[Federal Register: October 1, 2004 (Volume 69, Number 190)]
[Notices]
[Page 59003-59070]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01oc04-138]
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Part II
Department of Housing and Urban Development
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Fair Market Rents for the Housing Choice Voucher Program and Moderate
Rehabilitation Single Room Occupancy Program Fiscal Year 2005; Notice
[[Page 59004]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4937-N-02]
Fair Market Rents for the Housing Choice Voucher Program and
Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2005
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of final fiscal year (FY) 2005 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.
FMRs are used to determine payment standard amounts for the Housing
Choice Voucher program, to determine initial renewal rents for some
expiring project-based Section 8 contracts, and to determine initial
rents for housing assistance payment (HAP) contracts in the Moderate
Rehabilitation Single Room Occupancy program. Other programs may
require use of FMRs for other purposes. Today's notice provides for all
areas final FY2005 FMRs that reflect the estimated 40th and 50th
percentile rent levels trended to April 1, 2005.
Proposed FY2005 FMRs were published in the Federal Register on
August 6, 2004. The proposed FMRs were calculated for the first time
using 2000 Census data and new Office of Management and Budget (OMB)
metropolitan area definitions. Both changes in how FMRs were calculated
had significant impacts. A number of public comments from public
housing agencies (PHAs) and major interest groups raised concerns about
the magnitude of FMR changes experienced by many areas. HUD is required
by law to utilize the most recent available data in calculating FMRs,
and all federal agencies are instructed to use current OMB metropolitan
area definitions unless there are strong program reasons to use
alternative definitions. As a result of public comments and further
consideration of the proposed FMRs, HUD determined that there was
sufficient reason to not use the new OMB metropolitan area definitions
in calculating the final FY2005 FMRs. The final FY2005 FMRs provided in
this publication are therefore based on the most recent available data
but use the same FMR area definitions used in the FY2004 FMR
publication, which were based on old OMB metropolitan area definitions.
EFFECTIVE DATE: The FMRs published in this notice are effective on
October 1, 2004.
FOR FURTHER INFORMATION CONTACT: For technical information on the
methodology used to develop fair market rents or a listing of all fair
market rents, please call the HUD USER information line at 800-245-2691
or access the information on HUD's Web site, http://www.huduser.org/datasets/fmr.html.
Any questions related to use of FMRs or voucher
payment standards should be directed to HUD's local program staff for
the area in question. Questions on how to conduct FMR surveys or
further methodological inquiries may be addressed to Marie L. Lihn or
Lynn A. Rodgers, Economic and Market Analysis Division, Office of
Economic Affairs, Office of Policy Development and Research, telephone
202-708-0590. Persons with hearing or speech impairments may access
this number through TTY by calling the toll-free Federal Information
Relay Service at 800-877-8339. (Other than the HUD USER information
line and TTY numbers, telephone numbers are not toll free.)
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 to FMRs established by
HUD for different areas. In the Housing Choice Voucher 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 Housing Choice Voucher program must meet
reasonable rent standards. The interim rule published on October 2,
2000 (65 FR 58870), established 50th percentile FMRs for certain areas.
Electronic Data Availability: This Federal Register notice is
available electronically from the HUD news page: http://www.hudclips.org.
Federal Register notices also are available
electronically from the U.S. Government Printing Office website, http://www.gpoaccess.gov/fr/index.html
II. Procedures for the Development of FMRs
Section 8(c) of the USHA requires the Secretary of HUD to publish
FMRs periodically, but not less frequently than annually. Section 8(c)
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 this section.
The Department'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.) Final FY2005 FMRs are
published on or before October 1, 2004, as required by section 8(c)(1)
of the USHA.
III. Proposed FY2005 FMRs
On August 6, 2004 (69 FR 48040), HUD published proposed FY2005
FMRs. As noted in the preamble to the proposed FMRs, the FMRs for
FY2005 were based on two significant changes to the statistical
methodology used to compute FMRs.
The first change was the introduction of 2000 Census data as a
benchmark for FMRs. The 2004 FMRs were based on updated 1990 Census
data except in areas where Random Digit Dialing (RDD) surveys or
American Housing Surveys (AHS) had been conducted. Census 2000 data
only recently became available in the level of detail (recent mover,
standard-quality unit rents by number of bedrooms) necessary to
calculate FMRs. The Department refers to the use of new decennial
census data to revise FMRs as ``rebenchmarking.'' This process involves
replacing the base year FMR estimates with those developed from new
Census data and then updating the Census-based estimates from the date
of the Census to the midpoint of the program year during which the FMRs
will be in effect.
