020 Small
Area FMRs may be no less than 90 percent of the FY 2019 Small Area
FMRs. For all other metropolitan areas, for which Small Area FMRs are
calculated so that they may be used for other allowable purposes if
desired (e.g., exception payment standards, public housing flat rents),
the FY 2020 Small Area FMRs may be no less than 90 percent of the
greater of the FY 2019 metropolitan area-wide FMRs or the applicable FY
2019 Small Area FMR.
G. Other Limits on FMRs
All FMRs are subject to a state or national minimum. HUD calculates
a population-weighted median two-bedroom 40th percentile rent across
all non-metropolitan portions of each state, which, for the purposes of
FMRs, is the state minimum rent. State-minimum rents for each FMR area
are available in the FY 2020 FMR Documentation System, available at
https://www.huduser.gov/portal/datasets/fmr.html#2020_query. HUD also
calculates the population-weighted median two-bedroom 40th percentile
rent across all non-metropolitan portions of the country, which, for
the purposes of FMRs, is the national minimum rent. For FY 2020, the
national minimum rent is $714. The applicable minimum rent for a
particular area is the lower of the state or national minimum. Each
area's two-bedroom FMR must be no less than the applicable minimum
rent.
As in prior years, Small Area FMRs are subject to a maximum limit.
HUD limits each two-bedroom Small Area FMR to be no more than 150
percent of the two-bedroom FMR for the metropolitan area where the ZIP
code is located.
IV. Manufactured Home Space Surveys
HOTMA changed the manner in which vouchers are used to subsidize
manufactured home units. Please see HUD's Notice from January 18, 2017
(82 FR 5458) for more detailed information concerning the use of
vouchers for manufactured home units. Due to the nature of these
changes, HUD will no longer be publishing exception rents for
Manufactured Home Space pad rents.
V. Small Area FMRs
PHAs operating the Housing Choice Voucher (HCV) program in the 24
metropolitan areas identified in the November 16, 2016 Federal Register
notice ``Small Area Fair Market Rents in Housing Choice Voucher Program
Values for Selection Criteria and Metropolitan Areas Subject to Small
Area Fair Market Rents'' (81 FR 80678) are required to use Small Area
FMRs unless the PHA has received a temporary exemption from the use of
Small Area FMRs; HUD has suspended the Small Area FMR designation for
the metropolitan area under 24 CFR 888.113(c)(4); or the PHA is an MTW
PHA with an approved alternative payment standard policy. For more
information on the process for obtaining a temporary exemption or area-
wide suspension, please see PIH Notice 2018-01: Guidance on Recent
Changes in Fair
[[Page 45794]]
Market Rent (FMR), Payment Standard, and Rent Reasonableness
Requirements in the Housing Choice Voucher Program, item (9) beginning
on page 13, available at: https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2018-01.pdf. Small Area FMRs for all metropolitan areas
are listed in the Schedule B addendum. Other metropolitan PHAs
interested in using Small Area FMRs in the operation of their Housing
Choice Voucher program should contact their local HUD field office to
request approval from HUD to do so.
In the FY 2018 FMR Federal Register notice (82 FR 41637), HUD
announced changes in the way Small Area FMRs are calculated and
continues this change for the FY 2020 Small Area FMRs. HUD calculates
Small Area FMRs directly from the standard quality gross rents provided
to HUD by the Census Bureau for ZIP Code Tabulation Areas (ZCTAs), when
such data is statistically reliable, instead of using the current rent
ratio calculation. The ZCTA two-bedroom equivalent 40th percentile
gross rent is analogous to the standard quality base rents set for
metropolitan areas and non-metropolitan counties. For each ZCTA with
statistically reliable gross rent estimates, using the expanded test of
statistical reliability first used in FY 2018 (i.e., estimates with
margins of error ratios below 50 percent and based on at least 100
observations), HUD will calculate a two-bedroom equivalent 40th
percentile gross rent using the first statistically reliable gross rent
distribution data from the following data sets (in this order): Two-
bedroom gross rents, one-bedroom gross rents, and three-bedroom gross
rents. If either the one-bedroom or three-bedroom gross rent data is
used because the two-bedroom gross rent data is not statistically
reliable, the one-bedroom or three-bedroom 40th percentile gross rent
will be converted to a two-bedroom equivalent rent using the bedroom
ratios for the ZCTA's parent metropolitan area. To increase stability
to these Small Area FMR estimates, HUD averages the latest three years
of gross rent estimates.\9\
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\9\ For example, for FY 2020 Small Area FMRs, HUD averages the
gross rents from 2015, 2016, and 2017 5-Year ACS estimates. The 2015
and 2016 gross rent estimates would be adjusted to 2017 dollars
using the metropolitan area's gross rent CPI adjustment factors.
