[Federal Register Volume 79, Number 192 (Friday, October 3, 2014)]
[Notices]
[Pages 59786-59855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-23677]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5807-N-03]
Final Fair Market Rents for the Housing Choice Voucher Program
and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year
2015
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of Final Fiscal Year (FY) 2015 Fair Market Rents (FMRs).
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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
(USHA) requires the Secretary to publish FMRs periodically, but not
less than annually, adjusted to be effective on October 1 of each year.
This notice publishes the final FY 2015 FMRs for programs operating
under Section 8 of the United States Housing Act of 1937 (The Act) or
directed to use FMRs as calculated under Section 8 of the act.
Currently the programs operating under Section 8 of the act are the
Housing Choice Voucher, the Moderate Rehabilitation, and the project-
based voucher programs. Additionally, based on Section 210 of Division
L, Title II of the Consolidated Appropriations Act, 2014, Public
Housing Authorities administering Public Housing must use these FMRs in
calculating Flat Rents for public housing. Today's notice provides
final FY 2015 FMRs for all areas that reflect the estimated 40th and
50th percentile rent levels trended to April 1, 2015. The FY 2015 FMRs
are based on 5-year, 2008-2012 standard quality rents collected by the
American Community Survey (ACS). These 5-year rents are updated by one-
year recent-mover 2012 ACS rents. HUD uses the Consumer Price Index
(CPI) rent and utility indexes to further update the data from 2012 to
the end of 2013. HUD continues to use ACS data in different ways
according to the statistical reliability of rent estimates for areas of
different population sizes and counts of rental units.
The final FY 2015 FMRs in this notice have no methodology changes.
HUD continues to use the Puerto Rico Community Survey (PRCS) data (the
PRCS is a part of the ACS program) and the Consumer Price Index data
calculated specifically for Puerto Rico, as it first did for the FY
2014 FMRs. HUD also continues to adjust the FMRs for Puerto Rico based
on validated information related to utility rates, which have not shown
up in the gross rent or CPI data. The trend factor, applied to all FMR
areas, is the average annual change in national gross rents between
2007 and 2012.
The final FY 2015 FMR areas use the Office of Management and Budget
(OMB) metropolitan area definitions as updated through December 1, 2009
and include HUD modifications that were first used in the determination
of FY 2006 FMR areas. The February 28, 2013 update to the OMB
metropolitan area definitions are not been incorporated in the FY 2015
FMRs process due to the timing of the release and the availability of
ACS data. HUD will work toward incorporating these new area definitions
into the Proposed FY 2016 FMRs. The Department hopes to provide more
implementation details in an anticipated publication in January 2015.
The January 2015 notice will also discuss and solicit comments on
several topics related to the calculation of FMRs, including the
implementation of the February 28, 2013 OMB Metropolitan Area
Definitions and
[[Page 59787]]
possible measures the Department is considering that would reduce the
concentration of Section 8 voucher tenants. For example, HUD is
evaluating alternatives to the current 50th percentile FMR program
whose purpose was to mitigate excessive geographic concentration of
voucher tenants. HUD will solicit comments to determine interest in a
program that is based on different measures for determining how many
and which areas would receive special FMRs to encourage
deconcentration, as well as on alternative FMR-based tools for
promoting deconcentration such as Small Area FMRs estimated at the ZIP
code level.
The final FY 2015 notice updates the FMRs for Bennington, Windham,
and Windsor counties in Vermont to incorporate the results of surveys
received after publication of the proposed FY 2015 FMRs. These surveys
result in increases for all three nonmetropolitan counties.
DATES: Effective Date: The FMRs published in this notice are effective
on October 1, 2014.
FOR FURTHER INFORMATION CONTACT: For technical information on the
methodology used to develop FMRs or a listing of all FMRs, please call
the HUD USER information line at 800-245-2691 or access the information
on the HUD USER Web site http://www.huduser.org/portal/datasets/fmr.html. FMRs are shown at the 40th or 50th percentile in Schedule B.
For informational purposes, 40th percentile recent-mover rents for the
areas with 50th percentile FMRs will be provided in the HUD FY 2015 FMR
documentation system at http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15 and 50th percentile rents for all FMR areas
will be published at http://www.huduser.org/portal/datasets/50per.html
after publication of final FY 2015 FMRs.
Questions related to use of FMRs or voucher payment standards
should be directed to the respective local HUD program staff. For flat
rent questions, please contact Todd Thomas, Acting Director of the
Public Housing Management and Occupancy Division of the Public Housing
Office at 202-708- 5849. Questions on how to conduct FMR surveys or
concerning further methodological explanations may be addressed to
Marie L. Lihn or Peter B. Kahn, Economic and Market Analysis Division,
Office of Economic Affairs, Office of Policy Development and Research,
telephone 202-402-2409. Persons with hearing or speech impairments may
access this number through TTY by calling the toll-free Federal Relay
Service at 800-877-8339. (Other than the HUD USER information line and
TDD numbers, telephone numbers are not toll-free.)