The second change was the use of new metropolitan area definitions
issued by OMB to define FMR areas. As part of the 2000 Census process,
OMB released new metropolitan area
[[Page 59005]]
definitions on June 7, 2003, and updated them on February 18, 2004.
These new metropolitan area definitions contain substantial changes
from the old metropolitan area definitions because they incorporate the
2000 Census data and a substantially revised standard for defining
metropolitan areas.
In response to the August 6, 2004, proposed FMRs, HUD received 370
public comments. The majority of the commenters were opposed to the
proposed FMRs and cited various reasons. The primary reason given was
that the proposed FY2005 FMRs were significantly different from the
FY2004 FMRs and additional time was needed to examine the proposed
FMRs. Many commenters asked HUD to delay issuing FY2005 FMRs.
As noted in Section II of this preamble, HUD is required to issue
FMRs to be effective October 1, and the FMRs to be issued by HUD must
be based on the most recent available data trended to the mid-point of
the year in which they will be used. While HUD cannot delay issuance of
the FY2005 FMRs, HUD has made changes to the proposed FY2005 FMRs
announced in this notice in response to the public comments. (The
public comments are discussed in more detail in Section V of this
preamble.)
IV. Final FY2005 FMRs and FY2005 FMR Procedures
In setting the final FY2005 FMRs, HUD took into consideration a
large number of comments objecting to the magnitude of changes caused
by use of new OMB metropolitan area definitions and the inadequate time
given to evaluate and respond to the proposed changes. While HUD is
required by statute to use the most recent available data in setting
FMRs, and by regulation to use current OMB metropolitan area
definitions, HUD's regulations allow HUD to make exceptions to the use
of the most current OMB metropolitan area definitions. Therefore, HUD
is not obligated to use the new OMB metropolitan area definitions, and
has determined to use the old OMB metropolitan area definitions, that
is, the 2004 FMR area definitions, in calculating the final FY2005
FMRs. Use of the 2004 FMR area definitions generally produce fewer and
smaller differences between the FY2004 FMRs and the FY2005 FMRs set
forth in this notice for two reasons. The first is that the geographic
area over which the 40th (or 50th) percentile rent is determined is
unchanged, eliminating FMR differences resulting from changes in
geography. The second reason is that some areas retained post-2000
Census RDD survey-based increases by reverting to the old definitions,
whereas these increases could not be applied to the proposed FY2005
FMRs because the new areas differed too much from the old areas.
Therefore, the FY2005 FMR schedules contained in this notice are based
on 2000 Census and, when available, more current data, but were
calculated for the same geographic areas used in preparing the FY2004
FMRs. Schedule B(1) lists Fair Market Rents for each area by state.
FMRs that are at the 50th percentile, or median rent, are denoted by an
asterisk. For informational purposes, Schedule B(2) shows what the 40th
percentile FMRs would have been for the 39 areas where the FMR is set
at the 50th percentile.
A. 2000 Census-Based FMRs
For areas where the base-year estimates were developed from the
2000 Census, the 40th and, where appropriate, 50th percentile gross
rents for standard-quality units occupied by recent movers were
calculated for differing numbers of bedrooms. The rent distributions
were modified to eliminate public housing and other units with
similarly low rents, so that only market-rent units would be
considered. FMRs are calculated for all metropolitan areas and non-
metropolitan counties.
FMR estimates are calculated for two-bedroom units, which are the
most common rental units. Rent relationships between two-bedroom and
other unit sizes are then calculated using local unit size rent
relationships to the extent statistically feasible. For the past
several years, bedroom ratios have been based on 1990 Census data. The
FY2005 FMRs are the first to make use of 2000 Census data to more
closely reflect market rent differentials between units with differing
numbers of bedrooms. The rents for three-bedroom and larger units
continue to reflect HUD's policy to set higher rents for these units
than would result from using normal 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 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. The FMRs for single-
room occupancy units are 0.75 times the zero-bedroom (efficiency) FMR.
A further adjustment is made for areas with local bedroom-size
intervals above or below what are considered to be reasonable ranges or
where sample sizes are inadequate to accurately measure bedroom rent
differentials. Experience has shown that highly unusual bedroom ratios
typically reflect inadequate sample sizes or peculiar local
circumstances that HUD would not want to utilize in setting FMRs (e.g.,
luxury efficiency apartments in New York City that rent for more than
typical one-bedroom units). Bedroom interval ranges were established
based on an analysis of the range of such intervals for all areas with
large enough samples to permit accurate bedroom ratio determinations.
