[Federal Register Volume 89, Number 173 (Friday, September 6, 2024)]
[Proposed Rules]
[Pages 72766-72769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-19807]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 5

[Docket No. FR-6464-P-01]
RIN 2501-AE11


Adoption of 2020 Core Based Statistical Area Standards

AGENCY: Office of the Secretary, U.S. Department of Housing and Urban 
Development (HUD).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would adopt the 2020 Core Based Statistical 
Area (CBSA) standards as determined by the Office of Management and 
Budget (OMB). The Metropolitan Areas Protection and Standardization Act 
of 2021 (MAPS Act) requires agencies that propagate OMB's CBSA 
Standards for non-statistical use to seek public comment before 
determining that the propagation supports the purposes of the agency's 
programs and is in the public interest. This proposed rule describes 
HUD's use of CBSAs, how CBSA standards support relevant programs, and 
how HUD believes the adoption of updated standards ensures accuracy of 
data and program administration.

DATES: Comments are due by: November 5, 2024.

ADDRESSES: There are two methods for submitting public comments. All 
submissions must refer to the above docket number and title.
    1. Electronic Submission of Comments. Comments may be submitted 
electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through 
www.regulations.gov can be viewed by other commenters and interested 
members of the public. Commenters should follow the instructions 
provided on that website to submit comments electronically.
    2. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.


[[Page 72767]]


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

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All comments and 
communications properly submitted to HUD will be available for public 
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above 
address. Due to security measures at the HUD Headquarters building, an 
advance appointment to review the public comments must be scheduled by 
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number). HUD welcomes and is prepared to receive calls from 
individuals who are deaf or hard of hearing, as well as from 
individuals with speech or communication disabilities. To learn more 
about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. In 
accordance with 5 U.S.C. 553(b)(4), a summary of this proposed rule may 
be found at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Kurt Usowski, Deputy Assistant 
Secretary for Economic Affairs, Office of Policy Development and 
Research, Department of Housing and Urban Development, 451 7th St. SW, 
Washington, DC 20410, telephone number 202-402-5899 (this is not a 
toll-free number) or via email to [email protected]. HUD welcomes 
and is prepared to receive calls from individuals who are deaf or hard 
of hearing, as well as individuals with speech or communication 
disabilities. To learn more about how to make an accessible telephone 
call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background: Core Based Statistical Areas

    In its role as coordinator of the Federal statistical system, OMB 
establishes and maintains the CBSA program. CBSAs are geographic areas 
containing a large population nucleus, or urban area, and adjacent 
communities that have a high degree of integration with that nucleus 
measured by commuting ties. There are two types of CBSAs, the 
Metropolitan Statistical Area (MSA) and the Micropolitan Statistical 
Area. The classifications provide a nationally consistent set of 
delineations for collecting, tabulating, and publishing Federal 
statistics for geographic areas. OMB maintains CBSAs solely for 
statistical purposes. Every decade, OMB reviews and updates the 
Standards for Delineating CBSAs (CBSA standards), which describe the 
data sources and methods OMB uses to determine which geographic areas 
are to be designated CBSAs, prior to their application to new decennial 
census data. OMB updated CBSA standards on July 16, 2021 (86 FR 37770), 
prior to applying them to 2020 Census data.
    The Metropolitan Areas Protection and Standardization Act of 2021, 
or the MAPS Act, (31 U.S.C. 6102, et seq.) prohibits agencies from 
automatically propagating OMB's standards for non-statistical use by 
any domestic assistance program unless the agency determines that the 
propagation: (1) supports the purpose of the program; and (2) is in the 
public interest. (31 U.S.C. 6309(a)(2)(A)) Propagation of the standards 
for non-statistical use by domestic assistance programs must be done 
through a notice and comment rulemaking. (31 U.S.C. 6309(a)(2)(B))
    HUD's Office of Community Planning and Development (CPD), Office of 
Housing--Federal Housing Administration (FHA), and Office of Public and 
Indian Housing (PIH) use CBSAs to administer their programs listed in 
Table 1. The Office of Policy Development and Research (PD&R) also uses 
CBSA definitions to calculate Fair Market Rents, Area Median Family 
Income Estimates and Income Limits. This proposed rule describes, for 
each of its affected programs, how HUD uses CBSA definitions, how the 
use of new CBSA standards support the purposes of the programs, and 
that the adoption of the new CBSAs in the operations of these programs 
is in the public interest. HUD welcomes comments on all aspects of this 
proposed rule.

