[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Notices]
[Pages 77124-77197]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31319]
[[Page 77123]]
Vol. 80
Friday,
No. 238
December 11, 2015
Part III
Department of Housing and Urban Development
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Final Fair Market Rents for the Housing Choice Voucher Program and
Moderate Rehabilitation Single Room Occupancy Program and Other
Programs Fiscal Year 2016; Notice
Federal Register / Vol. 80 , No. 238 / Friday, December 11, 2015 /
Notices
[[Page 77124]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5885-N-02]
Final Fair Market Rents for the Housing Choice Voucher Program
and Moderate Rehabilitation Single Room Occupancy Program and Other
Programs Fiscal Year 2016
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of Final Fiscal Year (FY) 2016 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 of HUD to publish FMRs periodically, but
not less than annually, adjusted to be effective on October 1 of each
year. The primary uses of FMRs are to determine payment standards for
the Housing Choice Voucher (HCV) program; to determine initial renewal
rents for some expiring project-based Section 8 contracts; to determine
initial rents for housing assistance payment contracts in the Moderate
Rehabilitation Single Room Occupancy program; and, to serve as rent
ceilings for rental assistance units in the HOME Investment
Partnerships program. FMRs are used in the calculation of maximum award
amounts for Continuum of Care grantees and are used in the calculation
of flat rents in Public Housing units. Today's notice provides final FY
2016 FMRs for all areas that reflect the estimated 40th and 50th
percentile rent levels trended to FY 2016. The FY 2016 FMRs use rent
data collected by Bureau of the Census by the American Community Survey
(ACS). This rent data is collected over a five-year period, from 2009
through 2013. These data are updated by one-year 2013 ACS data for
areas where statistically valid one-year ACS data is available. HUD
continues to use ACS data in different ways according to the
statistical reliability of rent estimates. The Consumer Price Index
(CPI) rent and utility indexes are used to further update the data to
2014. These values are then trended forward to FY 2016. Based on the
comments received and as way to estimate FMRs more accurately, HUD has
replaced the historical-based annualized change in gross rent trend
factor with a forward-looking forecast for these final FY 2016 FMRs.
The national trend factor for the final FY 2016 FMRs uses a model that
forecasts national rent and utility CPI indices based on economic
assumptions used in the formulation of the President's Budget.
The FY 2016 FMRs incorporate a change in the level of statistical
reliability that allowed for an ACS estimate to be used in the
calculation of FMRs. Previously, if the error of the estimate was less
than the estimate itself, HUD used the estimate. The FY 2016 FMRs use
ACS estimates where the size of the error is limited to half of the
estimate. An additional change to the FY 2016 FMRs is the incorporation
of the February 28, 2013, Office of Management and Budget (OMB)
metropolitan area definition update based on the 2010 Decennial Census
data. The 2013 ACS data are the first to use the new area definitions
in the compilation of the ACS data. Bedroom ratios (comparing zero-,
one-, three- and four-bedroom rents to the two-bedroom base rent) were
updated from the 2010 estimations using a three-year average of five-
year ACS data.
DATES: Effective Date: The FMRs published in this notice are effective
on the date of publication.
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.gov/portal/datasets/fmr.html. FMRs are shown at the 40th or 50th percentile in Schedule B.
For informational purposes, the 40th percentile recent-mover rents for
the areas with 50th percentile FMRs will be provided in the HUD FY 2016
FMR documentation system at http://www.huduser.gov/portal/datasets/fmr/fmrs/docsys.html?data=fmr16 and the 50th percentile rents for all FMR
areas will be published at http://www.huduser.gov/portal/datasets/50per.html after publication of final FY 2016 FMRs. Unadjusted rents
(rents calculated directly from ACS data prior to the application of
state minimum rents) will be made available at: http://www.huduser.gov/portal/datasets/fmr.html. These rents may be used in conjunction with
the calculation of flat rents in the Public Housing program.
Additionally, Small Area FMRs, which may also be used as the basis for
Public Housing flat rents as an alternative to metropolitan wide FMRs,
are available at: http://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.
Questions related to use of FMRs or voucher payment standards
should be directed to the respective local HUD program office.
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.gov/portal/datasets/fmr.html. Federal Register notices also
are available electronically at https://www.federalregister.gov/, the
Federal Register Web site. Complete documentation of the methodology
and data used to compute each area's final FY 2016 FMRs is available at
http://www.huduser.gov/portal/datasets/fmr.html through the link
labeled ``Individual Area Final FY 2016 FMR Documentation.'' Final FY
2016 FMRs are available in a variety of electronic formats at http://www.huduser.gov/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 2016
Metropolitan Area Rents and historical versions of this data will be on
this site http://www.huduser.gov/portal/datasets/fmr/smallarea/index.html and there is a link from the FMR page of HUD User http://www.huduser.gov/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 and for PHAs investigating an alternative basis for
Public Housing flat rents. 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
[[Page 77125]]
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
the Department 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:
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 2016 FMRs, HUD has considered
all comments submitted in response to its September 8, 2015 (80 FR
53819) proposed FY 2016 FMRs and includes its responses to these
comments in 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's 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 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 2015 there were 16 areas using 50th-percentile FMRs. Of these
16 areas, six areas were eligible for evaluation. Only three of the six
areas will continue as 50th-percentile FMR areas; two of the remaining
three areas do not show measurable deconcentration over the three-year
period, will not continue as 50th-percentile FMR areas, and will not be
considered for the 50th percentile FMR program for three years. One
area, New Haven-Meriden, CT HUD Metro FMR Area (HMFA), that was
evaluated graduated from the program; this area will be re-evaluated
each year. This is a different result for the Baltimore-Columbia-
Towson, MD Metropolitan Statistical Area (MSA) than in the proposed FY
2016 FMRs, where deconcentration was not measured. After reviewing the
data in response to comments, it was discovered that areas up for re-
evaluation were not afforded a full three annual time-periods to
deconcentrate. A re-evaluation of all areas using three annual time-
periods resulted in the continuation of the Baltimore metropolitan area
in the 50th percentile FMR program; Fort Lauderdale and Richmond, even
with the additional year, did not exhibit measurable deconcentration.