The final ranges used were as follows: efficiency units are constrained
to fall between 0.65 and 0.83 of the two-bedroom FMR, one-bedroom units
must be between 0.76 and 0.90 of the two-bedroom unit, three-bedroom
units must be between 1.10 and 1.34 of the two-bedroom unit and four-
bedroom units must be between 1.14 and 1.63 of the two-bedroom unit.
Bedroom rents for a given FMR area were then adjusted if the
differentials between bedroom-size FMRs were inconsistent with normally
observed patterns (e.g., efficiency rents were not allowed to be higher
than one-bedroom rents and four bedroom rents were set at a minimum of
three percent higher than three-bedroom rents).
For low-population, non-metropolitan counties with small Census
recent-mover rent samples, Census-defined county group data were used
in determining rents for each bedroom size. This adjustment was made to
protect against unrealistically high or low FMRs resulting from
insufficient sample sizes. The areas covered by this new estimation
method have fewer than 33 two-bedroom Census sample observations.
After base 2000 Census estimates were established for each FMR area
and bedroom size, they were updated from the estimated Census date of
April 1, 2000, to April 1, 2005 (the midpoint of FY2005). Update
factors for the 2000 through end of 2003 period were based either on
the area-specific Consumer Price Index (CPI) survey data that were
available for the largest metropolitan areas or on HUD regional RDD
survey data.
For areas with local CPI surveys, CPI annual data on rents and
utilities were used to update the Census rent estimates. Three-quarters
of the 2000 CPI change factor was used to bring the FMR estimates
forward from April to
[[Page 59006]]
December of 2000. Annual CPI survey data could then be used for
calendar years 2001, 2002, and 2003. Trending to cover the period from
January 1, 2004, to April 1, 2005, was then needed. An annual trending
factor of three percent, based on the average annual increase in the
median Census gross rent between 1990 and 2000, was used to update
estimates from the end of 2003 (i.e., the last date for which CPI data
were available) until the midpoint of the fiscal year in which the
estimates were used. The 15-month trending factor was 3.75 percent (3
percent times 15/12).
For areas without local CPI surveys, the same process was used
except that regional RDD survey data were substituted for CPI data.
Regional RDD surveys were done for 20 areas--the metropolitan and
nonmetropolitan part of each of the 10 HUD regions. Areas covered by
CPI metropolitan surveys were excluded from the RDD metropolitan
regional surveys.
B. FMRs Based on Post-2000 Census Surveys
There are a number of areas where AHS and RDD telephone surveys of
rents have been conducted since the 2000 Census. Both the AHS and RDD
surveys have been proven to provide statistically reliable results
within the limits of their stated confidence intervals.
The RDD technique involves use of large, randomly selected samples
to obtain data on current rents paid for one- and two-bedroom rental
units occupied by recent movers. RDD surveys exclude public housing
units, newly built units and non-cash rental units. They do not exclude
substandard units because there is no practical way to determine
housing quality from telephone interviews. These surveys, however, also
exclude units without a telephone, and past analysis has shown that the
slightly downward rent estimate bias caused by including some
substandard units is almost exactly offset by the slightly upward bias
that results from only surveying units with telephones. This
relationship held true across a variety of areas.
RDD surveys that meet HUD criteria have a high degree of
statistical accuracy. There is a 95 percent likelihood that the 40th or
50th percentile recent mover contract rent estimates developed using
this approach are within three to four percent of the actual 40th or
50th percentile. Virtually all survey estimates of contract rent will
be within five percent of the actual 40th or 50th percentile value.
A number of RDD surveys were conducted after the 2000 Census. The
results of RDD surveys conducted in 2001 and 2002 were used in the
FY2004 FMRs and were evaluated for use in the final FY2005 FMRs. RDD
surveys are used to provide a rebenchmarked FMR in lieu of updating the
previous year's FMR when there is a statistically significant
difference. RDD estimates are updated using the same types of data used
to update Census estimates.
RDDs covering 24 areas were conducted in August 2004 and completed
in time for use in this publication. The first column of the following
table identifies the RDD survey area. The second column shows the final
FY2005 FMRs that would have been published based on updated Census and
2001-2002 AHS and RDD surveys. The third column shows the August 2004
RDD results, trended to the middle of FY2005. The fourth column shows
whether or not the RDD results were statistically different enough to
justify replacing the Census or other survey estimates with the RDD
results. The survey results were as follows:
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FY2005 FMR FY2005 FMR with
Area definition without RDD RDD RDD result
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Baltimore, MD............................. 915 847 Decrease.
Boston, MA................................ 1442 1266 Decrease.
Chicago, IL............................... 979 906 Decrease.
Cleveland-Lorain-Elyria, OH............... 703 703 No Change.
Detroit, MI............................... 848 805 Decrease.
