[Federal Register Volume 86, Number 149 (Friday, August 6, 2021)]
[Notices]
[Pages 43260-43266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16148]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR 6277-N-01]


Fair Market Rents for the Housing Choice Voucher Program, 
Moderate Rehabilitation Single Room Occupancy Program, and Other 
Programs Fiscal Year 2022

AGENCY: Office of the Assistant Secretary for Policy Development and 
Research, Housing and Urban Development (HUD).

ACTION: Notice of Fiscal Year (FY) 2022 Fair Market Rents (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

[[Page 43261]]

methods used to calculate the FY 2022 FMRs and enumerates the 
procedures for Public Housing Agencies (PHAs) and other interested 
parties to request reevaluations of their FMRs as required by HOTMA.

DATES: 
    Comment Due Date: September 30, 2021.
    Effective Date: October 1, 2021 unless HUD receives a valid request 
for reevaluation of specific area FMRs as described below.

ADDRESSES: HUD invites interested persons to submit comments regarding 
the FMRs and to request reevaluation of the FY 2022 FMRs through 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. 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.
    2. Submission of Comments by Mail. Members of the public may submit 
comments or requests for reevaluation 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 standard mail often results in delayed delivery. To 
ensure timely receipt of comments or reevaluation requests, HUD 
recommends that comments or requests submitted by standard 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.

    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. HUD does not accept 
facsimile (FAX) comments or requests for FMR reevaluation.

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.
    Questions related to use of FMRs or voucher payment standards 
should be directed to the respective local HUD program staff or the 
Office of Public and Indian Housing Customer Service Center at https://www.hud.gov/program_offices/public_indian_housing/about/css. Questions 
on how to conduct FMR surveys may be addressed to the mailbox for the 
Program Parameters and Research Division at [email protected].
    For any additional questions, you can contact Adam Bibler, Program 
Parameters and Research Division, Office of Policy Development and 
Research, telephone number 202-402-6057. Persons with a hearing- or 
speech-impairment may contact the Federal Relay Service at 800-877-8339 
(TTY). (Other than the ``800'' TTY number, the above-listed telephone 
numbers are not toll free.)
    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 2022 FMRs is available 
at https://www.huduser.gov/portal/datasets/fmr.html#2022_query. FY 2022 
FMRs are available in a variety of electronic formats at https://www.huduser.gov/portal/datasets/fmr.html, including in PDF and 
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. For informational purposes, HUD also 
publishes 50th percentile rents for all FMR areas at https://www.huduser.gov/portal/datasets/50per.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 a tenant would need 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. 
HUD's FMR calculations represent HUD's best effort to estimate the 40th 
percentile gross rent \1\ 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.
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    \1\ 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).
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    The FY 2022 FMRs incorporate revisions to metropolitan area 
definitions released by the Office of Management and Budget in 
September 2018 (see section III).\2\ PHAs and other users of FMRs 
should ensure that they look up the FY 2022 FMRs using the county, 
county equivalent, or town in the case of New England states, as the 
relationship between these areas and their respective metropolitan 
areas has changed in some instances.
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    \2\ See OMB Bulletin 18-04.

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[[Page 43262]]

II. Procedures for the Development of FMRs

    Section 8(c)(1) of the USHA, as amended by HOTMA (Pub. L. 114-201, 
enacted 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 2022 FMRs are available at 
https://www.huduser.gov/portal/datasets/fmr.html and will become 
effective on October 1, 2021. This notice also provides procedures for 
FMR reevaluation requests.