Housing authorities in these two areas are encouraged to review the
rules at 24 CFR 982.503(f) to determine if they qualify for continued
use of the 50th percentile rents when setting their payment standards.
One area, Washington, DC-VA-MD HMFA, that failed to deconcentrate as of
FY 2013 will once again become a 50th percentile FMR area.
In summary, there will be 14 50th-percentile FMR areas in FY 2016.
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 2016--50th-Percentile FMR Areas and Year of Next Reevaluation
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Albuquerque, NM MSA........................... 2018 Baltimore-Columbia-Towson, MD MSA..... 2019
Chicago-Joliet-Naperville, IL HUD Metro FMR 2018 Denver-Aurora-Broomfield, CO MSA...... 2018
Area.
Hartford-West Hartford-East Hartford, CT HUD 2018 Honolulu, HI MSA...................... 2018
Metro FMR Area.
Kansas City, MO-KS HUD Metro FMR Area......... 2018 Milwaukee-Waukesha-West Allis, WI MSA. 2018
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2019 Riverside-San Bernardino-Ontario, CA 2018
MSA. MSA.
Tacoma, WA HUD Metro FMR Area................. 2018 Virginia Beach-Norfolk-Newport News, 2018
VA-NC MSA.
Washington, DC-VA-MD HUD Metro FMR Area....... 2019 West Palm Beach-Boca Raton, FL HUD 2019
Metro FMR Area.
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III. Proposed FY 2016 FMRs
On September 8, 2015 (80 FR 53819), HUD published proposed FY 2016
FMRs with a comment period that ended October 8, 2015. 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/#!docketBrowser;rpp=25;po=0;dct=PS;D=HUD-2015-0072).
IV. FMR Methodology
This section provides a brief overview of the calculation steps for
the FY 2016 FMRs. For complete information on how FMR areas are
determined by each specific FMR area, see the online documentation by
FMR area http://www.huduser.gov/portal/datasets/fmr/fmrs/docsys.html?data=fmr16.
The proposed FY 2016 FMRs are based on the updated metropolitan
area definitions published by OMB on February 28, 2013. Counties that
have been removed from metropolitan areas will be nonmetropolitan
counties.
[[Page 77126]]
Counties that have been added to metropolitan areas will be treated as
metropolitan county subareas. These counties will 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. New multi-county metropolitan areas will be
treated as individual county metropolitan subareas using county-based
gross rent estimates (if statistically reliable); otherwise, a
metropolitan, area-wide gross rent estimate is used.
A. Base Year Rents
The U.S. Census Bureau released standard tabulations of five-year
ACS data collected between 2009 through 2013 in December of 2014. For
FY 2016 FMRs, HUD uses special tabulations of this five-year ACS data
collected between 2009 through 2013 to update the base rents that
provide the 40th and 50th percentile standard quality rents that were
provided in May 2015. HUD has updated base rents each year based on new
five-year data since FY 2012, for which HUD used 2005-2009 ACS data.
For FY 2016 FMRs, HUD updated the base rents set in FY 2015 using the
2008-2012 five-year data with the 2009-2013 five-year ACS data.\2\ HUD
updates base rents for Puerto Rico FMRs using the 2009-2013 Puerto Rico
Community Survey (PRCS); HUD first updated the Puerto Rico base rents
in FY 2014 based on 2007-2011 PRCS data collected through the ACS
program. The Bureau of the Census does not collect data annually using
the ACS for the Pacific Islands (Guam, Northern Marianas and American
Samoa) or the US Virgin Islands; however, as part of the 2010 Decennial
Census, the Census Bureau conducted a ``long-form'' sample surveys for
these areas. These data are incorporated in the FY 2016 FMRs. For the
first time, St. John, USVI will have an FMR that is separate from St.
Thomas, USVI and American Samoa and the Northern Mariana Islands will
have FMRs separate from Guam.
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\2\ The only difference in survey data between the 2008-2012 5-
year ACS data and the 2009-2013 5-year ACS data is the replacement
of 2008 survey responses with survey responses collected in 2013.
The 2009, 2010, 2011 and 2012 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 five-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 equal to the estimated two-
bedroom standard quality five-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 five-year ACS data.
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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 half of the
estimate or no estimate due to inadequate sample in the 2013 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 2016 is similar to the
methodology HUD used in FY 2015, with the only difference being the use
of updated ACS data and the change to the statistical reliability
assessment of the ACS data. The following describes the process for
determining the appropriate recent mover factor.