Dutchess County, NY....................... 901 942 Increase.
Fort Worth-Arlington, TX.................. 799 732 Decrease.
Indianapolis, IN.......................... 655 655 No Change.
Kansas City, MO-KS........................ 741 691 Decrease.
Los Angeles-Long Beach, CA................ 1011 1124 Increase.
Nassau-Suffolk, NY........................ 1225 1225 No Change.
Newburgh, NY-PA........................... 913 954 Increase.
Oakland, CA............................... 1342 1342 No Change.
Orange County, CA......................... 1403 1317 Decrease.
Portland-Vancouver, OR-WA................. 717 717 No Change.
Providence-Fall River-Warwick, RI-MA...... 663 845 Increase.
Sacramento, CA............................ 971 971 No Change.
San Antonio, TX........................... 716 716 No Change.
San Francisco, CA......................... 1792 1539 Decrease.
San Jose, CA.............................. 1748 1313 Decrease.
Seattle-Bellevue-Everett, WA.............. 943 834 Decrease.
Ventura, CA............................... 1257 1382 Increase.
Washington, DC-VA-MD-WV................... 1250 1187 Decrease.
Westchester County, NY.................... 1174 1259 Increase.
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HUD is directed by statute to use the most recent available data in
its FMR publications. The RDD survey results are being implemented in
the final FY2005 FMR publication consistent with that requirement.
HUD uses AHS data to calculate rents from the distributions of two-
bedroom units occupied by recent movers. Public housing units, newly
constructed units, and units that fail a housing quality test are
excluded from the rental housing distributions before the FMRs are
calculated. Thirteen areas were covered by AHS surveys conducted in
2002. Two surveys did not have enough recent mover cases to provide
reliable estimates. More current AHS results were used to replace FMR
estimates based on Census or RDD survey data if the Census- or RDD-
based estimate was outside the 95 percent confidence interval of the
AHS estimate. The AHS results produced statistically different
[[Page 59007]]
FMR estimates and were used to rebenchmark FMRs for the following areas
in Schedule B(1):
Orange County, CA, Portland-Vancouver, OR-WA, and Riverside-San
Bernardino, CA. As noted in the proposed FY2005 publication, the AHS
reduced the Portland FMR. The subsequent 2004 RDD survey confirmed this
result. Orange County and Riverside-San Bernardino had increases as a
result of the AHS. All three of these areas are 50th percentile FMR
areas.
C. Impacts of New Data on Final FY2005 FMRs
The use of the 2000 Census rent data corrects for estimation errors
that have accumulated during the past decade, and results in a larger
than usual number of FMR revisions this year. The availability of more
detailed local information on public housing, which is excluded from
FMR estimates, also improved these estimates. Post-2000 AHS and RDD
surveys provide more current estimates of market rents than those
available from the Census, and serve to document the need for FMR
changes in areas where recent mover rents do not follow regional or CPI
rent trends. New AHS and RDD survey results were incorporated into this
publication. The following table shows the distribution of impacts
resulting from use of the 2000 Census and the AHS and RDD surveys used
in this publication:
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Percent of Number of
Final FY2005 FMRs as % of FY2004 FMRs vouchers FMR areas
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Less than 80% of FY04 FMR..................... 1.1 14
80-89.9% of FY04 FMR.......................... 4.0 109
90-99.9% of FY04 FMR.......................... 34.0 403
100-110% of FY04 FMR.......................... 45.9 1,053
110.1-120% of FY04 FMR........................ 12.1 734
More than 120% of FY04 FMR.................... 2.9 345
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There are an additional 22 areas in the country where HUD has begun
RDD surveys that could not be completed in time for this publication.
Additionally, seven areas will be surveyed beginning in October 2004.
Because the FY2005 FMRs for these areas will not have the benefit of a
completed RDD survey by the date of submission of this document for
publication in the Federal Register, and thus not have the benefit of
the most recent rental data, HUD is allowing PHAs in those areas to
wait, if they so choose, for completion of the RDD surveys and issuance
of a notice that contains revised final FY2005 FMRs that reflect the
completed RDD surveys. The notice of revised final FY2005 FMRs for
these areas will reflect the RDD survey data and, at that point,
housing authorities must use these published FMRs. Areas where HUD is
currently conducting RDD surveys are:
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August and September 2004
State survey starts Area October 2004 Survey Starts
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NY.................... Albany-Schenectady-Troy, PR.................... Aguadilla, PR.
NY.
NM.................... Albuquerque, NM........... PR.................... Arecibo, PR.
GA.................... Atlanta, GA............... PR.................... Caguas, PR.