III. FMR Methodology

    This section provides a brief overview of how HUD computes the FY 
2022 FMRs. HUD is making no changes to the estimation methodology for 
FMRs as used by HUD for the FY 2021 FMRs. For complete information on 
how HUD derives each area's FMRs, see the online documentation at 
https://www.huduser.gov/portal/datasets/fmr.html#2022_query.
    The FY 2022 FMRs are based on the updated metropolitan area 
definitions published by the Office of Management and Budget (OMB) on 
September 14, 2018 and incorporated by the Census Bureau into the 2019 
American Community Survey (ACS) data. Following the methodology first 
established in FY 2016 to incorporate such revisions, HUD treats 
counties that OMB removed from metropolitan areas as nonmetropolitan 
counties. HUD treats counties that OMB added to metropolitan areas as 
metropolitan county subareas. They receive rents based on their own 
data if the local data is statistically reliable (with an error that is 
less than one-half of the estimate) or receive the metropolitan rent if 
their subarea estimate does not exist or is statistically unreliable. 
HUD treats new multi-county metropolitan areas as individual county 
metropolitan subareas using county-based gross rent estimates (if 
statistically reliable); otherwise, HUD uses a metropolitan, area-wide 
gross rent estimate. The goal of this policy is to minimize year-to-
year changes in FMR values that are solely due to area definition 
revisions.
    In FY 2022, HUD is making the following additional area definition 
changes:
    HUD is adding Oliver County, ND to the Bismarck, ND Metropolitan 
Statistical Area. Since FY 2016, Oliver County has comprised the Oliver 
County, ND HUD Metro FMR Area (HMFA), a separate area from the 
Bismarck, ND HUD Metro FMR Area. However, in each year from FY 2017 
through FY 2021, Oliver County did not have reliable gross rent data 
from the 5-year ACS, and HUD used the data for the Bismarck, ND MSA in 
its FMR calculation.
    HUD is adding Maunabo Municipio, PR to the San Juan-Guaynabo, PR 
HUD Metro FMR Area. Since FY 2006, Maunabo has been part of the 
Barranquitas-Aibonito, PR HUD Metro FMR Area. However, Maunabo is not 
contiguous with the other municipios that comprise the Barranquitas-
Aibonito, PR HUD Metro FMR Area. HUD FMR areas generally consist of 
contiguous counties or county equivalents.
    HUD is adding Utuado Municipio to the Aguadilla-Isabela, PR HUD 
Metro FMR Area. Prior to FY 2016, no FMR area in Puerto Rico consisted 
of a single municipio. Unlike Counties in the United States, HUD groups 
non-metropolitan Puerto Rico Municipios to form the ``Puerto Rico HUD 
Nonmetro Area'' because Municipios are often smaller than counties in 
the United States. Similarly, HUD is adding Quebradillas Municipio to 
the Arecibo, PR HUD Metro FMR Area, which is retitled as Arecibo, PR 
MSA. Following these two changes, there are no single municipio FMR 
areas remaining in Puerto Rico.

A. Base Year Rents

    For FY 2022 FMRs, HUD uses the U.S. Census Bureau's 5-year ACS data 
collected between 2015 and 2019 as the ``base rents'' for the FMR 
calculations. These data are the most current ACS data available at the 
time that HUD calculates the FY 2022 FMRs. HUD pairs a ``margin of 
error'' test \3\ with an additional requirement based on the number of 
survey observations supporting the estimate 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 to be used as base rents.
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    \3\ 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 \4\ (provided that there is data available 
for at least two of these years),\5\ or if such data are not available, 
using the two-bedroom rent data within the next largest geographic 
area. For a metropolitan subarea, the next largest area is its 
containing metropolitan area. For a non-metropolitan area, the next 
largest area is the state non-metropolitan portion.
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    \4\ For FY 2022, the three years of ACS data in question are 
2017, 2018 and 2019. HUD adjusts the 2017 and 2018 data to be 
denominated in 2019 dollars using the growth in Consumer Price Index 
(CPI)-based gross rents measured between 2017, 2018, and 2019.
    \5\ To be used in the three-year average calculation, the 5-year 
estimates must be minimally statistically qualified; that is, the 
margin of error of the estimates must be less than half the size of 
the estimate.
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B. Recent-Mover Factors

    Following the assignment of the standard quality two-bedroom rent 
described above, HUD applies a recent-mover factor to these rents. HUD 
calculates the recent-mover factor as the change between the 5-year 
2015-2019 standard quality two-bedroom gross rent and the 1-year 2019 
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, HUD sets the recent-mover factor 
to 1. When the recent-mover factor is greater than one, HUD is, in 
effect, replacing the base rent with the recent-mover rent for that 
area.
    The calculation of the recent-mover factor for FY 2022 continues to 
use statistical reliability requirements that are similar to those for 
base rents. That is, for a recent-mover gross rent estimate

[[Page 43263]]

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'' 1-year recent-mover ACS data for 
the FMR area is tested for statistical reliability.\6\ HUD will use an 
``all-bedroom'' recent-mover factor from the FMR area, 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 are not available preserves the use of local information to the 
greatest extent possible.
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    \6\ ``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 are not 
available, HUD will continue to base FMR areas' recent-mover factors on 
larger geographic areas. 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 sub-areas 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.
    Applying the recent-mover factor to the standard quality base rent 
produces an ``as of'' 2019 recent mover two-bedroom gross rent for the 
FMR area.