In general, HUD uses one-year, two-bedroom recent mover gross rents
from the special tabulation of the ACS for the smallest geographic area
encompassing the FMR area that 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. In these cases, the
recent mover factor effectively removes the five-year data from the
calculation of the FMRs. For areas with statistically reliable recent
mover data for the FMR area itself, the one-year recent mover two-
bedroom gross rent becomes the base rent for the area. However, HUD
bases other areas' recent mover factors on larger geographic areas if
this is necessary to obtain statistically reliable estimates. For
metropolitan areas that are subareas of larger metropolitan areas, the
recent mover hierarchy is FMR area, metropolitan area, aggregated
metropolitan parts of the state, and state. Metropolitan areas that are
not divided follow a similar path from FMR area, to aggregated
metropolitan parts of the state, to state. In nonmetropolitan areas,
HUD bases the recent mover factor on the FMR area, the aggregated
nonmetropolitan parts of the state, or if that is not available, based
on the whole state. HUD calculates the recent mover factor as the
percentage change between the five-year 2009-2013 standard quality two-
bedroom gross rent and the one-year 2013 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
five-year standard quality rent is larger than the comparable one-year
recent mover rent the recent mover factor is set to 1.0. The process
for calculating each area's recent mover factor is detailed in the FY
2016 Final FMR documentation system available at: http://www.huduser.gov/portal/datasets/fmr/fmrs/docsys.html?data=fmr16.
Applying the recent mover factor to the standard quality base rent
produces an ``as of'' 2013 recent mover two-bedroom base gross rent for
the FMR area.
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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 half of the estimate.
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C. Other Rent Survey Data
A new base rent has been calculated for the insular areas using the
2010 decennial census of American Samoa, Guam, the Northern Mariana
Islands, and the Virgin Islands. This is the first time American Samoa
and the Northern Mariana Islands will have an FMR that is separate from
Guam. In addition, St. Johns, VI will receive a separate FMR;
previously it was combined with St. Thomas. The 2010 rent data is
updated to 2013 using the change in national ACS rents from 2010 to
2013.
In addition to the Pacific island areas, HUD does not use the ACS
as the base rent or recent mover factor for eight areas where the FY
2016 FMR is based on survey data. Surveys conducted in 2012 for Hood
River County, OR, Mountrail County, ND, Ward County, ND, and Williams
County, ND are used as base rents. Survey data from 2012 survey still
represents the most current data available for these areas where only
five-year ACS data exists. These base rents are adjusted to 2014 using
regional CPI data. Surveys conducted in 2014 for Bennington County, VT,
Windham County, VT, Windsor County, VT, and Seattle, WA are used for
base rents. HUD has no funds to conduct surveys of FMR areas, and so
future surveys must be paid for by the PHAs.
D. Updates From 2013 to 2014
HUD updates the ACS-based ``as of'' 2013 rent through the end of
2014 using the annual change in gross rents measured from the CPI
between 2013 and 2014. 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
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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 2013 to 2014 for all Puerto Rico FMR areas.
E. Trend From 2014 to April 2016
The trend factor for the final FY 2016 FMRs has been changed from
the annualized change in median gross rents as measured across the most
recent five years of available 1-year ACS data, used in the proposed FY
2016 FMRs as published on September 8, 2015 (80 FR 53817). Instead, HUD
trends the final FY 2016 FMRs forward with national forecasts of the
rent and utility components of CPI, resulting in an increase in the FMR
for all areas. The trend factor applied for the Proposed FY 2016 FMRs
was 1.0334 percent; the forecast trend factor applied to the Final FY
2016 FMRs is 1.0457. The trend factor is the weighted average change
between the most recent annual Rent of Primary Residence and Utility
CPIs and the same indices forecasted to the relevant fiscal year.
F. Puerto Rico Utility Adjustments
The gross rent data from the 2009 to 2013 Puerto Rico Community
Survey (PRCS) coupled with the local CPI data measured across Puerto
Rico includes the utility rate increases from Commonwealth-owned
utility companies that was the basis for utility rate adjustments
across all Puerto Rico FMR areas in both FY 2014 and FY 2015. The FY
2016 FMRs no longer include the utility adjustment; any changes in the
Puerto Rico energy tariffs have been in effect long enough to be
included in the Puerto Rico CPI. As pointed out in a comment by the
Commonwealth of Puerto Rico Division of Housing, the South Region CPI
was inadvertently used for the calculation of Proposed FY 2016 FMRs
throughout Puerto Rico, and this has been corrected.
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 bedroom counts and used them to set FMRs for other units.
HUD did this because it is much easier to update two-bedroom estimates
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 five-year ACS data. The
bedroom ratio methodology used in this update was the same methodology
that was used when calculating bedroom ratios using 2000 Census data.
The bedroom ratios HUD used in the calculation of FY 2016 FMRs have
been updated using average data from three five-year data series (2007-
2011, 2008-2012, and 2009- 2013). This update incorporates the most
recent available data while also smoothing the potential variability
from the discontinuity of resetting the bedroom ratios once every five
years.
HUD establishes 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 FMRs are constrained to fall between 0.62 and 0.82 of the
two-bedroom FMR; one-bedroom FMRs must be between 0.75 and 0.86 of the
two-bedroom FMR; three-bedroom FMRs must be between 1.14 and 1.34 of
the two-bedroom FMR; and, four-bedroom FMRs must be between 1.27 and
1.62 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 bedroom-size 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
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. 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 zero-bedroom (efficiency) FMR.