NJ.................... Bergen-Passaic, NJ........ PR.................... Mayaguez, PR.
OH.................... Cincinnati, OH-KY-IN...... PR.................... Ponce, PR.
OH.................... Columbus, OH.............. PR.................... San Juan-Bayamon, PR.
OH.................... Dayton-Springfield, OH.... PR.................... Nonmetropolitan areas.
CO.................... Denver, CO................
CT.................... Hartford, CT..............
HI.................... Honolulu, HI..............
TX.................... Houston, TX...............
HI.................... Kauai and Maui, HI........
KY.................... Louisville, KY-IN.........
TX.................... McAllen-Edinburg-Mission,
TX.
TN.................... Nashville, TN.............
NJ.................... Newark, NJ................
NY.................... New York, NY..............
NE.................... Omaha, NE-IA..............
PA.................... Philadelphia, PA-NJ.......
MA.................... Springfield, MA...........
OK.................... Tulsa, OK.................
AZ.................... Tucson, AZ................
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D. Regulatory Procedures for Exceptions to Established FMRs
For housing authorities in areas that are not undergoing RDD
surveys but continue to have concerns with the FY2005 FMRs announced in
this notice, HUD's regulations in 24 CFR 888.113 provide the procedures
by which HUD may make exceptions to established FMRs.
E. Manufactured Home Space Rents
Manufactured home space rents are set at 40 percent of the two-
bedroom rent. Exceptions to this rent are granted when justified by
survey data. All approved exceptions to these rents that were in effect
in FY2004 were updated to 2005 using the relevant update factor. If the
result of this computation was higher than 40 percent of the
rebenchmarked two-bedroom rent, the exception remains and is listed in
Schedule D.
F. FMRs for Federal Disaster Areas
Under the authority granted in 24 CFR part 888, the Secretary of
HUD finds good cause to waive and hereby waives the regulatory
requirements that govern requests for geographic area exception FMRs
for areas that are declared disaster areas by the Federal Emergency
Management Agency (FEMA). HUD is prepared (1) to grant disaster-related
FMR exceptions up to 10 percent above the applicable FMRs for those
areas. HUD field offices are authorized to approve such exceptions for
single-county FMR areas and for individual county parts of multi-county
FMR areas that qualify as disaster areas under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act, if (2) the PHA certifies
that damage to the rental housing stock as a result of the disaster is
so substantial that it has increased the prevailing rent levels in the
affected
[[Page 59008]]
area. Such exception FMRs must be requested in writing by the
responsible PHAs. Exception FMRs approved by HUD during FY2005 will
remain in effect until superseded by the publication of the final
FY2007 FMRs, and replace lower, published FMR values.
V. Public Comments
In addition to the changes made in this notice for final FY2005
FMRs, HUD is continuing to accept public comments on FY2005 FMRs
through November 5, 2004. HUD will consider these comments in
determining revisions that may be needed to the FY2005 FMRs. Any such
revisions will be announced in a subsequent FY2005 Federal Register
notice.
In response to the August 6, 2004 proposed FMRs, HUD received 370
public comments covering 75 FMR areas during the initial comment period
ending September 7, 2004. The majority of these comments concerned
changes in the metropolitan area definitions that resulted in higher or
lower FMRs. The New England region, where there was a proposed change
away from the city-town designations previously used to define
metropolitan areas to new OMB county-based metropolitan definitions,
provided 148 comments. Many of the New England comments noted that the
change in the geographic definitions was significant and had the impact
of reducing FMRs in most metropolitan areas in New England. Some county
parts shifted from one metropolitan area to another (e.g., part of
Brockton to Providence, part of Boston to Providence), and some non-
metropolitan areas were added to metropolitan areas with substantial
increases for the non-metropolitan area (Chelmsford to Cambridge) and
significant decreases for the metro area. Some metropolitan areas were
combined (Bridgeport and Stamford-Norwalk) with increases for one area
and decreases for the other area. The change in geography prevented the
use of some 2001 and 2002 HUD RDD surveys in the proposed FY2005 FMR
publication, because the metropolitan area coverage for these areas had
changed so much under the new OMB area definitions that it was not
considered valid to apply survey results based on different area
definitions. Returning to use of the old metropolitan area definitions
has the effect of re-instating RDD-based increases for the following
areas (that are either a Metropolitan Statistical Area (MSAs) or a
Primary Metropolitan Statistical Areas (PMSA):
Boston, MA-NH MSA
Portland, ME MSA
Brockton, MA PMSA
Lawrence, MA-NH PMSA
Lowell, MA-NH PMSA
Worcester, MA-CT MSA
Though not all comments from the New England region discussed the
new geography, most stated that the proposed reductions were
inconsistent with recent rental market history. In general, however,
Census and more current surveys correct for what can be several years
of accumulated estimation errors, and should not be thought of as
solely relating to the change in rents that occurred between FY 2004
and FY2005. Many national housing and legal aid organizations also
provided comments opposing the use of the new county-based metropolitan
designations for New England and other areas and cited fair housing
concerns.