---------------------------------------------------------------------------
For ZCTAs without usable gross rent data by bedroom size, HUD will
continue to calculate Small Area FMRs using the rent ratio method
similar to that HUD has used in past Small Area FMR calculations. To
calculate Small Area FMRs using a rent ratio, HUD divides 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. If
a ZCTA does not have reliable rent data at the all bedroom level, HUD
will then check to see if the ZCTA is bordered by ZCTAs that themselves
have reliable rent data. If at least half of a ZCTA's ``neighbors''
have such data, the weighted average of those estimates will be used as
the basis for the SAFMR rather than a county proxy, where the weight is
the length of the shared boundary between the ZCTA and its neighbor.
This is a new step, as proposed in the Federal Register notice,
``Proposed Changes to the Methodology Used for Estimating FMRs'' (84 FR
26141). In small areas where the neighboring ZCTA median gross rents
are not statistically reliable, HUD continues to substitute the median
gross rent for the county containing the ZIP code in the numerator of
the rent ratio calculation. HUD multiplies this rent ratio by the
current two-bedroom rent for the metropolitan area containing the small
area to generate the current year two-bedroom rent for the small area.
HUD continues to use a rolling average of ACS data in calculating
the Small Area FMR rent ratios. HUD believes coupling the most current
data with previous year's data minimizes excessive year-to-year
variability in Small Area FMR rent ratios due to sampling variance.
Therefore, for FY 2020 Small Area FMRs, HUD has updated the rent ratios
to use an average of the rent ratios calculated from the 2011-2015,
2012-2016, and 2013-2017 5-year ACS estimates.
VI. Request for Public Comments and FMR Reevaluations
In the next Section, HUD will respond to the comments on its
proposed methodology changes, which have been incorporated in the use
of more local trend factors and use of more local data for the Small
Area FMRs. HUD will continue to accept public comments on the methods
HUD uses to calculate FY 2020 FMRs, including Small Area FMRs, and the
FMR levels for specific areas. Due to its current funding levels, HUD
does not have sufficient resources to conduct local surveys of rents to
address comments filed regarding the FMR levels for specific areas.
PHAs may continue to fund such surveys independently, as specified
below, using ongoing administrative fees or their administrative fee
reserve if they so choose. HUD continually strives to calculate FMRs
that meet the statutory requirement of using ``the most recent
available data'' while also serving as an effective program parameter.
PHAs or other parties interested in requesting HUD's reevaluation
of their area's FY 2020 FMRs, as provided for under section 8(c)(1)(B)
of USHA, must follow the following procedures:
1. By the end of the comment period, such reevaluation requests
must be submitted publicly through https://www.regulations.gov or
directly to HUD as described above. The area's PHA or, in
multijurisdictional areas, PHA(s) representing at least half of the
voucher tenants in the FMR area, must agree that the reevaluation is
necessary.
2. In order for a reevaluation to occur, the requestor(s) must
supply HUD with data more recent than the 2017 ACS data used in the
calculation of the FY 2020 FMRs. HUD requires data on gross rents paid
in the FMR area for standard quality rental housing units. The data
delivered must be sufficient for HUD to calculate a 40th and 50th
percentile two-bedroom rent.\10\ Should this type of data not be
available, requestors may gather this information using the survey
guidance available at https://www.huduser.gov/portal/datasets/fmr/NoteRevisedAreaSurveyProcedures.pdf and https://www.huduser.gov/portal/datasets/fmr/PrinciplesforPHA-ConductedAreaRentSurveys.pdf.
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\10\ Although there are no 50th percentile FMRs for FY 2020, HUD
must calculate 50th percentile rents for the Success Rate Payment
Standard under 24 CFR 982.503(e).
---------------------------------------------------------------------------
3. On or about October 2, HUD will post a list, at https://www.huduser.gov/portal/datasets/fmr.html, of the areas requesting
reevaluations and where FY 2019 FMRs remain in effect.