Electronic Data Availability: This Federal Register notice is
available electronically from the HUD User page at http://www.huduser.org/datasets/fmr.html. Federal Register notices also are
available electronically from http://www.gpoaccess.gov/fr/index.html,
the U.S. Government Printing Office Web site. Complete documentation of
the methodology and data used to compute each area's final FY 2015 FMRs
is available at http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15. Final FY 2015 FMRs are available in a variety
of electronic formats at http://www.huduser.org/portal/datasets/fmr.html. FMRs may be accessed in PDF format as well as in Microsoft
Excel. A new HUD User page has been developed for Small Area FMRs and
those based on final FY 2015 Metropolitan Area Rents and historical
versions of this data will be on this site, with a link from the FMR
page of HUD User http://www.huduser.org/portal/datasets/fmr.html.
Please note that these Small Area FMRs are for reference only, except
where they are used by public housing authorities (PHAs) participating
in the Small Area FMR demonstration. With approval from the Housing
Voucher Management Division of the Office of Public and Indian Housing
(PIH) these Small Area FMRs may be used in the process of determining
exception payment standards.
SUPPLEMENTARY INFORMATION:
I. Background
Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing
assistance to aid lower-income families in renting safe and decent
housing. Housing assistance payments are limited by FMRs established by
HUD for different geographic areas. In the HCV program, the FMR is the
basis for determining the ``payment standard amount'' used to calculate
the maximum monthly subsidy for an assisted family (see 24 CFR
982.503). In general, the FMR for an area is the amount that would be
needed to pay the gross rent (shelter rent plus utilities) of privately
owned, decent, and safe rental housing of a modest (non-luxury) nature
with suitable amenities. In addition, all rents subsidized under the
HCV program must meet reasonable rent standards. HUD's regulations at
24 CFR 888.113 require it to establish 50th percentile FMRs for certain
areas.
II. Procedures for the Development of FMRs
Section 8(c)(1) of the USHA requires the Secretary of HUD to
publish FMRs periodically, but not less frequently than annually.
Section 8(c)(1) states, in part, as follows:
Proposed fair market rentals for an area shall be published in
the Federal Register with reasonable time for public comment and
shall become effective upon the date of publication in final form in
the Federal Register. Each fair market rental in effect under this
subsection shall be adjusted to be effective on October 1 of each
year to reflect changes, based on the most recent available data
trended so the rentals will be current for the year to which they
apply, of rents for existing or newly constructed rental dwelling
units, as the case may be, of various sizes and types in the market
area suitable for occupancy by persons assisted under this section.
HUD's regulations at 24 CFR part 888 provide that HUD will develop
proposed FMRs, publish them for public comment, provide a public
comment period of at least 30 days, analyze the comments, and publish
final FMRs. (See 24 CFR 888.115.) For FY 2015 FMRs, HUD has considered
all comments submitted in response to its August 15, 2014 (78 FR 47339)
proposed FY 2015 FMRs but its responses are posted on its Web site
because of the time required to publish this notice.
In addition, HUD's regulations at 24 CFR 888.113 set out procedures
for HUD to assess whether areas are eligible for FMRs at the 50th
percentile. Minimally qualified areas \1\ are reviewed each year unless
not eligible to be reviewed. Areas that currently have 50th percentile
FMRs are evaluated for progress in voucher tenant concentration after
three years in the program. Continued eligibility is determined using
HUD administrative data that show levels of voucher tenant
concentration. The levels of voucher tenant concentration must be above
25 percent and show a decrease in concentration since the last
evaluation. At least 85 percent of the voucher units in the area must
be reported for a determination on the
[[Page 59788]]
status of a 50th percentile area. Areas are not qualified for review if
they are within the three-year period as a 50th-percentile area or have
lost 50th-percentile status for failure to de-concentrate within the
last three years.
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\1\ As defined in 24 CFR 888.113(c), a minimally qualified area
is an area with at least 100 Census tracts where 70 percent or fewer
of the Census tracts with at least 10 two-bedroom rental units are
Census tracts in which at least 30 percent of the two bedroom rental
units have gross rents at or below the two bedroom FMR set at the
40th percentile rent. This continues to be evaluated with 2000
Decennial Census information. Although the 5-year ACS tract level
data is available, HUD plans to implement new 50th percentile areas
in conjunction with the implementation of new OMB area definitions.
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In FY 2014 there were 19 areas using 50th-percentile FMRs. Of these
19 areas, 13 areas were eligible for evaluation. Only four of the 13
areas will continue as 50th percentile FMR areas; those nine areas that
do not continue as 50th percentile areas did not show measurable
deconcentration and will not be evaluated for an additional three-year
period, as required by the regulation. An additional six areas that
failed to deconcentrate as of FY 2012 will once again become 50th
percentile FMR areas.