                       Table 1--HUD Uses of CBSAs
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                       Use                              HUD Office
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Community Development Block Grant Program.......  CPD.
Community Development Block Grant Disaster        CPD.
 Recovery Program.
Housing Opportunities for Persons with AIDS       CPD.
 Program.
HOME Investment Partnerships (HOME) Program.....  CPD.
Housing Trust Fund (HTF) Program................  CPD.
Continuum of Care...............................  CPD.
Emergency Solutions Grant (ESG).................  CPD.
FHA's Title II Program (loan limits)............  Housing.
Choice Neighborhoods Initiative.................  PIH.
Difficult Development Area and Qualified Census   PD&R.
 Tract Designations.
Fair Market Rents, Area Median Family Income,     PD&R.
 and Income Limits.
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II. Use of CBSAs in HUD Programs

A. Fair Market Rents, Area Median Family Income, and Income Limits

    HUD uses CBSAs to calculate Fair Market Rents (FMRs), HUD's Area 
Median Family Income (HAMFI) estimates, and Income Limits (ILs). FMRs, 
HAMFI, and ILs are addressed together because they incorporate MSA 
definitions in substantially identical ways and the presence of 
interacting calculations in the determination of these ``program 
parameters.'' That is, FMRs, HAMFI estimates, and ILs share the same 
geography in any given fiscal year. FMRs are an estimate of the amount 
of money that would cover gross rents (rent and utility expenses) on 40 
percent of the rental housing units in an area. FMRs are used in 
several HUD programs, including determining the maximum amount a 
Housing Choice Voucher will cover. ILs, which are derived from HAMFIs 
(and in some cases, FMRs) set eligibility income levels for HUD 
programs as well as various other federal programs and maximum rent 
levels for housing supported by the Low-Income Housing Credit. From the 
inception of FMRs, HUD has generally considered MSAs to be good proxies 
for housing markets as they have been historically based on home-to-
work commuting interactions as the principal means of identifying 
component geography to be combined.

[[Page 72768]]

HUD has always also made exceptions for MSAs where boundaries extended 
beyond the actual housing market. Following the 2000 revisions that 
created CBSAs, HUD began making far more exceptions to the use of OMB-
defined MSAs in FMRs to avoid large changes in FMR values due largely 
to geographic definition changes of MSAs. Since the promulgation of 
regulations mandating the use of ``Small Area FMRs'' estimated at the 
ZIP-code level in selected FMR areas, HUD has largely stopped 
incorporating new counties added to MSAs into FMR areas, instead 
maintaining separate ``HUD Metro FMR Areas'' (HMFAs).
    Currently, for computations of FMR estimates HUD uses the MSAs to 
define which areas are in HUD Metro FMR Areas or defines the FMR area 
as coterminous with the MSA as appropriate for the housing market. FMRs 
are estimated separately for each county or county equivalent not in a 
MSA, including those in Micropolitan CBSAs. HUD also uses MSA-level 
data in the calculation of FMRs in HMFAs. See HUD's notice announcing 
fiscal year (FY) 2024 FMRs for details on the use of MSA-level data at: 
https://www.huduser.gov/portal/datasets/fmr/fmr2024/FMR_FY24_FinalNotice_2023.pdf (88 FR 60223). HAMFIs and ILs are 
estimated for the same areas as FMRs. Details on the relationship 
between ILs and FMRs is available in the FY 2024 Income Limits 
Methodology description at: https://www.huduser.gov/portal/datasets/il//il24/IncomeLimitsMethodology-FY24.pdf.

B. Difficult Development Area and Qualified Census Tract Designations

    HUD designates Difficult Development Areas (DDAs) and Qualified 
Census Tracts (QCTs) for purposes of the Low-Income Housing Credit 
(LIHTC) program. DDAs and QCTs derive from FMRs and ILs, but HUD also 
uses CBSA definitions in counting the metropolitan population and 
nonmetropolitan population for the DDAs, where designated populations 
are restricted to 20 percent of the respective totals, and the full 
population of metropolitan CBSAs for QCTs where the total population of 
designated tracts in a metropolitan area or nonmetropolitan part of a 
state cannot exceed 20 percent of total population of the respective 
areas. (26 U.S.C. 42(d)(5)(B))

C. Additional PIH Use of CBSAs

    PIH's Choice Neighborhoods Initiative program uses CBSA definitions 
as part of its grant application process. In awarding Planning grants 
and Implementation grants, MSAs are used to determine points earned for 
the ``leverage'' rating factor. Points are different for applications 
targeting a neighborhood in an MSA with a population greater than 
500,000 versus 500,000 or less. CBSAs are also a factor used to 
determine whether an applicant qualifies for an exception to the hard 
unit one-for-one replacement requirement. If grantees want to locate 
replacement housing outside their target neighborhood, they cannot 
locate it in areas of minority concentration, which is defined using 
CBSA delineations.