C. Other Rent Survey Data

    HUD calculates base rents for the insular areas using data 
collected during the 2010 decennial census of American Samoa, the 
Northern Mariana Islands, and the Virgin Islands beginning with the FY 
2016 FMRs.\7\ HUD updates the 2010 base year data to 2019 using the 
growth in national ACS data for the FY 2022 FMRs. Note that while the 
2010 decennial census also included Guam, HUD uses the result of a more 
recent rent survey in calculating the FMRs for Guam, as discussed in 
the following paragraph.
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    \7\ The ACS is not conducted in the Pacific Islands (Guam, 
Northern Mariana Islands and American Samoa) or the U.S. Virgin 
Islands. As part of the 2010 Decennial Census, the Census Bureau 
conducted ``long-form'' sample surveys for these areas. HUD uses the 
results gathered by this long form survey for the FY 2022 FMRs.
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    HUD does not use ACS data to establish the base rent or recent-
mover factor where the FY 2021 FMRs are based on locally collected 
survey data which are more recent than the 2019 ACS. For larger 
metropolitan areas that have valid ACS one-year recent-mover data, 
survey data may not be any older than the mid-point of the calendar 
year for the ACS one-year data. Since the ACS one-year data used for 
the FY 2022 FMRs is from 2019, larger areas with valid one-year recent 
mover data may not use other survey data collected before June 30, 2019 
for the FY 2022 FMRs. Areas without statistically reliable 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. For FY 2022 FMRs, 
there are 18 areas that are based on local ad hoc surveys:
     HUD uses survey data from 2017 to calculate the FMRs for 
Hood River County, OR; Wasco County, OR; Hawaii County, HI; and the 
Jonesboro, AR HMFA.
     HUD uses survey data from 2018 to calculate the FMRs for 
Coos County, OR; Curry County, OR; and Douglas County, OR.
     HUD uses survey data from 2019 to calculate the FMRs for 
Kauai County, HI; Eugene-Springfield, OR MSA; Portland, ME HUD Metro 
FMR Area; Santa Maria-Santa Barbara, CA MSA; Worcester, MA HUD Metro 
FMR Area; and Guam.
     HUD uses survey data from 2020 to calculate the FMRs for 
Santa Cruz-Watsonville, CA MSA; Houston-The Woodlands-Sugar Land, TX 
HUD Metro FMR Area, Knox County, ME; Lincoln County, ME; and Waldo 
County, ME.

D. CPI Gross Rent Adjustment Factors

    HUD updates the ACS-based ``as of'' 2019 rent through 2020 using 
the annual change in gross rents measured through the Consumer Price 
Index (CPI) from 2019 to 2020 (CPI update factor). HUD uses local CPI 
data for FMR areas within Class A metropolitan areas covered by local 
CPI data. 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 2019 to 2020 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 2020 to FY 2022 using a trend 
factor which is based on local or regional forecasts of CPI gross rent 
data. HUD derived a trend factor for each Class A CPI area and Class B/
C CPI region using 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 chose the actual model used for each CPI area's trend factor based 
on which model generates the lowest Root Mean Square Error (RMSE) 
statistic and applied the trend factors to the corresponding FMR areas. 
HUD is holding 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. More details on the trend factor 
forecasts are available in the June 5, 2019 Federal Register notice (84 
FR 26141) and are available at https://www.federalregister.gov/documents/2019/06/05/2019-11763/proposed-changes-to-the-methodology-used-for-estimating-fair-market-rents.