In summary, there will be 16 50th-percentile FMR areas in FY 2015.
In Schedule B, where all FMRs are listed by state and area, an asterisk
designates the 50th percentile FMR areas. The following table lists the
FMR areas along with the year of their next evaluation.
FY 2015 50th-Percentile FMR Areas and Year of Next Reevaluation
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Albuquerque, NM MSA........................... 2018 Baltimore-Towson, MD HUD Metro FMR 2016
Area.
Chicago-Joliet-Naperville, IL HUD Metro FMR 2018 Denver-Aurora-Broomfield, CO MSA..... 2018
Area.
Fort Lauderdale, FL HUD Metro FMR Area........ 2016 Hartford-West Hartford-East Hartford, 2018
CT HUD Metro FMR Area.
Honolulu, HI MSA.............................. 2018 Kansas City, MO-KS HUD Metro FMR Area 2018
Milwaukee-Waukesha-West Allis, WI MSA......... 2018 New Haven-Meriden, CT HUD Metro FMR 2016
Area.
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2016 Richmond, VA HUD Metro FMR Area...... 2016
MSA.
Riverside-San Bernardino-Ontario, CA MSA...... 2018 Tacoma, WA HUD Metro FMR Area........ 2018
Virginia Beach-Norfolk-Newport News, VA-NC MSA 2018 West Palm Beach-Boca Raton, FL HUD 2016
Metro FMR Area.
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III. Proposed FY 2015 FMRs
On August 15, 2014 (79 FR 48178), HUD published proposed FY 2015
FMRs with a comment period that ended September 15, 2014. HUD has
considered all public comments received and HUD provides responses to
these comments on the FMR Web site http://www.huduser.org/portal/datasets/fmr.html. HUD does not specifically identify each commenter,
but all comments are available for review on the Federal Government's
Web site for capturing comments on proposed regulations and related
documents (Regulations.gov--http://www.regulations.gov/#!docketDetail;D=HUD-2014-0065).
IV. FMR Methodology
This section provides a brief overview of the calculation steps for
the FY 2015 FMRs. For complete information on how FMR areas are
determined by each specific FMR area, see the online documentation
http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15.
The FY 2015 FMRs use OMB metropolitan area definitions and
standards that were first used in the FY 2006 FMRs. OMB changes to the
metropolitan area definitions through December 2009 are incorporated.
HUD has not incorporated the February 28, 2013 OMB metropolitan area
definition changes because the Census Bureau did not incorporate these
definitions into the 2012 ACS tabulations; therefore, the FY 2015 area
definitions are the same as those used in FY 2014. HUD anticipates that
the new OMB area definitions (based on the 2010 decennial Census) will
replace those based on the 2000 Census (first incorporated into the
FMRs with the FY 2006 publication that replaced those based on the 1990
Census) with the FY 2016 proposed FMRs.
A. Base Year Rents
HUD used special tabulations of 5-year ACS data collected between
2008 through 2012. For FY 2015 FMRs, HUD updated the base rents set in
FY 2014 using the 2007-2011 5-year data with the 2008-2012 5-year ACS
data.\2\
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\2\ The only difference in survey data between the 2007-2011 5-
year ACS data and the 2008-2012 5-year ACS data is the replacement
of 2007 survey responses with survey responses collected in 2012.
The 2008, 2009 2010 and 2011 survey responses remain intact;
however, the weighting placed on each survey response is updated by
the Census Bureau during the process of aggregating the data to be
as of the final year of the 5-year period.
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HUD historically based FMRs on gross rents for recent movers (those
who have moved into their current residence in the last 24 months).
However, due to the nature of the 5-year ACS data, HUD developed a new
methodology for calculating recent-mover FMRs in FY 2012. As in FY
2012, HUD assigns all areas a base rent which is the estimated two-
bedroom standard quality 5-year gross rent from the ACS.\3\ Because
HUD's regulations mandate that FMRs represent recent mover gross rents,
HUD continues to apply a recent mover factor to the standard quality
base rents assigned from the 5-year ACS data. Calculation of the recent
mover factor is described below.
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\3\ For areas with a two-bedroom standard quality gross rent
from the ACS that have a margin of error greater than the estimate
or no estimate due to inadequate sample in the 2012 5-year ACS, HUD
uses the two-bedroom state non-metro rent for non-metro areas.
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B. Recent Mover Factor
Following the assignment of the standard quality two-bedroom rent
described above, HUD applies a recent mover factor to these rents. The
calculation of the recent mover factor for FY 2015 is similar to the
methodology used in FY 2014, with the only difference being the use of
updated ACS data. The following describes the process for determining
the appropriate recent mover factor.