For low-population, nonmetropolitan counties with small or
statistically insignificant data for any two of the three five-year ACS
standard quality rents series used in the average, 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 2015 were updated to FY 2016 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 2016 Proposed FMRs.
VI. Small Area Fair Market Rents
Small Area Fair Market Rents (SAFMRs) replace the use of FMRs for
the HCV program as part of a court settlement by all public housing
authorities (PHAs) in the Dallas, TX HMFA. SAFMRs are also used in
HUD's demonstration program by 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. The SAFMRs used by
Dallas and the PHAs in the demonstration 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. Similar to the bedroom ratios discussed in item G of section IV
or this notice, HUD calculates the ZIP code rent ratio using an average
of 2007-2011, 2008-2012, and 2009-2013 data. This average rent ratio is
multiplied by the current two-bedroom
[[Page 77128]]
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 2016
SAFMRs, HUD uses the updated bedroom rent ratios discussed above.\5\
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\5\ 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 2016 FMR documentation system available at (http://www.huduser.gov/portal/datasets/fmr/fmrs/docsys.html?data=fmr16)
contains detailed calculations for each ZIP code area in
participating jurisdictions.
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HUD also makes Small Area FMRs for all metropolitan areas available
at http://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.
Housing Authorities may use these Small Area FMRs as a guide for
setting payment standards within their FMR area and may use them in
requesting exception payment standards in accordance with 24 CFR
982.503(c)(2)(A).
VII. Public Comments Overview of Comments
A. Overview
A total of 83 comments were received and are posted on the
regulations.gov site (not all duplicate comments were posted) (http://www.regulations.gov/#!docketBrowser;rpp=25;po=0;dct=PS;D=HUD-2015-
0072), which is also linked on the HUD User FMR page http://www.huduser.gov/portal/datasets/fmr.html. Most comments contested FMR
reductions compared with the FY 2015 FMRs and several noted that year-
over-year changes are not keeping up with a tight rental market. While
many comments included some type of market data, none provided market
rent data that could be used for an adjustment of the FY 2016 FMRs. The
FMR methodology has been the subject of Inspector General of HUD and
Government Accounting Office studies, and it is clear that the use of
such real-time data as found in newspaper ads or Craigslist cannot be
used to adjust FMRs, because this data is not statistically
representative of the FMR area. While surveys of rents must be
conducted to contest the FMRs, HUD has been unable to fund such surveys
for several years; consequently, PHAs must fund their own surveys, if
needed. None of these commenters provided a statistically valid survey
of rents that could be used to adjust the FY 2016 FMRs. The timing
between proposed and final was admittedly too short to conduct a study
of statistically valid rents and several commenters announced their
intention to conduct rent surveys, which if statistically different
will be incorporated in a revised FY 2016 FMR publication. Several
commenters who did not experience a reduction in FY 2016 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.
The use of FMRs in the calculation of public housing flat rents
continues to garner comments. Small nonmetropolitan areas find the flat
rents based on FMRs are too high for their market. Where the state
minimum is used, a nonmetropolitan county does have the option of using
its own, lower rent. A suggestion that FMRs be adjusted based on square
footage of units is not feasible because the data on size of units is
not available for all areas from a statistically reliable source. 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 HCV 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. HUD's Office of Policy Development, and Research
supports the program office by making the Small Area FMRs and the
unadjusted rents available as alternatives to the FMR for setting
Public Housing flat rents.
Many commenters oppose decreases of any level in the FMR,
especially those commenters that operate programs that use FMRs but do
not allow payment standard 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 2016 FMRs
harmless, that is they wanted the FMR to remain at the FY 2015 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 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 HCV 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. According to the legal opinion, the statute must be changed
before HUD can 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.
The Department recognizes that significant variation in FMRs from
year to year increases the administrative burden on all users of FMRs.
HUD has made changes to the calculation methodology to attempt to quell
this annual variation while comporting to the statutory requirement to
use the most recent data available. For example, using averages of 3
years of five-year ACS data in the calculation of the bedroom ratios
and the small area rent ratios were implemented to increase the
stability of these components of the calculations while also
incorporating the most recent data each year. Moving to a tighter
statistical standard for use of ACS estimates (less than a 50 percent
margin of error as opposed to different from 0) is also incorporated to
lessen the variability from sampling error within the ACS while still
taking advantage of annually updated information. HUD will continue to
pursue strategies that increase the stability of the FMRs from year to
year within the limitations of the current statutory framework.
Although there were several changes to the metropolitan area
definitions for
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the FY 2016 FMRs, geographic area comments were submitted for only two
areas: Columbia city, MD and Barranquitas, PR. HUD proposed to remove
the place-based FMR for Columbia city, MD that it had since the 1970s.
HUD proposed to do this because Columbia city is unique among FMR areas
to receive this treatment and was created before exception payment
standards existed. The Final FY 2016 FMRs maintain the proposed area
definitions and continue to incorporate Columbia city, MD as part of
the Baltimore-Columbia-Towson, MD MSA. To ensure that voucher families
currently living in the city are not impacted, and to ensure future
voucher families are able to access rental units in Columbia city, HUD
is issuing exception payment standards at up to 132 percent of the
metropolitan FMR for the area. The comment discussing proposed FY 2016
FMRs in Puerto Rico agreed with HUD's policy for not maintaining
Quebradillas Municipio as part of the Barranquitas-Aibonito-
Quebradillas, PR HUD Metro FMR area, a subarea of the San Juan, PR MSA,
noting that it was not a contiguous Municipio. The comment also
requested that Maunaubo Municipio also be separated from Barranquitas.