E. Bedroom Rent Adjustments

    HUD updates the bedroom ratios used in the calculation of FMRs 
annually. The bedroom ratios used in the calculation of FY 2022 FMRs 
are calculated from three five-year ACS data series (2013-2017, 2014-
2018, and 2015-2019). 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, HUD uses 
the bedroom ratios for the area's larger parent geography.
    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 ensure an adequate distributional fit in these 
bedroom ratio calculations for individual 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 2022 FMR estimates, HUD sets the bedroom

[[Page 43264]]

interval ranges as follows: Efficiency FMRs are constrained to fall 
between 0.66 and 0.86 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 1.14 and 1.31 of 
the two-bedroom FMR; and four-bedroom FMRs (again, prior to adjustment) 
must be between 1.26 and 1.59 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.
    HUD also further adjusts the rents for three-bedroom and larger 
units to reflect HUD's policy to set higher rents for these units.\8\ 
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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    \8\ 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).\9\
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    \9\ 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. Minimum FMRs

    All FMRs are subject to a state or national minimum. HUD calculates 
a population-weighted median two-bedroom FMR across all non-
metropolitan counties or county-equivalents 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 2022 FMR Documentation 
System, available at https://www.huduser.gov/portal/datasets/fmr.html#2022_query. HUD also calculates the population-weighted median 
FMR rent across all non-metropolitan areas of the country, which, for 
the purposes of FMRs, is the national minimum rent. For FY 2022, the 
national minimum rent is $757. 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.

G. 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 2022 Small 
Area FMRs may be no less than 90 percent of the FY 2021 Small Area 
FMRs. For all other metropolitan areas, the FY 2022 Small Area FMRs may 
be no less than 90 percent of the greater of the FY 2021 metropolitan 
area wide FMRs or the applicable FY 2021 Small Area FMR.
    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 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 
2022 FMR Documentation System (available at: https://www.huduser.gov/portal/datasets/fmr.html#2022_query).

IV. Small Area FMRs

    HUD lists Small Area FMRs for all metropolitan areas in the Small 
Area FMR Schedule. Metropolitan PHAs operating in areas where the use 
of Small Area FMRs are not mandated should contact their local HUD 
field office to request approval for using Small Area FMRs in the 
operation of their Housing Choice Voucher program.
    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 are statistically reliable. 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 
calculates 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 are used because the two-
bedroom gross rent data are not statistically reliable, HUD converts 
the one-bedroom or three-bedroom 40th percentile gross rent 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.\10\
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    \10\ For example, for FY 2022 Small Area FMRs, HUD averages the 
gross rents from 2017, 2018, and 2019 5-Year ACS estimates. The 2017 
and 2018 gross rent estimates would be adjusted to 2019 dollars 
using the metropolitan area's gross rent CPI adjustment factors.
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    For ZCTAs without usable gross rent data by bedroom size, HUD 
calculates Small Area FMRs using the rent ratio method. To calculate 
Small Area FMRs using a rent ratio, HUD divides the median gross rent 
across all bedrooms for the ZCTA by the similar median gross rent for 
the metropolitan area of the ZCTA. If a ZCTA does not have reliable 
rent data at the all-bedroom level, HUD will then check to see if the 
ZCTA borders other ZCTAs that themselves have reliable rent data. If at 
least half of a ZCTA's ``neighbors'' have such data, HUD will use the 
weighted average of those estimates 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. In small areas where the 
neighboring ZCTA median gross rents are not statistically reliable, HUD 
substitutes 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 FMR for the metropolitan 
area containing the small area to generate the current year two-bedroom 
FMR for the small area.
    HUD continues to use a rolling average of ACS data in calculating 
the

[[Page 43265]]

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 2022 Small Area FMRs, HUD has updated the rent ratios to use an 
average of the rent ratios calculated from the 2013-2017, 2014-2018, 
and 2015-2019 5-year ACS estimates.
    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.

V. Request for Public Comments and FMR Reevaluations

    HUD accepts public comments on the methods HUD uses to calculate FY 
2022 FMRs and requests for reevaluation of FMRs for specific areas 
prior to the effective date of this notice. HUD lacks the 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.