In general, HUD uses the 1 year ACS-based two-bedroom recent mover
gross rent estimate from the smallest geographic area encompassing the
FMR area for which the estimate is statistically reliable to calculate
the recent mover factor.\4\ HUD calculates some areas' recent mover
factors using data collected just for the FMR area. However, HUD bases
other areas' recent mover factor on larger geographic areas if this is
necessary to obtain statistically reliable estimates. For metropolitan
areas that are sub-areas of larger metropolitan areas, the order is FMR
area, metropolitan area, aggregated metropolitan parts of the state,
and state. Metropolitan areas that are not divided into subparts follow
a similar path from FMR area, to aggregated metropolitan parts of the
state, to state. In nonmetropolitan areas the recent mover factor is
based on the FMR area, aggregated nonmetropolitan parts of the state,
or if that is not available, on the basis of the whole state. HUD
calculates the recent mover factor as the percentage change between the
5-year
[[Page 59789]]
2008-2012 standard quality two-bedroom gross rent and the 1-year 2012
recent mover two-bedroom 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. The process for calculating each area's recent mover
factor is detailed in the FY 2015 Final FMR documentation system
available at: http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15. Applying the recent mover factor to the
standard quality base rent produces an ``as of'' 2012 recent mover two-
bedroom base gross rent for the FMR area.\5\
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\4\ For the purpose of the recent mover factor calculation, a
statistically reliable estimate occurs where the recent mover gross
rent has a margin of error that is less than the estimate itself.
\5\ The Bureau of the Census does not collect the ACS data 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 a ``long-form'' sample surveys for these
areas. These data were not released in time to be included in FY
2015 FMRs. Therefore, HUD uses the national change in gross rents,
measured between 2011 and 2012 to update last year's FMRs for these
areas.
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C. Other Rent Survey Data
HUD does not use the ACS as the base rent or recent mover factor
for 16 areas where the FY 2015 FMR was adjusted based on survey data
collected in late 2012, 2013, or 2014. PHAs conducted surveys for the
following areas: Bennington County, VT, Hood River County, OR, Oakland,
CA, Santa Barbara, CA, Stamford, CT, Windham County, VT, and Windsor
County, VT, while HUD conducted surveys for Burlington, VT, Cheyenne,
WY, Danbury, CT, Flagstaff, AZ, Mountrail County, ND, Odessa, TX,
Rochester, MN, Ward County, ND, and Williams County, ND. HUD has no
funds to conduct surveys of FMR areas, and so all future surveys must
be paid for by the PHAs.
D. Updates From 2012 to 2013
HUD updates the ACS-based ``as of'' 2012 rent through the end of
2013 using the annual change in CPI from 2012 to 2013. As in previous
years, HUD uses Local CPI data coupled with Consumer Expenditure Survey
(CEX) data for FMR areas with at least 75 percent of their population
within Class A metropolitan areas covered by local CPI data. HUD uses
Census region CPI data for FMR areas in Class B and C size metropolitan
areas and nonmetropolitan areas without local CPI update factors.
Additionally, HUD is using CPI data collected locally in Puerto Rico as
the basis for CPI adjustments from 2012 to 2013 for all Puerto Rico FMR
areas. Following the application of the appropriate CPI update factor,
HUD converts the ``as of'' 2013 CPI adjusted rents to ``as of''
December 2013 rents by multiplying each rent by the national December
2013 CPI divided by the national annual 2013 CPI value.
E. Trend From 2013 to 2015
As in FY 2014, HUD continues to calculate the trend factor as the
annualized change in median gross rents as measured across the most
recent 5 years of available 1-year ACS data. The national median gross
rent in 2007 was $789 and $884 in 2012. The overall change between 2007
and 2012 is 12.04 percent and the annualized change is 2.30 percent.
Over a 15-month time period, the effective trend factor is 2.883
percent. HUD applies this trend factor to the ``as of'' December 2013
rents to produce FMRs that correspond to the middle of the 2015 fiscal
year.
F. Puerto Rico Utility Adjustments
The gross rent data from the 2008 to 2012 Puerto Rico Community
Survey (PRCS) does not include the utility rate increases from
Commonwealth-owned utility companies from last year that were submitted
as part of the comments from Puerto Rico housing agencies. HUD included
additional utility values in the final FY 2014 FMRs to account for
these changes in Puerto Rico and these utility adjustments are
continued for all areas of Puerto Rico in the FY 2015 FMRs.
The table below shows the fixed amounts that are added to the
Puerto Rico FMRs by bedroom count.
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0--Bedroom 1--Bedroom 2--Bedroom 3--Bedroom 4--Bedroom
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Utility Adjustment................................................. $20 $25 $35 $40 $50
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G. Bedroom Rent Adjustments
HUD calculates the primary FMR estimates for two-bedroom units.