Maunaubo Municipio is also not contiguous to any of the other four
central municipios; notwithstanding the geographic discontinuity, HUD
did not change the Maunaubo Municipio's area definition for FY 2016.
HUD will attempt to evaluate this request, due to geographic
discontinuity, after acquiring the necessary data as part of the FY
2017 FMR process.
Several PHAs with lower proposed FY 2016 FMRs relative to FY 2015
or earlier FMRs requested that HUD conduct a survey of rents for their
FMR areas. As stated in the proposed FY 2016 FMR Notice, HUD does not
have funds available to conduct surveys in FY 2016. While some areas
provided data, the 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 (or
Craigslist) because these sources for rents do not represent actual
contracted rents, nor can rent reasonableness studies be used 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 within the FMR area 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 several PHAs in metropolitan and
nonmetropolitan areas are conducting surveys and have 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 exception 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.
HUD received a comment from the Inclusive Communities Project
(ICP), regarding the Small Area FMRs in the Dallas, TX HUD Metro FMR
Area. ICP used HUD's guidance on how to provide data-supported comments
on the levels of Small Area FMRs using HUD's special tabulations of the
distribution of gross rents by bedroom unit size for ZIP Code
Tabulation Areas. HUD has reviewed the comment and has made the
appropriate change to the final FY 2016 Small Area FMRs for the Dallas,
TX HUD Metro FMR Area.
B. Issues Raised in Comments and HUD Responses
In accordance with 24 CFR 888.115, HUD has reviewed the public
comments that were submitted by the due date and has adjusted the
proposed FMRs accordingly. Furthermore, HUD has determined that there
are no comments with ``statistically valid rental survey data that
justify the requested changes in metropolitan areas or non-metropolitan
counties.'' HUD's responses to all known comments received by the
comment due date and a part of the notice record http://www.regulations.gov/#!docketBrowser;rpp=25;po=0;dct=PS;D=HUD-2015-0072
follow.
Comment: FMR decreases do not reflect the current rental market;
more recent data must be used for the determination of FMRs. Several of
the areas expressing dissatisfaction with decreases, provided market
studies, rent reasonableness findings, or rent data compiled from rents
for large apartment projects that show that the rents in their area
increased in the past year, while the FY 2016 FMRs show a decline from
the FY 2015 FMRs. Over 30 comments from tenants, landlords, housing
advocacy and development organizations and PHAs protested the reduction
in the Oakland, CA metropolitan area that resulted from the replacement
of a 2013 local survey with 2013 ACS one-year data. Their claim is that
in such a tight rental market, as experienced in Oakland, even the
relatively small decreases of less than two percent for efficiencies
through three-bedroom units (four-bedroom FMRs decreased 10 percent
compared with last year as a result of the bedroom ratio re-
estimation), will hurt a program with huge waiting lists and low
success rates. Most of these commenters requested that HUD revise the
FY 2016 FMRs by using the 2014 ACS data (one year 2014 standard
tabulations were made available on September 17, 2015).
HUD Response: FMRs are estimated rents, and can change from year-
to-year in ways that are different from market rent changes or economic
activity. Such a year-over-year comparison is especially invalid when
data from a local survey is replaced with one-year ACS data, as is the
case for Burlington, VT, Oakland, CA, and Santa Barbara, CA. When
economic activity decreases, rents don't necessarily decrease and some
increased economic activity that might put pressure on rents cannot be
measured in real time. HUD is required to use the most current data
available and this means that local surveys conducted in 2013 must be
replaced by 2013 ACS data for areas with one-year ACS data. HUD is
precluded from using sources of data that are not statistically
reliable. Rent reasonableness studies are not subject to the same
constraints on statistical reliability and cannot be used to alter
FMRs.
HUD is unable to use the 2014 ACS data in the calculation of the FY
2016 FMRs. The standard tabulations of ACS data based on the 2014 data
collection have not been completely released at this time. Furthermore,
HUD cannot use the standard tabulations of ACS data to
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set the level of the FMRs for the following reasons:
1. Standard tabulations do not provide 40th percentile rent
estimates.
2. Standard tabulations are not available for certain HUD
Metropolitan FMR Areas.
3. Standard tabulations may not be filtered to eliminate
substandard units or units likely to be subsidized with gross rents
below HUD's Public Housing Cut Off Rent.
4. Standard tabulations do not have gross rents specific to recent
movers.
Given the limitations of the data in the standard tabulations, HUD
reviewed the available data to determine if any improvements to the FMR
calculations in the Oakland, CA HUD Metro FMR area could be made. One
possibility HUD considered was to replace the CPI based gross rent
inflation factor capturing rent growth between 2013 and 2014. The CPI
based inflation factor for gross rents used in the proposed FY 2016 FMR
calculation is 5.33 percent. The change in the median gross rents
measured for the Oakland-Haywood-Berkeley, CA Metropolitan Division,
which comprised of Alameda and Contra Costa Counties--the same as the
FMR area, between 2013 one-year ACS data and 2014 one-year ACS data is
only 4.1. Consequently, incorporating the information from the standard
tabulations of ACS data that are available now would LOWER the FY 2016
FMRs rather than raise them as the comments suggest.