4. Data for reevaluations must be supplied to HUD no later than
Friday January 10, 2020. On Monday January 13, 2020, HUD will post at
https://www.huduser.gov/portal/datasets/fmr.html a listing of the areas
that requested FMR reevaluations but did not deliver data and making
the FY 2020 FMRs effective in these areas.
5. HUD will use the data delivered by January 10, 2020 to
reevaluate the FMRs and following the reevaluation, will post revised
FMRs with an accompanying Federal Register notice stating the revised
FMRs are available, which will include HUD responses to comments filed
during the comment period for this notice.
6. Any data supporting a change in FMRs supplied after January 10,
2020 will be incorporated into FY 2021 FMRs.
7. PHAs operating in areas where the calculated FMR is lower than
the published FMR (i.e., those areas where HUD has limited the decrease
in the annual change in the FMR to 10
[[Page 45795]]
percent) may request payment standards below the basic range (24 CFR
982.503(d)) and reference the ``unfloored'' rents (i.e., the
unfinalized FMRs calculated by HUD prior to application of the 10-
percent-decrease limit) depicted in the FY 2020 FMR Documentation
System (available at: https://www.huduser.gov/portal/datasets/fmr.html#2020_query.
Questions on how to conduct FMR surveys may be addressed to Marie
L. Lihn or Peter B. Kahn of the Program Parameters and Research
Division, Office of Economic Affairs, Office of Policy Development and
Research at HUD headquarters, 451 7th Street SW, Room 8208, Washington,
DC 20410; telephone number 202-402-2409 (this is not a toll-free
number), or they may be reached at [email protected].
For small metropolitan areas without one-year ACS data and non-
metropolitan counties, HUD has developed a method using mail surveys
that is discussed on the FMR web page: https://www.huduser.gov/portal/datasets/fmr.html#survey_info. This method 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 method for mail surveys in
areas with 1-year ACS data or in areas not covered by ACS data, HUD
would apply the standard established for Random-Digit Dialing (RDD)
telephone rent surveys. HUD will evaluate these survey results to
determine whether they would establish a new FMR statistically
different from the current FMR, which means that the survey confidence
interval must not include the FMR. The survey should collect results
based on 200 one-bedroom and two-bedroom eligible recent mover units to
provide a small enough confidence interval for significant results in
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 methods are acceptable in providing data to support
reevaluation requests if the survey method can provide statistically
reliable, unbiased estimates of gross rents paid of the entire FMR
area. 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 non-metropolitan areas may survey three-bedroom units, in
addition to one- and two-bedroom units and are only required to get 100
eligible survey responses. In certain circumstances, PHAs may conduct
surveys of groups of non-metropolitan 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 in counties where FMRs are
based on the combined rents in the cluster of FMR areas, HUD will not
revise their FMRs 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 current 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, but in no case
will fewer than 100 eligible cases be considered.
HUD has developed guidance on how to provide data-supported
comments on Small Area FMRs using HUD's special tabulations of the
distribution of gross rents by unit bedroom count for ZIP Code
Tabulation Areas. This guidance is available at https://www.huduser.gov/portal/datasets/fmr.html in the FY 2020 FMR section and
should be used by interested parties in commenting on whether or not
the level of Small Area FMRs are too high or too low (i.e., Small Area
FMRs that are larger than the gross rent necessary to make 40 percent
of the units accessible for an individual zip code or that are smaller
than the gross rent necessary to make 40 percent of the units
accessible for a given zip code). HUD will post revised Small Area FMRs
after confirming commenters' calculations.
As stated earlier in this notice, HUD is required to use the most
recent data available when calculating FMRs. Therefore, in order to
reevaluate an area's FMR, HUD requires more current rental market data
than the 2017 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. Public Comments on Notice of Proposed Changes to the Methodology
Used for Estimating Fair Market Rents
HUD received 25 comments addressing the proposed changes to the
methodology of calculating FMRs. There are three additional comments
that appear to be mistakenly filed with this notice as they do not
pertain to FMRs. There are two proposed methodology changes to the
calculation of FMRs. The first concerns the use of local or regional
trend factors in place of the national trend factor that has
historically been used. The more local trend factors were proposed to
improve FMR estimates to better reflect the rent inflation that occurs
between the time that ACS data is collected and the fiscal year for
which the FMRs are produced. HUD proposed to use metropolitan and
regional Gross Rent Index forecasts to calculate and apply more locally
based trend factors to address concerns of FMR accuracy. While several
commenters were opposed to this change, primarily due to the belief
that HUD did not provide enough information to evaluate the proposal,
many of the comments that addressed this proposed change to the trend
factor supported the change to more local trend factors. Consequently,
HUD replaced the national trend factor with local and regional trend
factors in the FY 2020 FMRs.