D. Additional CPD Use of CBSAs

    CPD's Community Development Block Grant (CDBG) program uses OMB's 
definition of ``Principal Cities'' of Metropolitan CBSAs to determine 
which jurisdictions are eligible for metropolitan city status, as 
defined at 24 CFR 570.3. Metropolitan cities are participating units of 
general local government that are either principal cities, by OMB's 
definition, or any other city in a metropolitan area with a population 
of 50,000 or more. Other entitlement jurisdictions include ``urban 
counties'' which are defined and may be determined eligible by one of 
two ways as set forth in the Housing and Community Development Act of 
1974, as amended (``HCDA'') (see 42 U.S.C. 5302(a)(6)). Either the 
population of the urban county exceeds 200,000 after deducting the 
population contained in any metropolitan city (cities), or part(s) of a 
metropolitan city (cities), within the county, or the urban county 
meets the low- and moderate-income preponderance test, in that it has a 
total combined population of at least 100,000 (but fewer than 200,000) 
in its unincorporated areas and included units of general local 
government, and those areas (combined) include the majority of low- and 
moderate-income persons in the county. The CDBG entitlement formula 
uses as its denominator for five of the six variables the aggregated 
data for all metropolitan areas (see 42 U.S.C. 5306). CDBG-eligible 
low- and moderate-income areas and households are determined relative 
to HUD's ILs.
    CPD's CDBG-Disaster Recovery funds provides relief to rebuild 
disaster-stricken areas and crucial seed money to start the long-term 
recovery process. Funding is awarded to ``metropolitan areas'' and 
``metropolitan cities'', among other recipients. Those geographic areas 
are defined in the HCDA as being established by OMB, referring to 
CBSAs. (42 U.S.C. 5302(a))
    Additionally, CPD's Housing Opportunities for Persons With AIDS 
(HOPWA) program awards funding to States and ``metropolitan statistical 
areas'' to address the housing needs of low-income people living with 
HIV/AIDS and their families. The statute for the program defines 
``metropolitan statistical areas'' as metropolitan statistical areas 
established by OMB and specifies that this includes the District of 
Columbia (HOPWA, section 853(5) of the AIDS Housing Opportunity Act, 42 
U.S.C. 12902(5)).
    Finally, CDP's HOME, Continuum of Care, and ESG programs offer 
grants to grantees in geographic areas based on the CDBG definitions 
that are themselves based on CBSAs. These programs do not otherwise use 
CBSAs in their grant allocation formulas. The HTF program uses formula 
factors whose definitions are based upon CBSA-level data.

E. Office of Housing's Use of CBSAs

    The Office of Housing uses CBSAs to establish the Title II loan and 
mortgage limits. Loan limits are based on the county-level median home 
price of the highest price county within the area, with ``area'' 
defined as the ``metropolitan statistical area as established by the 
Office of Management and Budget'', referring to OMB's CBSA program. 
(National Housing Act 203(b)(2) (12 U.S.C. 1709(b)(2))

III. Adoption of New CBSAs Standards Would Support Program Purposes and 
be in the Public Interest

    The new CBSA standards support FMRs, HAMFIs, and ILs. Because the 
new CBSAs become the standards for Federal statistical entities and 
private sector firms releasing data used in FMR calculations, adopting 
the new standards in these calculations serves to promote the accuracy 
of FMRs and makes their calculation more efficient. Whether a 
particular county is a non-metropolitan FMR area or one-county HMFA 
makes only a slight difference in the estimated value of the FMR but 
may make it more accurate. HMFA designation means HUD applies 
adjustments to the county-level data derived from the containing MSA 
rather than the non-metropolitan part of the state. Similar adjustments 
apply to ILs. Using new CBSA definitions improves the accuracy of HUD's 
affected calculations. The accuracy of these program parameters is in 
the public interest as it most appropriately will direct resources 
governed by these parameters to recipients in the most appropriate 
amounts.

[[Page 72769]]

    The new CBSA standards support HUD's designation of DDAs and QTCs 
as well as PIH, CPD, and Housing's programs because they more 
accurately reflect the current housing markets, which have changed 
significantly since the 2010 census. Furthermore, adopting the new 
standards will not be disruptive to the programs as program 
participants are expecting HUD to regularly update the metropolitan 
area standards and definitions to reflect current market conditions as 
HUD has done historically.