Comments for other parts of the country also expressed concerns
about geographic definitional changes that resulted in significant
increases and decreases in FMRs that could adversely affect local
programs. The new OMB definitions combined the two large metropolitan
areas of New York City and Bergen-Passaic to create the New York--
Wayne-White Plains, NY-NJ Division. As a result, the rents for Bergen-
Passaic declined significantly, and comments were received about this
decline. Dutchess and Orange counties in New York, formerly both
separate metropolitan areas, were combined under the new geographic
definitions. The proposed FY2005 FMRs for this combined metropolitan
area significantly lowered rents for Dutchess County. Counties that
were formerly non-metropolitan were concerned that HUD's current
voucher renewal policy meant that they would be unable to continue to
assist all current voucher families if FMRs increased, because voucher
assistance funding would be set at the previous year's expenditure
level plus a modest inflation adjustment. This was the primary concern
from counties added to the metropolitan areas of Clarksville, TN,
Lafayette, IN, Jonesboro, AR, and Anchorage, AK. In other comments,
objections were raised by counties that had previously been included in
metropolitan areas that were removed and designated as micropolitan
areas with their own, much lower FMRs. This category includes comments
received from Lincoln County, NC (formerly in Charlotte), Richmond
County, KY (formerly in Lexington), Genessee County, NY (formerly in
Rochester, NY), and Webster Parish, LA (formerly in Shreveport).
Warrenton County, NJ, had a large proposed FMR reduction because it was
removed from the Newark metropolitan area and placed in the Allentown,
PA, metropolitan area. Anderson County, SC, had a large FMR reduction
because it was taken out of the Greenville metropolitan area and made a
separate metropolitan area with its own, much lower FMR.
In Puerto Rico, the new OMB definitions, especially for San Juan,
were considered a cause of the proposed FMR reduction because many
lower rent metropolitan and non-metropolitan municipios were added to
this metropolitan area. The main source of these reductions, however,
was the 2000 Census. RDD surveys of all Puerto Rico FMR areas will be
conducted starting in October 2004.
A form letter-writing campaign by landlords in the Lake County-
Kenosha County, IL-WI Division, resulted in 134 comments. Taking Lake
County out of the Chicago metropolitan area and merging it with Kenosha
County resulted in a significant decline in the FMR for Lake County and
a significant increase for Kenosha County.
Many commenters with no changes in geography expressed concern over
reductions in their FMRs. This included Cheyenne, WY, Fargo, ND, and
Knox County, IN, and all areas in Hawaii. In Johnstown, PA, the removal
of Somerset County was noted as a possible cause of the reduction in
the proposed FMR, although the primary cause of the reductions proposed
for both parts of the old metropolitan area was related to the use of
2000 Census data. The change from the use of state minimums to Census-
defined county groups produced FMR declines in areas such as Sumter
County, FL, Evangeline Parish, LA, and Harlan and Knox counties in
Kentucky. Concerns about the large changes in county rents in Texas,
Georgia, and Oklahoma were noted in general comments by the Texas
Tenants' Union, the Georgia Department of Community Affairs, and the
Oklahoma City Housing Authority. Other commenters stated that the
proposed FMRs resulted in too many significant changes and would hinder
the application of the program. This included comments from the States
of Georgia, New York, New Jersey, Massachusetts, Vermont, Rhode Island,
and Puerto Rico.
The Louisville Metro Housing Authority commented that significantly
higher utility costs in the past year warranted higher FMRs. Louisville
is currently undergoing an RDD survey that was started in September
2004. The utilities used for the FMR come from the utility schedule of
the PHA, so the
[[Page 59009]]
higher utility costs will be included in determining the RDD estimate.
Data of some form were provided to support comments made for 30 FMR
areas. For the most part, the data consisted of rent reasonableness
studies, data on local housing market conditions, newspaper ads for
rental units, voucher rent data, and apartment rent data for projects.
Only the data submitted with the comments of the Okanogan County
Housing Authority met the minimum statistical requirement for
acceptance. Accordingly, the FMRs for the County of Okanagon, WA, will
be increased from the proposed FMR.