This is generally the most common sized rental unit and, therefore, the
most reliable to survey and analyze. Formerly, after each decennial
Census, HUD calculated rent relationships between two-bedroom units and
other unit sizes and used them to set FMRs for other units. HUD did
this because it is much easier to update two-bedroom estimates annually
and to use pre-established cost relationships with other unit bedroom
counts than it is to develop independent FMR estimates for each unit
bedroom count. When calculating FY 2013 FMRs, HUD updated the bedroom
ratio adjustment factors using 2006-2010 5-year ACS data using similar
methodology to what was implemented when calculating bedroom ratios
using 2000 Census data to establish rent ratios. The bedroom ratios
used in the calculation of FY 2015 FMRs remain the 2006-2010 based
ratios applied to the two-bedroom FMR computed from the 2012 ACS data.
HUD established bedroom interval ranges based on an analysis of the
range of such intervals for all areas with large enough samples to
permit accurate bedroom ratio determinations. These ranges are:
Efficiency (zero-bedroom) FMRs are constrained to fall between 0.59 and
0.81 of the two-bedroom FMR; one-bedroom FMRs must be between 0.74 and
0.84 of the two-bedroom FMR; three-bedroom FMRs must be between 1.15
and 1.36 of the two-bedroom FMR; and four-bedroom FMRs must be between
1.24 and 1.64 of the two-bedroom FMR. (The maximums for the three-
bedroom and four-bedroom FMRs are irrespective of the adjustments
discussed in the next paragraph.) HUD adjusts bedroom rents for a given
FMR area if the differentials between unit bedroom-count FMRs were
inconsistent with normally observed patterns (i.e., efficiency rents
are not allowed to be higher than one-bedroom rents and four-bedroom
rents are not allowed to be lower than three-bedroom rents). The
bedroom ratios for Puerto Rico follow these constraints.
HUD further adjusts the rents for three-bedroom and larger units to
reflect HUD's policy to set higher rents for these units than would
result from using unadjusted market rents. This adjustment is intended
to increase the likelihood that the largest families, who have the most
difficulty in leasing units, will be successful in finding eligible
program units. The adjustment adds 8.7 percent to the unadjusted three-
bedroom FMR estimates and adds 7.7 percent to the unadjusted four-
bedroom
[[Page 59790]]
FMR estimates. The FMRs for unit sizes larger than four bedrooms are
calculated by adding 15 percent to the four-bedroom FMR for each extra
bedroom. For example, the FMR for a five-bedroom unit is 1.15 times the
four-bedroom FMR, and the FMR for a six-bedroom unit is 1.30 times the
four-bedroom FMR. FMRs for single-room occupancy units are 0.75 times
the efficiency FMR.
For low-population, nonmetropolitan counties with small or
statistically insignificant 2006-2010 5-year ACS recent-mover rents,
HUD uses state non-metropolitan data to determine bedroom ratios for
each unit bedroom count. HUD made this adjustment to protect against
unrealistically high or low FMRs due to insufficient sample sizes.
V. Manufactured Home Space Surveys
The FMR used to establish payment standard amounts for the rental
of manufactured home spaces (pad rentals including utilities) in the
HCV program is 40 percent of the FMR for a two-bedroom unit. HUD will
consider modification of the manufactured home space FMRs where public
comments present statistically valid survey data showing the 40th-
percentile manufactured home space rent (including the cost of
utilities) for the entire FMR area.
All approved exceptions to these rents based on survey data that
were in effect in FY 2014 were updated to FY 2015 using the same data
used to estimate the HCV program FMRs. If the result of this
computation was higher than 40 percent of the new two-bedroom rent, the
exception remains and is listed in Schedule D. The FMR area definitions
used for the rental of manufactured home spaces are the same as the
area definitions used for the other FMRs. No additional exception
requests were received in the comments to the FY 2015 Proposed FMRs.
VI. Small Area Fair Market Rents
Small Area Fair Market Rents (SAFMRs) are used as part of a court
settlement by all public housing authorities (PHAs) in the Dallas, TX
HMFA. They are also used as part of HUD's demonstration program for
five PHAs the Housing Authority of the County of Cook (IL), the City of
Long Beach (CA) Housing Authority, the Chattanooga (TN) Housing
Authority, the Town of Mamaroneck (NY) Housing Authority, and the
Laredo (TX) Housing Authority. These FMRs are listed in the Schedule B
addendum.
SAFMRs are calculated using a rent ratio determined by dividing the
median gross rent across all bedrooms for the small area (a ZIP code)
by the similar median gross rent for the metropolitan area of the ZIP
code. This rent ratio is multiplied by the current two-bedroom rent for
the entire metropolitan area containing the small area to generate the
current year two-bedroom rent for the small area. In small areas where
the median gross rent is not statistically reliable, HUD substitutes
the median gross rent for the county containing the ZIP code in the
numerator of the rent ratio calculation. For FY 2015 SAFMRs, HUD
continues to use the rent ratios developed in conjunction with the
calculation of FY 2013 FMRs based on 2006-2010 5-year ACS data.\6\
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\6\ HUD has provided numerous detailed accounts of the
calculation methodology used for Small Area Fair Market Rents.