Comment: FMRs should be held harmless at the FY 2015 levels.
Several comments requested that FMRs not be allowed to decline from
their FY 2015 level, especially where FY 2015 data included a local
survey. Some of these comments provided market data that showed current
rents in apartment projects that were higher than the FMR.
HUD Response: HUD cannot ignore the more current 2013 ACS data and
allow FMRs to stay the same as they were for FY 2015; FY 2015 FMRs were
based on gross rents from the 2012 ACS. By statute (42 U.S.C.
1437f(c)(1)(B)) and regulation (24 CFR 888.113(e)), HUD is required to
use the most current data available. Apartment buildings of five units
or more are only one segment of the rental market in a FMR area.
Typical data submitted in comments to this notice provided information
on rents for units in this segment, which generally account for less
than half of the rental market for those areas. Single-family homes,
both attached and detached (including townhomes and duplexes), small
rental apartments, and mobile homes make up the rest of the rental
market. While rent surveys conducted either by HUD or a PHA would
provide more current data than the ACS, these surveys take about two
months to complete and can be quite expensive. HUD does not have funds
available to conduct any surveys in 2016 and cannot delay the
implementation of FY 2016 FMRs while new surveys are being conducted.
Rents in areas with relatively short-term market tightening are not
easily measured by rent surveys. Based on past experience HUD finds
that an area must have rent increases or declines for a period of at
least two years before changes can be accurately measured by surveys.
Should the survey results show market conditions that are statistically
different from the published FMRs, HUD will revise the FY 2016 FMRs.
HUD recommends following the survey guidance available at the bottom of
the Web page http://www.huduser.org/portal/datasets/fmr.html for small
metropolitan areas without consistent one-year ACS data and
nonmetropolitan areas. For large areas with significant one-year ACS
data, the requirement for completed recent mover surveys are greater;
there must be about 200 two-bedroom (or two-bedroom and equivalent one-
bedroom and possibly equivalent three-bedroom) recent mover surveys
where the FMR is not within the confidence interval of the survey. HUD
will review the results of private surveys and will revise the Final FY
2016 FMRs if warranted. For small nonmetropolitan counties, HUD will
work with the PHA to simplify the requirements for obtaining valid
survey results. The selection of the units surveyed must be random and
the distribution of the structures surveyed must be representative of
the distribution of structure types from the 2013 ACS. HUD will not
accept a survey that is comprised only of apartment project rentals,
any more than it would accept private project rental data for major
metropolitan areas as a means of revising FMRs. This data typically
excludes single-family rentals, which are generally about one-third of
the rental market for an area, and this percentage can be greater in
small metropolitan areas and nonmetropolitan counties.
Comment: Reductions in FMRs are discouraging the development of
affordable multifamily housing projects. Decreases in FMRs reduce the
financial viability of Low Income Housing Tax Credit (LIHTC) projects
that are limited to Section 8 voucher.
HUD Response: For years, HUD held income limits harmless to
eliminate the effect of lower rents on LIHTC units, assuming rents were
income based. But, the effect of this policy was to create areas where
there were no changes in income limits for years, which also did not
provide adequate rents for LIHTC projects. Congress provided statutory
hold harmless income limits for LIHTC projects, and special income
limits for projects in service by December 31, 2008, that were subject
to HUD's Hold Harmless policy in either 2007 or 2008. Beginning with
the FY 2010 HUD Income Limits HUD eliminated its hold harmless policy
for other income limits, but limited annual changes in income limits to
plus or minus five percent (or greater if on average there was an
annual increase in the national median family income of more than five
percent). Since that time, LIHTC developers have planned for decreases
in income-based rents between the time projects are proposed and placed
in service. FMRs have always increased and decreased with the change in
the data. HUD cannot ignore the requirement to use the most current
data by only implementing FMR changes in five percent increments.
Statutory and regulatory changes are required before HUD would be able
to implement any methodology changes that deviate from the use of the
most current rent data available.
Comment: Market rents did not decrease in the past year and neither
should FMRs. Many areas protested decreases or even slight increases in
the FMRs in areas where success rates are falling (Oakland and Santa
Barbara) or large decreases where the economy is increasing and putting
pressures on the housing market (Sioux City). Several commenters stated
that market rents did not decrease and in fact increased over the past
year, so FMRs should not decrease. Both Santa Cruz, CA and Burlington,
VT experienced large declines in FY 2016 FMRs compared with FY 2015
FMRs. The decline in Santa Cruz was based on the decrease in recent
mover gross rents measured by the 2013 one-year ACS data, and in
Burlington the decrease was driven by the replacement of a December
2012-based local survey with 2013 one-year ACS data.
HUD Response: FMRs do not represent a time series of rent data for
each FMR area. When market rents for areas increase, decrease, or stay
the same, FMRs do not necessarily have the same directional change. The
FMR process, as currently designed, develops the best estimate of the
40th (or 50th) percentile gross rent for a particular area using the
timeliest available data covering the entire market area; this process
revise past FMR estimates with updated information. Therefore, year-
over-year FMR changes can sometimes
[[Page 77131]]
seemingly conflict with perceived market trends. Annual revisions to
all of the underlying data used to estimate FMRs are now possible with
the five-year ACS data. Because of the nature of the ACS five-year
tabulations, however, 80 percent of the survey observations will remain
the same from one year to the next, but are re-weighted to match the
population and housing unit estimates of the final year of the five-
year range. Also many rural FMR areas rely on update factors based on
survey results from a larger, encompassing geographic area (for
example, state-based update factors used for nonmetropolitan counties).