A group of major industry organizations (e.g., CLPHA, NAHMA, NAHRO,
NLIHC, and others) jointly submitted a set of comments which argued for
more time to evaluate the impacts of the new OMB definitions, more time
to permit RDD surveys (including HUD's) to be completed, and postponing
implementation of decreases until all RDD results were available and
sufficient time had been allowed to consider all public comments. They
also recommended an analysis of the new OMB definitions with the
objective of minimizing the impact of their implementation (e.g., by
allowing for submarket areas patterned after old area definitions when
appropriate). HUD-conducted surveys of all areas with significant
decreases in large-unit FMRs were proposed by commenters, as was the
continued use of state minimum FMRs and the same minimum bedroom ratios
used in the FY2004 FMRs. Concerns about large-unit FMR calculations
were also expressed. The final FMRs address some but not all of these
concerns. Use of old OMB definitions is the simplest way of addressing
the concerns raised in many comments about use of the new definitions,
and permits the impacts of use of new definitions to be distinguished
from the impacts of new data. Many of the other requests were at odds
with the requirement that HUD use the most recent available data in
setting FMRs. PHAs continue to have the discretion to fund their own
RDD surveys, but HUD's budget for this purpose has been and will
continue to be limited.
HUD is permitting areas where HUD RDD surveys are being conducted
to wait for issuance of updated final FY2005 FMRs for these areas that
reflect completed RDD surveys. HUD will do as many RDD surveys in the
future as available funding permits, and will continue to concentrate
on areas with believe that use of local bedroom ratio data is
appropriate in instances where there are large samples. The Census
provides the best available measure of bedroom size rent relationships
for most larger areas, and shows that small differentials, between
bedroom sizes occur and are valid. In response to comments, however,
HUD is using standard national ratios in instances where the
statistical reliability of local ratios is questionable and has
adjusted the calculation for the four-bedroom FMR to ensure that it is
higher than the three-bedroom FMR by the minimum typical percentage
differential even when Census data show no difference.
Both the increases and decreases in the bedroom ratios based on
2000 Census data reflect actual rent relationships, and HUD continues
to add significant rent bonuses for units with more than two bedrooms.
The decrease in the differentials between two-bedroom and larger rental
units that occurs in some FMR areas is due to the availability of more
current and reliable Census data. The same FMR bonuses for larger
bedroom sizes used in the past were also applied in calculating the
FY2005 FMRs.
VI. Manufactured Home Space Surveys
The FMR used to establish payment standard amounts for the rental
of manufactured home spaces in the Housing Choice Voucher 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.
Manufactured home space FMR revisions are published as final FMRs
in Schedule D. Once approved, the revised manufactured home space FMRs
establish new base year estimates that are updated annually using the
same data used to estimate the Housing Choice Voucher program FMRs. The
FMR area definitions used for the rental of manufactured home spaces
are the same as the area definitions used for the other FMRs.
VII. HUD Rental Housing Survey Guides
HUD recommends the use of professionally-conducted RDD telephone
surveys to test the accuracy of FMRs for areas where there is a
sufficient number of Section 8 units to justify the survey cost of
$20,000-$30,000. Areas with 500 or more program units usually meet this
criterion, and areas with fewer units may meet it if local rents are
thought to be significantly different from the FMR proposed by HUD. In
addition, HUD has developed a simplified version of the RDD survey
methodology for smaller, nonmetropolitan PHAs. This methodology is
designed to be simple enough to be done by the PHA itself, rather than
by professional survey organizations.
PHAs in nonmetropolitan areas may, in certain circumstances, do
surveys of groups of counties. All county-group surveys must be
approved in advance by HUD. PHAs are cautioned that the resulting FMRs
will not be identical for the counties surveyed; each individual FMR
area will have a separate FMR based on its relationship to the combined
rent of the group of FMR areas.
PHAs that plan to use the RDD survey technique may obtain a copy of
the appropriate survey guide by calling HUD USER on 800-245-2691.
Larger PHAs should request ``Random Digit Dialing Surveys; A Guide to
Assist Larger Housing Agencies in Preparing Fair Market Rent
Comments.'' Smaller PHAs should obtain ``Rental Housing Surveys; A
Guide to Assist Smaller Housing Agencies in Preparing Fair Market Rent
Comments.'' These guides are also available on the Internet at http://www.huduser.org/datasets/fmr.html
.
HUD prefers, but does not mandate, the use of RDD telephone
surveys, or the more traditional method described in the small PHA
survey guide. Other survey methodologies are acceptable if they provide
statistically reliable, unbiased estimates of the 40th percentile gross
rent. Survey samples preferably 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 so as to be statistically
representative of the entire rental housing stock of the FMR area. In
particular, surveys must include units of all rent levels and be
representative by structure type (including single-family, duplex and
other small rental properties), age of housing unit, and geographic
location. The decennial Census should be used as a starting point and
means of verification for determining whether the sample is
representative of the FMR area's rental housing stock. All survey
results must be fully documented.