Please see our Federal Register notice of April 20, 2011 (76 FR
22125) for more information regarding the calculation methodology.
HUD's Final FY 2015 FMR documentation system available at (http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15)
contains detailed calculations for each ZIP code area in
participating jurisdictions.
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VII. Public Comments Overview of Comments
A. Overview
A total of 64 comments were received and posted on the
regulations.gov site (http://www.regulations.gov/#!docketDetail;D=HUD-
2014-0065), which is also linked on the HUD User FMR page http://www.huduser.org/portal/datasets/fmr.html. Most comments contested FMR
reductions compared with the FY 2014 FMRs and some contested reductions
in FMRs over several years. None of these commenters provided a
statistically valid survey of rents that could be used to adjust the FY
2015 FMR. While the timing between proposed and final was short, only
one commenter announced its intention to conduct a rent survey, but did
not file a formal comment. Several commenters who did not experience a
reduction in FY 2015 FMRs complained about the small increase in light
of rental market conditions for their area. And some nonmetropolitan
areas were concerned with the large increases and decreases that the
ACS data provides.
A significant proportion of the comments opposed the use of FMRs in
the calculation of public housing flat rents. While FMRs are used in
other HUD programs, the methodology used in determining FMRs and the
publication of FMRs for comment is primarily in support of the Section
8 Housing Choice Voucher program. Other HUD programs must rely on the
current FMR methodology. The adjustment of flat rents by FMRs is an
issue for the program staff in the Division of Housing Management and
Occupancy of PIH.
Decreases of any level in the FMR were opposed especially for
certain HUD programs and other programs that use FMRs but do not allow
flexibility in applying FMRs, such as the Continuum of Care program and
the Low-Income Housing Tax Credit program (LIHTC). Several comments
requested that HUD hold the FY 2015 FMRs harmless, that is they wanted
the FMR to remain at the FY 2014 level, or some earlier level if it
would otherwise be lower. In addition to, or instead of, implementing a
hold harmless policy, several comments asked HUD to limit annual
increases and decreases of FMRs to five percent, or at the very least
impose a hard floor of five percent on decreases. This inability to
hold FMRs harmless at some previously higher level is especially
difficult for LIHTC landlords and developers to understand because no
such legal prohibition exists for the calculation of HUD's income
limits which are also used in the rent calculation for these units. HUD
has been able to use such measures in constraining income limit
increases and decreases, but HUD is specifically precluded from
incorporating these changes into the FMR methodology by the statutory
language governing FMRs requiring the use of the most recent available
data. As stated in previous FMR notices, HUD's Housing Choice Voucher
program counsel reviewed the statutory language governing the
calculation of FMRs to determine if the Department has the authority to
institute caps and floors on the amount the FMRs could change annually.
Based on this review, HUD's program counsel issued a legal opinion that
HUD CANNOT impose floors or caps in changes in FMRs because this would
violate the portion of the statute that directs HUD to use the most
current data available. The legal opinion is that the statute needs to
be changed in order for HUD to implement these types of caps and
floors. No statutory changes regarding the use of the most recent
available data have since been enacted; consequently, HUD does not have
the authority to use a hold harmless policy or other policy which would
permit HUD to impose caps and floors on FMR changes. HUD is required to
use the most recent available data and FMRs must increase or decrease
based on this data. Ignoring decreases or phasing decreases or
increases in over several years would not fully implement FMRs based on
the most recent available data.
Comments were received that oppose the current methodology used to
define FMR areas. HUD has not incorporated
[[Page 59791]]
the new metropolitan area definitions released by OMB on February 28,
2013 for the FY 2015 FMRs, but will begin to review how to incorporate
these new area definitions.
Several PHAs with lower proposed FY 2015 FMRs relative to FY 2014
or earlier FMRs requested that HUD conduct a survey of rents for their
FMR areas. As stated in the proposed FY 2015 FMR Notice, HUD
anticipates it will have no funds to conduct surveys in FY 2015. While
one area provided data, this data could not be accepted as the basis
for changing FMRs because it did not meet the threshold for
representativeness and/or statistical reliability established for
rental survey data to be used in FMR determinations. HUD may not use
data from newspaper ads because these do not represent actual
contracted rents, or rent reasonableness studies as these typically do
not sample units randomly. Other data provided may be acceptable, but
the sources and method of collection must be identified. Data must be
collected randomly and cover the entire rental stock including single-
family units, not just large apartment projects. Single family units
and smaller apartment buildings are an important part of the rental
market and cannot be ignored. HUD did receive notification that one PHA
in a nonmetropolitan area is conducting its own survey and has sought
guidance from HUD on the survey methodology. Any other PHAs interested
in surveys to support changes in FMRs should review section VIII of
this notice for further information regarding acceptable survey
methodology.