Even if the base rent is not adjusted the annual changes in FMRs do not
necessarily reflect very recent changes in the housing market
conditions for the smaller area but still represent HUD's best estimate
of 40th percentile gross rents in the FMR area.
Comment: HUD should validate its FMR estimation methodology by
comparing one-year ACS data with fiscal year FMRs for the same year,
beginning with a comparison of 2006 one-year ACS rent data to the FY
2006 FMRs. This analysis would determine which aspects of HUD's
discretionary methodology is less accurate and could help HUD modify
its methodology to improve accuracy while adhering to the requirement
to use the most recent data available. The up and down changes that
occur with the final fair market rents cause a lot of problems and
stress for the landlords, tenants and the PHAs.
HUD Response: Because the integration of ACS data into the FMR
estimation process has been gradual and evolving, and will continue to
evolve to address issues like volatility in estimates arising from
large sampling variation in smaller markets, there is not yet a basis
for making the suggested comparison. FMR methodology and the underlying
data have been relatively stable only between FY 2013 and FY 2016 FMRs.
ACS data on recent-mover rents is only available for one of these
years. Further, because the ACS only produces highly reliable estimates
of the 40th percentile recent mover two-bedroom rent in the largest
metropolitan areas, the comparison would only be valid for large
markets, and FMRs have not been particularly volatile in these markets.
Finally, the logic of this comment suggests that HUD should change the
FMR estimation process to a model-based forecast system derived from
time-series-panel data on rents. Again, this methodology would only be
valid for the largest metropolitan FMR areas where a highly reliable
recent mover rent can be derived from ACS data. It is not clear that
the model would be feasible and accurate for smaller FMR areas, nor how
a model-based FMR estimate would accord with statutory language
regarding FMR estimates.
Comment: The year-to-year volatility in FMRs has significant
adverse impacts. A reduction of more than five percent in the published
FMRs triggers a rent reasonableness analysis on the part of the PHA
with jurisdiction over the area (Housing Choice Voucher Guidebook,
directive 7420.10G). If the PHA's analysis finds that the rent being
charged by a property owner is no longer reasonable, the owner will be
required to reduce the rent. If the owner determines that this
reduction will adversely affect the financial stability of the
property, the owner will likely choose to leave the program, and the
tenant will then have to move. Another consequence of a large reduction
in FMRs is that owners may have to defer maintenance items because cash
flows are no longer adequate to cover operating expenses.
Alternatively, higher FMRs force the PHA with jurisdiction over the
area to increase their payment standards and serve far fewer families
within the community. This is detrimental at a time when PHAs are
already stretching the limited amount of funding received from HUD to
help as many families as they can. Increased FMRs will increase the
waiting list for the HCV program and will increase the homeless
population for an area.
FMRs cannot decrease in economic growth areas; some of these areas
cannot manage the voucher program even with modest FMR increases.
Several comments, even pertaining to FMR areas with decreases below
five percent, or with modest increases, pressed for higher FY 2016
FMRs. Some of these areas had very tight markets and some of these
areas already used payment standards at 110 percent of the FMRs. One
commenter protested the retroactive effective date of October 1, 2015,
which would not provide the time required to adjust payment standards.
HUD Response: The FMRs are effective when published. To help manage
the HCV program and mitigate the impact of FMR decreases, PHAs may be
able to: (1) Use Success Rate Payment Standards 24 CFR 982.503(e); or
(2) request Exception Payment Standards for subareas within a FMR area
(not to exceed 50 percent of the population) at 24 CFR 982.503(c).
Comment: Vacancy rates are low, making it impossible to absorb FMR
decreases. Several comments stated that low or no vacancy rates in
areas with increased economic activity require higher FMRs so that
voucher tenants can compete for housing. In these areas, there is not
sufficient rental housing and generally, the 2013 rental data from the
ACS does not reflect this situation.
HUD Response: When a market tightens rapidly, the FMRs cannot keep
pace. The most accurate, statistically reliable data available to HUD
is lagged by two years. Even if HUD conducts surveys of these areas,
capturing the full scope of rent increases is difficult if the market
condition has been occurring for less than two years; furthermore, it
is challenging to get valid results for surveys of relatively small
housing markets (with population under 1,000 persons). Most of the
areas suffering from very rapidly tightening market conditions meet one
or both of these criteria. Areas with sustained extremely low vacancy
rates require construction of additional units. Higher FMR levels will
not necessarily encourage additional development. These areas may use
Exception Payment Standards for subareas within an FMR area (not to
exceed 50 percent of the population) as described at 24 CFR 982.503(c),
or Success Rate Payment Standards available at 24 CFR 982.503(e) to
alleviate market pressures, or in severely disrupted rental markets.
Comment: FY 2016 FMR decreases reduce the ability of families to
find affordable housing. Several comments stated that FMR decreases
make it harder for tenants to find affordable housing, so HUD should
not implement FMR decreases. The decrease in FMRs from FY 2015 to FY
2016 will reduce the availability of affordable housing in the area;
landlords will be able to get higher rents from tenants that are not
Section 8 voucher holders and so many will opt out of the program.