IV. This Proposed Rule

    For the reasons stated above, this proposed rule would 
affirmatively adopt new OMB CBSA Standards for purposes of estimating 
Fair Market Rents, Area Median Family Incomes, and Income Limits, and 
for other administrative purposes in PIH, CPD, and Housing programs. 
This includes any future revisions to the CBSA delineations under these 
standards.
    HUD proposes to add a new subpart M to part 5 that will cross 
reference all affected programs and adopt the updated CBSA standards 
for such programs.

V. Findings and Certifications

Regulatory Review (Executive Orders 12866, 13563, and 14094)

    This proposed rule would adopt updated standards for CBSA 
delineations that HUD programs use for program administrative purposes. 
It is statistical and administrative in nature with the purpose of 
maintaining past administrative practices. This rule was not subject to 
OMB review. This proposed rule is not a ``significant regulatory 
action'' as defined in section 3(f) of Executive Order 12866 and is not 
an economically significant regulatory action.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
Tribal governments, and on the private sector. This proposed rule does 
not impose any Federal mandates on any State, local, or Tribal 
governments, or on the private sector, within the meaning of UMRA.

Environmental Review

    This proposed rule establishes discretionary review of loan limits, 
fair market rent schedules, income limits and exclusions with regard to 
eligibility for or calculation of HUD housing assistance or rental 
assistance, and similar rate and cost determinations and related 
external administrative or fiscal requirements or procedures which do 
not constitute a development decision that affects the physical 
condition of specific project areas or building sites. Accordingly, 
under 24 CFR 50.19(c)(6), this proposed rule is categorically excluded 
from environmental review under the National Environmental Policy Act 
of 1969 (42 U.S.C. 4321).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This proposed rule would adopt updated definitions of CBSA geographic 
areas that affected HUD programs use for various administrative 
purposes. The proposed adoption would be statistical and administrative 
in nature and consistent with longstanding HUD policy and practice. 
Therefore, the proposed action does not have a significant economic 
impact on a substantial number of small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule 
either: (i) imposes substantial direct compliance costs on State and 
local governments and is not required by statute, or (ii) preempts 
State law, unless the agency meets the consultation and funding 
requirements of section 6 of the Executive order. This proposed rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on State and local governments or preempt State 
law within the meaning of the Executive order.

List of Subjects in 24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social Security, Unemployment compensation, Wages.

    Accordingly, for the reasons stated in the preamble, HUD proposes 
to amend 24 CFR part 5 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
1. The authority for part 5 continues to read as follows:

    Authority: 12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f, 
1437n, 3535(d); 42 U.S.C. 2000bb et seq.; 34 U.S.C. 12471 et seq.; 
Sec. 327, Pub. L. 109-115, 119 Stat. 2396; E.O. 13279, 67 FR 77141, 
3 CFR, 2002 Comp., p. 258; E.O. 13559, 75 FR 71319, 3 CFR, 2010 
Comp., p. 273; E.O. 14015, 86 FR 10007, 3 CFR, 2021 Comp., p. 517.

0
2. Add subpart M to read as follows:

Subpart M--Core Based Statistical Areas


Sec.  5.3001   Automatic propagation of OMB's Core Based Statistical 
Area Standards.

    When using Core Based Statistical Areas (CBSAs), HUD shall use the 
2020 CBSA standards adopted by the Office of Management and Budget on 
July 16, 2021, through publication in the Federal Register as well as 
any subsequent updates to the CBSA delineations based on these 
standards made by the Office of Management and Budget. Purposes and 
programs that use the CBSA standards include, but are not limited to:
    (a) The Community Development Block Grant Program (24 CFR part 
570);
    (b) The Community Development Block Grant Disaster Recovery funds 
(applicable appropriations and Federal Register notices);
    (c) The Housing Opportunities for Persons with AIDS Program (24 CFR 
part 574);
    (d) The HOME Investment Partnerships Program (24 CFR part 92);
    (e) The Continuum of Care Program (24 CFR part 578);
    (f) The Emergency Solutions Grants Program (24 CFR part 576);
    (e) The FHA Title II Program (National Housing Act of 1934 Title 
II);
    (f) The Choice Neighborhoods Initiative Program (42 U.S.C. 1437v, 
as applied by the applicable annual appropriations act(s); 24 CFR 
905.602(d);
    (g) The Housing Trust Fund Program (24 CFR part 93); and
    (h) The calculation of: Fair Market Rents (24 CFR part 888); Area 
Median Family Income (this part); Income Limits (this part); Difficult 
Development Areas; and Qualified Census Tracts.

Todd Richardson,
General Deputy Assistant Secretary, Policy Development and Research.
[FR Doc. 2024-19807 Filed 9-5-24; 8:45 am]
BILLING CODE 4210-67-P