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 is prepared to
relax normal sample size requirements.
Accordingly, the Fair Market Rent Schedules, which will not be
codified in
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24 CFR part 888, are amended as follows:
Dated: September 24, 2004.
Alphonso Jackson,
Secretary.
Fair Market Rents for the Housing Choice Voucher Program
Schedules B and D--General Explanatory Notes
1. Geographic Coverage
a. Metropolitan Areas--FMRs are market-wide rent estimates that are
intended to provide housing opportunities throughout the geographic
area in which rental-housing units are in direct competition.
HUD uses the OMB Metropolitan Statistical Area (MSA) and Primary
Metropolitan Statistical Area (PMSA) definitions, but the current
definitions from the June 6, 2003 publication have not yet been
incorporated. Use of these new geographic definitions will be
considered for use in future FMR publications. Schedule B FMRs are
issued for the same metropolitan area definitions used by HUD in FY
2004 with the exceptions discussed in paragraph (b). The OMB-defined
metropolitan areas closely correspond to housing market area
definitions.
b. Exceptions to OMB Definitions--The exceptions are counties
deleted from several large metropolitan areas whose old OMB
metropolitan area definitions were determined by HUD to be larger than
the housing market areas. The FMRs for the following counties (shown by
the metropolitan area) are calculated separately and are shown in
Schedule B within their respective states under the ``Metropolitan FMR
Areas'' listing:
Metropolitan Area Counties Assigned County-Based FMRs
Chicago, IL
DeKalb, Grundy and Kendall Counties
Cincinnati-Hamilton, OH-KY-IN
Brown County, Ohio; Gallatin, Grant and Pendleton Counties in
Kentucky; and Ohio County, Indiana
Dallas, TX
Henderson County
Flagstaff, AZ-UT
Kane County, UT
New Orleans, LA
St. James Parish
Washington, DC-MD-VA-WV
Berkeley and Jefferson Counties in West Virginia; and Clarke,
Culpeper, King George and Warren Counties in Virginia
c. Nonmetropolitan Area FMRs--FMRs also are established for
nonmetropolitan counties and for county equivalents in the United
States, for nonmetropolitan parts of counties in the New England states
and for FMR areas in Puerto Rico, the Virgin Islands and the Pacific
Islands.
d. Virginia Independent Cities--FMRs for the areas in Virginia
shown in the table below were established by combining the Census data
for the nonmetropolitan counties with the data for the independent
cities that are located within the county borders. Because of space
limitations, the FMR visiting in Schedule B includes only the name of
the nonmetropolitan County. The full definitions of these areas,
including the independent cities, are as follows:
Virginia Nonmetropolitan County FMR Area and Independent Cities
Included With County
------------------------------------------------------------------------
County Cities
------------------------------------------------------------------------
Allegheny............................ Clifton Falls, Covington.
Augusta.............................. Staunton and Waynesboro.
Carroll.............................. Galax.
Frederick............................ Winchester.
Greensville.......................... Emporia.
Henry................................ Martinsville.
Montgomery........................... Radford.
Rockbridge........................... Buena Vista and Lexington.
Rockingham........................... Harrisonburg.
Southampton.......................... Franklin.
Wise................................. Norton.
------------------------------------------------------------------------
2. Bedroom Size Adjustments
Schedules B(1) and B(2) shows the FMRs for 0-bedroom through 4-
bedroom units. The FMRs for unit sizes larger than 4 bedrooms are
calculated by adding 15 percent to the 4-bedroom FMR for each extra
bedroom. For example, the FMR for a 5-bedroom unit is 1.15 times the 4-
bedroom FMR, and the FMR for a 6-bedroom unit is 1.30 times the 4-
bedroom FMR. FMRs for single-room-occupancy (SRO) units are 0.75 times
th 0-bedroom FMR.
3. Arrangement of FMR Areas and Identification of Constituent Parts
a. The FMR areas in Schedule B(1) are listed alphabetically by
metropolitan FMR area and by nonmetropolitan county within each state.
The metropolitan areas in Schedule B(2) are listed alphabetically by
the state and metropolitan area for only those 39 areas currently at
the 50th percentile for their FMR. 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 nonmetropolitan county listings.
d. The New England towns and cities included in a nonmetropolitan
part of a county are listed immediately following the county name.
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[FR Doc. 04-21892 Filed 9-30-04; 8:45 am]
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