HUD Response: FMRs must reflect the most current statistically
valid data and this means that FMRs cannot be held harmless (not
allowed to decrease) when this data shows a decline. Most of the
declines in the FMRs are based on lower 2013 rents, and in a few cases
the 2013 to 2014 CPI adjustment reflects a decline.
Comment: FY 2016 FMR decreases will require existing tenants to pay
a greater share of their income on rents. Several comments stated that
their current tenants will have to pay a greater share of their income
on rents, with FMR decreases.
HUD Response: New tenants are not allowed to pay more than 40
percent of their income on rent. Existing tenants will not have to pay
rent based on reduced FMRs until the second anniversary of their
Housing Assistance Payment (HAP) contract. If tenant rent
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burden increases for an area, PHAs may use this as a justification for
higher payment standards.
Comment: Disabled and difficult-to-place residents suffer a
disproportionately greater impact from FMR decreases because they have
fewer housing choice options. Disabled residents already have fewer
units available to them, and reducing the FMR will further reduce their
options. Difficult to place residents, because of a history of late
payments or other issues, will have fewer landlords willing to rent to
them if the FMR is lower.
HUD Response: HUD must use the most current data available and
rents may increase and decrease. The data used as the basis for FY 2016
FMRs is more current than what was available in the estimation of the
FMRs for FY 2015. The rent and utility data for the FY 2016 FMRs are
more current than for the FY 2015 FMRs and are a better representation
of the position in the rent distribution required by the FMR
regulations. If a family has a member with a disability, a PHA may
establish a higher payment standard for that family as a reasonable
accommodation as discussed in 24 CFR 982.505(d).
Comment: HUD should institute caps and floors to limit annual FMR
changes to five percent. A five percent change in the FMR triggers a
rent reasonableness study, which is costly for cash-strapped PHAs. HUD
should have instituted the same cap and floor of five percent that it
instituted for Income Limits with the FY 2010 Income Limits.
HUD Response: HUD is constrained by legal and regulatory language
for its calculation of FMRs. HUD cannot ignore the requirement that it
use the most current data by implementing FMR changes in five percent
increments. Statutory and regulatory changes are required before HUD
would be able to implement any methodology changes that would limit the
use of the most current rent data in setting FMRs. No such regulation
or legislative requirement governs the calculation of income limits and
prior to FY 2010, income limits were held harmless, that is, not
allowed to ever decline. The change to incorporate caps and floors of
up to five percent was a way to remove this hold harmless policy and
create parity with increases and decreases.
Comment: HUD should provide flexibility concerning the
implementation of the FY 2016 FMRs and provide a 3-month delay similar
to the implementation of changes in the determination of Public Housing
Flat Rents. HUD should allow Housing Authorities a 90-day grace period
from HUD's publication of final FY 2016 FMRs before any PHA revised
voucher payment standards would affect voucher-assisted households'
rent shares or Total Tenant Payment (TTP) as of January 1, 2016.
HUD Response: Program counsel for the HCV program reviewed this
comment and revisited the statutory language governing FMRs. The plain
language interpretation of the statute is that FMRs become effective
upon publication in final form in the Federal Register and does not
afford the implementation flexibility requested in the comment.
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
one-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 2016. 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 the section labeled ``Fair Market Rent
Surveys'' at: http://www.huduser.gov/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
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 2009-2013 five-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
metropolitan 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 the new ratios based on an average of 2007-2011,
2008-2012, and 2009-2013 five-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 all mobile home parks in the FMR 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 2013 ACS.
IX. 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 77133]]
Dated: December 8, 2015.
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 2016 FMRs incorporates the OMB
definitions of metropolitan areas based on the CBSA standards as
implemented with 2000 Census data and updated by the 2010 Census in
February 23, 2013. The adjustments made to the 2000 definitions to
separate subparts of these areas where FMRs or median incomes would
otherwise change significantly are continued. To follow HUDs policy of
providing FMRs at the smallest possible area of geography, no counties
were added to existing metropolitan areas. All counties added to
metropolitan areas will still be treated as separate counties. New
multicounty metropolitan areas are not subdivided. All metropolitan
areas that have at least one subarea will also receive a subarea, that
is the rents from a county that is a subarea will not be used for the
remaining metropolitan subarea rent determination. The specific
counties and New England towns and cities within each state in MSAs and
HMFAs were not changed by the February 28, 2013 OMB metropolitan area
definitions. These areas are listed in Schedule B.
2. Unit Bedroom Count 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 2016 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, $714
CA HMFA.
Santa Ana-Anaheim- 867
Irvine, CA HMFA.
* Riverside-San 565
Bernardino-Ontario, CA
MSA.
San Diego-Carlsbad, CA 859
MSA.
Santa Rosa, CA MSA..... 814
Vallejo-Fairfield, CA 655
MSA.
Maryland....................... California-Lexington 536
Park, MD MSA.
Oregon......................... Bend-Redmond, OR MSA... 371
Salem, OR MSA.......... 548
Pennsylvania................... Gettysburg, PA MSA..... 589
Washington..................... Olympia-Tumwater, WA 659
MSA.
Seattle-Bellevue, WA 728
HMFA.
West Virginia.................. Logan County........... 485
McDowell County........ 485
Mercer County.......... 485
Mingo County........... 485
Wyoming County......... 485
------------------------------------------------------------------------
* 50th percentile FMR area.
[FR Doc. 2015-31319 Filed 12-10-15; 8:45 am]
BILLING CODE 4210-67-P