The second proposed methodology change concerns calculating Small
Area FMRs. In calculating Small Area FMRs, HUD attempts to use ZIP Code
level estimates where possible. In cases where ZIP Code level estimates
are not available or are not sufficiently reliable, HUD's practice was
to assign a Small Area FMRs based on the estimate of gross rent for the
county of the ZIP Code. However, because metropolitan counties are
often much larger than ZIP Codes, this approach has the potential to
produce anomalous Small Area FMR values where the county based Small
Area FMR is not an accurate proxy for neighborhood-level rents. HUD's
new estimation method for a ZCTA without reliable rent data is to check
to see if the ZCTA is bordered by ZCTAs that themselves have reliable
rent data. If at
[[Page 45796]]
least half of a ZCTA's ``neighbors'' have such data, the weighted
average of those estimates will be used as the basis for the Small Area
FMR rather than a county proxy, where the weight is length of the
shared boundary between the subject ZCTA and its neighbor. Again, many
of the comments that addressed this proposal were supportive and this
proposal is implemented in the FY 2020 FMRs. Objections to the Small
Area FMR proposal were offered by commenters that felt they had
insufficient information to evaluate the proposal.
The following summaries of comments and responses also include
responses to other comments regarding the calculation of FMRs that were
not responsive to the specific methodology changes that were the
subject of the notice. No response is provided to comments that did not
address FMR estimation methodology.
A. More Local Trend Factors
Comments: Some commenters were concerned that HUD would use its
flexibility in selecting from a range of trend factor models to choose
the one resulting in the lowest FMRs, while others asked HUD to
uniformly choose the model that provides the highest possible FMRs.
HUD Response: The goal of selecting the trend factor from among
several models based on RMSE is not to provide the lowest or highest
FMR possible, but rather to provide the most accurate forecast of rent.
While all of the models will be updated and run annually, HUD will hold
constant the models selected for the FY 2020 FMRs for a period of 5
years.
Comments: More information is needed on how the models are
selected. How are the Hypothetical FY 2019 FMRs calculated for areas
that are based on local surveys?
HUD Response: For each geography, a sample of past quarters of CPI
data are used to forecast the most recent 8 quarters of published CPI
values. These 8 quarters are the validation set. A forecast is run on
the sample CPI data, excluding the validation set. For each quarter in
the validation set, the known value is compared to the forecasted value
to determine its RMSE. An average of the RMSE in the validation set is
assigned to each geography and used in comparison to other models. HUD
includes information on which model was selected for each forecast area
in the FY 2020 FMR documentation system at https://www.huduser.gov/portal/datasets/fmr.html#2020_query. The models will be reassessed
every 5 years. The FY 2019 Hypotheticals are based on ACS data, even in
areas where a local survey is used for FY 2019 FMRs.
Comments: The new trend factor methodology does not place enough
weight on the impact of local rents in calculating the FMR. The FMR
methodology can be improved by increasing the weight of local housing
conditions on the formula, or by returning to the policy where local
rent survey costs may be reimbursed by HUD. The local surveys being
conducted provide more accurate information than the trend factor
methodology change, they should be used for 5 years and they should be
funded by HUD. Several commenters were concerned that HUD would not
continue to use local surveys conducted by the PHAs.
HUD Response: HUD is not eliminating the use of locally conducted
surveys and HUD has never reimbursed local survey costs meaning there
is no such policy to which to return. HUD has not been appropriated
funding to conduct local area surveys for FMR purposes. The only viable
avenue for reimbursement of surveys is the Housing Choice Voucher
program administrative fee set aside account; however, reimbursement of
FMR surveys is not an explicitly authorized category for reimbursement.
In the past, when HUD relied on decennial Census data to estimate FMRs,
HUD selected and paid for the local surveys that would be conducted in
a given year; this contract and source of funds no longer exists.
During that time if an unselected local area did its own survey, its
survey cost was not reimbursed by HUD. Surveys are used for 5 years
when there is no ACS recent mover data available for the FMR area in
question. HUD extends the use of surveys to the maximum extent possible
with the statutory limitation of using the ``most recent data
available.''