For areas that are considering conducting their own surveys, HUD
would caution them to explore all no-cost options as a means of
alleviating problems they are having with low FMRs. HUD has experience
conducting surveys in areas with low or no vacancy rates and this
experience has shown that it is extremely difficult to capture accurate
gross rent levels in tight markets. For that reason, HUD provides
emergency exception payment standards up to 135 percent of the FMR for
the Section 8 voucher program in areas impacted by natural resource
exploration or in presidentially declared disaster areas. PHAs
interested in applying for these emergency payment standards should
contact their local HUD field office. Other programs that use FMRs will
have to pursue similar strategies such as exception payment standards
or hold harmless provisions within the statutory and regulatory
framework governing those programs.
B. Issues Raised in Comments and HUD Responses
In accordance with 24 CFR 888.115, HUD has reviewed the public
comments that have been submitted by the due date and has determined
that there are no comments with ``statistically valid rental survey
data that justify the requested changes.'' HUD's responses to all known
comments received by the comment due date and a part of the notice
record http://www.regulations.gov/#!docketDetail;D=HUD-2014-0065 are
located at http://www.huduser.org/portal/datasets/fmr.html.
VIII. Rental Housing Surveys
In 2011, HUD solicited bidders to study the methodology used to
conduct local area surveys of gross rents to determine if the Random
Digit Dialing (RDD) methodology could be improved upon. The Department
undertook this study due to the increasing costs and declining response
rates associated with telephone surveys. Furthermore, the advent of the
1-year ACS limits the need for surveys in large metropolitan areas.
Based on this research, the Department decided that its survey
methodology should be changed with mail surveys being the preferred
method for conducting surveys, because of the lower cost and greater
likelihood of survey responses. These surveys, however, take almost
twice as long to conduct as prior survey methods took, and when
response times are most critical, the Department may choose to conduct
random digit dialing surveys as well, as the budget permits.
Unfortunately, the anticipated budget does not permit HUD to conduct
any surveys in FY 2015. The methodology for both types of surveys along
with the survey instruments is posted on the HUD USER Web site, at the
bottom of the FMR page in a section labeled Fair Market Rent Surveys
at: http://www.huduser.org/portal/datasets/fmr.html
Other survey methodologies are acceptable in providing data to
support comments if the survey methodology can provide statistically
reliable, unbiased estimates of the gross rent. 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 of structure type (including single-family,
duplex, and other small rental properties), age of housing unit, and
geographic location. The 2008-2012 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.
Most surveys cover only one- and two-bedroom units, which has
statistical advantages because these are generally the most abundant
rental units in an area. However in nonmetropolitan areas and some
metrolitan areas, three-bedroom units are also surveyed because there
are significant rental units at this size in the FMR area. If the
survey is statistically acceptable, HUD will estimate FMRs for other
bedroom sizes using ratios based on the 2006-2010 5-year ACS data. A
PHA or contractor that cannot obtain the recommended number of sample
responses after reasonable efforts should consult with HUD before
abandoning its survey; in such situations, HUD may find it appropriate
to relax normal sample size requirements.
HUD will consider increasing manufactured home space FMRs where
public comment demonstrates that 40 percent of the two-bedroom FMR is
not adequate. In order to be accepted as a basis for revising the
manufactured home space FMRs, comments must include a pad rental survey
of the mobile home parks in the area, identify the utilities included
in each park's rental fee, and provide a copy of the applicable public
housing authority's utility schedule.
As stated earlier in this Notice, HUD is required to use the most
recent data available when calculating FMRs. Therefore, in order to re-
evaluate an area's FMR, HUD requires more current rental market data
than the 2012 ACS.
VIII. Environmental Impact
This Notice involves the establishment of fair market rent
schedules, which do not constitute a development decision affecting the
physical condition of specific project areas or building sites.
Accordingly, under 24 CFR 50.19(c)(6), this Notice is categorically
excluded from environmental review under the National Environmental
Policy Act of 1969 (42 U.S.C. 4321).
Accordingly, the Fair Market Rent Schedules, which will not be
codified in 24 CFR part 888, are proposed to be amended as shown in the
Appendix to this notice:
[[Page 59792]]
Dated: September 29, 2014.
Katherine M. O'Regan,
Assistant Secretary for Policy Development and Research.