FMR Reevaluations

    42 U.S.C. 1437f (c)(1)(B) includes the following: ``The Secretary 
shall establish a procedure for public housing agencies and other 
interested parties to comment on such fair market rentals and to 
request, within a time specified by the Secretary, reevaluation of the 
fair market rentals in a jurisdiction before such rentals become 
effective.''
    PHAs or other parties interested in requesting HUD's reevaluation 
of their area's FY 2022 FMRs, as provided for under section 8(c)(1)(B) 
of USHA, must follow the following procedures:
    1. Prior to the effective date of this notice, PHAs or other 
parties must submit reevaluation requests through https://www.regulations.gov/ or directly to HUD as described above. The area's 
PHA or, in multi-jurisdictional areas, PHA(s) representing at least 
half of the voucher tenants in the FMR area, must agree that the 
reevaluation is necessary.
    2. The requestor(s) must supply HUD with data more recent than the 
2019 ACS data used in the calculation of the FY 2022 FMRs. HUD requires 
data on gross rents paid in the FMR area for occupied standard quality 
rental housing units. Occupied recent mover units (defined as those who 
moved in the past 24 months) provide the best data. The data delivered 
must be sufficient for HUD to calculate a 40th and 50th percentile two-
bedroom gross rent.\11\ 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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    \11\ Although there are no longer 50th percentile FMRs, HUD must 
calculate 50th percentile rents for the Success Rate Payment 
Standard under 24 CFR 982.503(e).
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    3. Areas where valid reevaluation requests are submitted must 
continue to use FY 2021 FMRs whether the FY 2022 FMRs are lower or 
higher than the FY 2021 FMRs. Following the comment period, HUD will 
post a list, at https://www.huduser.gov/portal/datasets/fmr.html, of 
the areas requesting reevaluations and where FY 2021 FMRs remain in 
effect.
    4. PHAs or other parties must supply data for reevaluations to HUD 
no later than Friday January 7, 2022. All survey responses of rental 
units gathered as part of the survey efforts should be delivered to 
HUD. In addition to the survey data, HUD requires a current utility 
schedule in order to evaluate the survey responses. Finally, HUD 
encourages PHAs to evaluate their survey data to ensure the survey 
supports their request. Should PHAs or their contractors undertake this 
evaluation, HUD requests that this analysis also be submitted.
    HUD will use the data delivered by January 7, 2022 to reevaluate 
the FMRs and following the reevaluation, will post revised FMRs in 
April of 2022 with an accompanying Federal Register notice stating the 
revised FMRs are available, which will include HUD's responses to 
comments filed during the comment period for this notice. On Monday 
January 10, 2022, 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 2022 FMRs 
effective in these areas. HUD will incorporate any data supporting a 
change in FMRs supplied after January 7, 2022 into FY 2023 FMRs. 
Questions on how to conduct FMR surveys may be addressed to the Program 
Parameters and Research Division 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 units.
    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 are required to get 100 eligible 
survey responses which means they should have at least 5,000 rental 
units. PHAs may conduct surveys of groups of non-metropolitan counties 
to increase the number of rental units that are surveyed, but HUD must 
approve all county-grouped surveys in advance. HUD cautions 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, HUD advises 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. Staff from HUD's Program 
Parameters and Research Division will work with PHAs in areas 
requesting re-evaluations to provide the minimum number of survey cases 
required to ensure that data submitted for re-evaluation represent a 
statistically valid sample.
    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

[[Page 43266]]

requirements, but in no case will fewer than 100 eligible cases be 
considered.

Calculating Small Area FMRs Using Rent Distributions

    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 2022 FMR section 
under the ``Documents'' tab 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.

VI. 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.

Todd Richardson,
General Deputy Assistant Secretary for Policy Development and Research.

Fair Market Rents for the Housing Choice Voucher Program

Schedule B--General Explanatory Notes

Arrangement of FMR Areas and Identification of Constituent Parts
    a. The Metropolitan and Non-Metropolitan FMR Area Schedule lists 
FMRs alphabetically by state, by metropolitan area and by non-
metropolitan county within each state and are available at https://www.huduser.gov/portal/datasets/fmr.html.
    b. The schedule lists the constituent counties (and New England 
towns and cities) included in each metropolitan FMR area 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. The schedule lists two non-metropolitan counties alphabetically 
on each line of the non-metropolitan county listings.
    d. Similarly, the schedule lists the New England towns and cities 
included in a non-metropolitan county immediately following the county 
name.

[FR Doc. 2021-16148 Filed 8-5-21; 8:45 am]
BILLING CODE 4210-67-P