Comments: Commenters were concerned about the Hypothetical FY 2019
FMRs that decline with the new local trend factor models. FMR decreases
should be limited to 5 percent. Another commenter requested that FMR
decreases should not be applied in the first year of a decline and
should be limited to a 5 percent reduction afterward
HUD Response: The decrease in the hypothetical FY 2019 FMRs means
that the rate of growth measured by the more local forecast is slower
than the national forecast. The FMR rulemaking that was completed in
2016, instituted a 10 percent limit on FMR decreases. This cannot be
changed without undertaking further rulemaking. In cases where there
were survey data used in place of ACS data, the hypothetical FY 2019
FMRs may be lower because the survey rents were not used. PHAs have the
authority to maintain their payment standard levels for in place
tenants when FMRs decrease.
B. Neighboring ZIP Code Rents
Comments: County-based proxies should continue to be used instead
of neighboring ZCTA.
HUD Response: County based proxies do not provide the same level of
differentiation in rents and lead to anomalously high and low Small
Area FMRs.
Comments: The methodology change for Small Area FMRs should not be
implemented without a strict hold harmless policy at the level of the
metro FMR. Also, concerns were expressed about decreases in SAFMRs in
Qualified Opportunity Zones.
HUD Response: The purpose of using neighboring ZCTA data is to
better localize rents and to take advantage of more local data. As for
hold harmless policies, PHAs have the right to hold their payment
standards harmless for in-place tenants who choose not to move.
Comments: HUD should investigate the spatial relationship between a
ZIP Code that does not appear in the ZCTA data set and other
neighboring ZIP Codes using the ZIP+4 data set. This could reduce the
number of Small Area FMRs that will continue to use a county-based
proxy rent estimate even with the proposed neighboring ZIP Code
methodology.
HUD Response: HUD will evaluate this proposal and may propose
additional changes to the Small Area FMR methodology, but that will
require publishing a methodology change notice at a later date.
C. Other FMR Issues
Comments: The proposed methodology continues to be very complicated
and does nothing to minimize the administrative burden for agencies to
budget and better predict funding levels.
HUD Response: HUD provides detailed documentation and explanations
of how FMRs are calculated. HUD has received numerous comments about
the inaccuracy of FMRs particularly in housing markets where rents are
changing rapidly. The complexity of the FMR calculation methods reflect
HUD's best efforts to improve the accuracy of the FMR calculations.
HUD's Office of Public and Indian Housing provides tools and support to
agencies in their budgeting
[[Page 45797]]
activities for the Housing Choice Voucher program.
Comments: FMRs are not high enough, they should be increased. FMRs
should be set at the 50th percentile. HUD should use rent
reasonableness data, data from all renters not just recent movers, and
rental data from additional sources such as Craigslist in setting FMRs.
HUD Response: HUD cannot unilaterally increase FMRs without
supporting data. HUD cannot change the FMR percentile without
undertaking rulemaking. Rent Reasonableness data are generally not
market wide assessments of gross rents paid across the totality of the
rental stock in an area and therefore are not suitable for calculating
FMRs. HUD does use ``All renters'' in setting the base rent. The recent
mover rent or recent mover adjustment is only used to increase the
FMRs--we do not let the recent mover adjustment decrease rents.
Craigslist, Axiometrics, and Apartment.com are not sources that can be
relied upon for data capturing gross rents paid. HUD is reviewing the
possibility of using alternative data sources for update factors but
cannot use these sources for baselining FMRs.
Comments: HUD should incorporate vacancy rates and additional
geographic data when calculating FMRs.
HUD Response: Vacancy rates were tested and did not add explanatory
power to the gross rent index forecasts; further, there are not
forecasts of expected vacancy rates as inputs for use in the forecast
models.
Comments: Using CPI has unintended consequences; the use of CPI
often forces people to choose between housing and Medicaid.
HUD Response: CPI has been the basis of our update of base year
data for many years and our trend factors for several years. This
proposed change to more local trend factors changes the use of the CPI
from national to local and regional to capture differences in rent
changes within the nation.
Comments: HUD should increase basic range payment standard
flexibilities.
HUD Response: Payment standard ranges cannot be increased without
statutory and regulatory changes. This is not something that can be
done within the FMR calculation method notices; this may be done as
part of a larger package of regulatory reforms.
Comments: How are bedroom sizes calculated and why was the two-
bedroom the only one provided for the Hypothetical FY 2019 FMRs?