Fair Market Rents for the Housing Choice Voucher Program
Schedules B and D--General Explanatory Notes
1. Geographic Coverage
a. Metropolitan Areas--Most FMRs are market-wide rent estimates
that are intended to provide housing opportunities throughout the
geographic area in which rental-housing units are in direct
competition. HUD is using the metropolitan CBSAs, which are made up of
one or more counties, as defined by the Office of Management and Budget
(OMB), with some modifications. HUD is generally assigning separate
FMRs to the component counties of CBSA Micropolitan Areas.
b. Modifications to OMB Definitions--Following OMB guidance, the
estimation procedure for the FY 2015 Final FMRs incorporates the OMB
definitions of metropolitan areas based on the CBSA standards as
implemented with 2000 Census data updated through December 1, 2009, but
makes adjustments to the definitions to separate subparts of these
areas where FMRs or median incomes would otherwise change significantly
if the new area definitions were used without modification. In CBSAs
where subareas are established, it is HUD's view for programmatic
purposes that the geographic extent of the housing markets are not yet
the same as the geographic extent of the CBSAs, but may become so in
the future as the social and economic integration of the CBSA component
areas increases. Modifications to metropolitan CBSA definitions are
made according to a formula as described below.
Metropolitan area CBSAs (referred to as MSAs) may be modified to
allow for subarea FMRs within MSAs based on the boundaries of old FMR
areas (OFAs) within the boundaries of new MSAs. (OFAs are the FMR areas
defined for the FY 2005 FMRs. Collectively they include 1999-definition
MSAs/Primary Metropolitan Statistical Areas (PMSAs), metro counties
deleted from 1999-definition MSAs/PMSAs by HUD for FMR purposes, and
counties and county parts outside of 1999-definition MSAs/PMSAs
referred to as nonmetropolitan counties.) Subareas of MSAs are assigned
their own FMRs when the subarea 2000 Census Base Rent differs by at
least 5 percent from (i.e., is at most 95 percent or at least 105
percent of) the MSA 2000 Census Base Rent, or when the 2000 Census
Median Family Income for the subarea differs by at least 5 percent from
the MSA 2000 Census Median Family Income. MSA subareas, and the
remaining portions of MSAs after subareas have been determined, are
referred to as HUD Metro FMR Areas (HMFAs) to distinguish these areas
from OMB's official definition of MSAs.
The specific counties and New England towns and cities within each
state in MSAs and HMFAs are listed in Schedule B.
2. Bedroom Size Adjustments
Schedule B shows the FMRs for zero-bedroom through four-bedroom
units. The Schedule B addendum shows Small Area FMRs for all PHAs
operating using Small Area FMRs. The FMRs for unit sizes larger than
four bedrooms are calculated by adding 15 percent to the four-bedroom
FMR for each extra bedroom. For example, the FMR for a five-bedroom
unit is 1.15 times the four-bedroom FMR, and the FMR for a six-bedroom
unit is 1.30 times the four-bedroom FMR. FMRs for single-room-occupancy
(SRO) units are 0.75 times the zero-bedroom FMR.
3. Arrangement of FMR Areas and Identification of Constituent Parts
a. The FMR areas in Schedule B are listed alphabetically by
metropolitan FMR area and by nonmetropolitan county within each state.
The exception FMRs for manufactured home spaces in Schedule D are
listed alphabetically by state.
b. The constituent counties (and New England towns and cities)
included in each metropolitan FMR area are listed immediately following
the listings of the FMR dollar amounts. All constituent parts of a
metropolitan FMR area that are in more than one state can be identified
by consulting the listings for each applicable state.
c. Two nonmetropolitan counties are listed alphabetically on each
line of the non-metropolitan county listings.
d. The New England towns and cities included in a nonmetropolitan
county are listed immediately following the county name.
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Schedule D--FY 2015 Exception Fair Market Rents for Manufactured Home
Spaces in the Section 8 Housing Choice Voucher Program
------------------------------------------------------------------------
State Area name Space rent
------------------------------------------------------------------------
California................. Los Angeles-Long Beach, CA $694
HUD Metro FMR Area.
Orange County, CA HUD Metro 842
FMR Area.
* Riverside-San Bernardino- 549
Ontario, CA MSA.
San Diego-Carlsbad-San 839
Marcos, CA MSA.
Santa Rosa-Petaluma, CA MSA 773
Vallejo-Fairfield, CA MSA.. 622
Colorado................... Boulder, CO MSA............ 512
Maryland................... St. Mary's County.......... 518
Oregon..................... Bend, OR MSA............... 361
Salem, OR MSA.............. 523
Pennsylvania............... Adams County............... 579
Washington................. Olympia, WA MSA............ 628
Seattle-Bellevue, WA HUD 693
Metro FMR Area.
West Virginia.............. Logan County............... 469
McDowell County............ 469
Mercer County.............. 469
Mingo County............... 469
Wyoming County............. 469
------------------------------------------------------------------------
* 50th percentile FMR areas.
[FR Doc. 2014-23677 Filed 10-2-14; 8:45 am]
BILLING CODE 4210-67-C