HUD Response: HUD calculates FMRs directly for two-bedroom units
and other bedroom unit sizes are calculated using bedroom ratios
relating the different unit sizes to two-bedroom units. For a given
year, the relationship between two-bedroom units and other unit sizes
is the same; therefore, the percentage difference between the actual FY
2019 2-bedroom FMR and the Hypothetical two-bedroom FMR will be the
same across all unit sizes.
Comments: HUD should discontinue it use of Core Based Statistical
Areas (CBSAs) as the basis of metropolitan FMR areas. These areas
create distortions in FMRs.
HUD Response: HUD has been using CBSAs as the basis of metropolitan
FMRs since the FY 2006 FMRs for all but the New England areas. While
the CBSAs were larger than the FMR areas in most metropolitan areas
prior to FY 2006 FMRs, HUD instituted a policy of only including new
counties to a metropolitan area where the there was no rent data of its
own that could be used or where the rent data for the new county was
within five percent of the metropolitan-wide rent. This was done to
mitigate the effects of geography changes on FMRs. Median family
incomes were also required to be within five percent for a county to be
added to an FMR area under a CBSA definition change. The adjustments
made to the FY 2006 area definitions to separate subparts of these
areas where FMRs or median incomes would otherwise change significantly
are continued. To follow HUD's policy of providing FMRs at the smallest
possible area of geography, no counties were added to existing
metropolitan areas due to recent updates in metropolitan area
definitions. All counties added to metropolitan areas by changes in the
CBSA definitions will still be treated as separate counties for FMR
calculations; that is, the rents from a county that is a subarea will
not be used in the remaining metropolitan sub-area rent determination.
All metropolitan areas that have been subdivided by HUD will use ACS
data which conforms to HUD's area definition if statistically reliable
information exists. If statistically reliable data for the HUD defined
area is not available, HUD uses information from larger encompassing
geographies, as described elsewhere in this notice. As of 2018, the CPI
uses areas based on CBSAs. While CBSAs represented larger areas for the
FMRs, for the CPI the CBSAs represent smaller areas.
VIII. Environmental Impact
This Notice involves the establishment of FMR 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 available at https://www.huduser.gov/portal/datasets/fmr.html.
Dated: August 21, 2019.
Seth D. Appleton,
Assistant Secretary for Policy Development and Research.
Fair Market Rents for the Housing Choice Voucher Program Schedule B--
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 uses the metropolitan CBSAs, which are made up of one
or more counties, as defined by 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 2020 FMRs incorporates the OMB
definitions of metropolitan areas based on the CBSA standards as
implemented with 2000 Census data and updated by the 2010 Census in
February 28, 2013, including incremental adjustments through July 15,
2015. The adjustments made to the 2000 definitions to separate subparts
of these areas where FMRs or median incomes would otherwise change
significantly are continued. To follow HUD's policy of providing FMRs
at the smallest possible area of geography, no counties were added to
existing metropolitan areas due to recent updates in metropolitan area
definitions. All counties added to metropolitan areas by the CBSA will
still be treated as separate counties for FMR calculations; that is,
the rents from a county that is a sub-area will not be used in the
remaining metropolitan sub-area rent determination. All metropolitan
areas that have been subdivided by HUD will use ACS data which conforms
to HUD's area definition if statistically reliable information exists.
If statistically reliable data for the HUD defined area is not
available, HUD uses information from larger encompassing geographies,
as described elsewhere in this notice.
[[Page 45798]]
The specific counties and New England towns and cities within each
state in MSAs and HMFAs were not changed by the July 15, 2015 OMB
metropolitan area definitions. These areas are listed in Schedule B,
available online at https://www.huduser.gov/portal/datasets/fmr.html.
2. Unit Bedroom Count Adjustments
Schedule B, available at https://www.huduser.gov/portal/datasets/fmr.html, shows the FMRs for zero-bedroom through four-bedroom units.
The Schedule B addendum shows Small Area FMRs for all metropolitan
areas. The FMRs for unit sizes larger than four bedrooms may be
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 the online Schedule B are listed alphabetically
by metropolitan FMR area and by non-metropolitan county within each
state and are available at https://www.huduser.gov/portal/datasets/fmr.html.
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 non-metropolitan counties are listed alphabetically on each
line of the non-metropolitan county listings.
d. The New England towns and cities included in a non-metropolitan
county are listed immediately following the county name.
[FR Doc. 2019-18608 Filed 8-29-19; 8:45 am]
BILLING CODE 4210-67-P