[Federal Register: August 6, 2004 (Volume 69, Number 151)]
[Notices]
[Page 48039-48099]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au04-125]
[[Page 48039]]
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Part IV
Department of Housing and Urban Development
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Proposed Fair Market Rents for the Housing Choice Voucher Program and
Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2005;
Notice
[[Page 48040]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4937-N-01]
Proposed 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 Proposed 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 Fair Market Rents (FMRs)
annually to be effective on October 1 of each year. The Department's
regulations at 24 CFR part 888 provide a notice and comment process for
developing FMRs. Today's notice proposes FMRs for FY2005. The proposed
numbers would amend FMR schedules 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.
Proposed FY2005 FMRs are based on 40th percentile recent mover FMR
estimates for most areas, but FMRs for 38 metropolitan areas are shown
at the 50th percentile FMR standard. The 50th percentile FMRs were
initiated in 2001 to increase housing choice opportunities in
metropolitan areas where high percentages of vouchers were being used
in high poverty census tracts. For informational purposes, 40th
percentile FMRs for the 38 areas that currently have 50th percentile
FMRs are also listed.
The proposed FY2005 FMRs in this notice are the first to utilize
new Office of Management and Budget (OMB) area definitions and 2000
Census data (which became available in September 2003). The FMR
estimates have been trended to April 2005, the mid-point of FY2005.
DATES: Comments Due Date: September 7, 2004. Due to a number of
technical and policy issues associated with rebenchmarking the FY2004
FMRs with 2000 Census data, the proposed FY2005 FMRs are being
published later than usual. HUD is required to publish FMRs for effect
by October 1, 2004. To meet this requirement, HUD is allowing a 30-day
comment submission period for the FMRs proposed in this notice. Reviews
of these comments will be reflected in a Federal Register notice issued
on or about October 1, 2004. HUD will accept comments during the 60-day
period following the initial 30-day comment period. Comments received
during the 60-day period will be considered for inclusion in a
subsequent FY2005 Federal Register FMR notice.
ADDRESSES: Interested persons are invited to submit comments regarding
HUD's estimates of the FMRs as published in this notice to the Office
of the General Counsel, Rules Docket Clerk, Room 10276, Department of
Housing and Urban Development, 451 Seventh Street, SW., Washington, DC
20410-0001. Communications should refer to the above docket number and
title and should contain the information specified in the ``Request for
Comments'' section. To ensure that the information is fully considered
by all of the reviewers, each commenter is requested to submit two
copies of its comments, one to the Rules Docket Clerk and the other to
the Economic and Market Analysis Staff in the appropriate HUD field
office. A copy of each communication submitted will be available for
public inspection and copying during regular business hours (8 a.m. to
5 p.m. eastern time) at the above address.
FOR FURTHER INFORMATION CONTACT: Deborah Hernandez, Director, Office of
Housing Voucher Programs, telephone (202) 708-2934, responsible for
decisions on how fair market rents are used; or Mark Johnston, Office
of Special Needs Assistance Programs, telephone (202) 708-4300,
responsible for administration of the Mod Rehab Single Room Occupancy
program. 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 the HUD Web site, http://www.huduser.org/datasets/fmr.html. Further
questions on the methodology may be addressed to Marie L. Lihn,
Economic and Market Analysis Division, Office of Economic Affairs,
telephone (202) 708-0590, e-mail marie_l._lihn@hud.gov. Hearing- or
speech-impaired persons may use the Telecommunications Device for the
Deaf (TTY) at (800) 927-7589. (Other than the HUD USER 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 by 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. 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 Web site:
http://www.gpoaccess.gov/fr/index.html.
II. Procedures for the Development of FMRs
Section 8(a) of the USHA requires the Secretary of HUD to publish
FMRs periodically, but not less frequently than annually. The
Departments regulations provide that HUD will develop proposed FMRs,
publish them for public comment, analyze the comments, and publish
final FMRs. (See 24 CFR 888.115.) Final FY2005 FMRs will be published
on or before October 1, 2004, as required by section 8(c)(1) of the
USHA.
III. Fair Market Rent Schedules
This notice proposes revised FMRs for FY2005. These are the first
FMRs calculated using 2000 Census data, which 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 proposed FY2005 FMRs for all areas in the country have been
rebenchmarked, either with Census data or with Random Digit Dialing
surveys or American Housing Surveys conducted after the date of the
2000 Census.
In addition to the use of Census 2000 data for FMRs, these FMRs
also reflect a change in metropolitan area definitions. Please see the
following
[[Page 48041]]
section on Metropolitan Area Definitions for a discussion of housing
market areas and HUD's use of OMB-defined metropolitan area. Due to the
rebenchmarking and the changes in area definitions, the proposed FMRs
for many areas differ from the normal updating of last year's FMRs.
Schedules B(1) and B(2) at the end of this document list the
proposed FMR levels for rental housing. Schedule B(1) lists the
proposed 2005 FMRs for all areas using the estimated 40th or 50th
percentile FMR standard. An asterisk in Schedule B(1) identifies the
FMR areas where use of 50th percentile FMRs had been authorized. There
are some metropolitan areas and parts of metropolitan areas that
previously qualified for 50th percentile FMRs but no longer do so
because of OMB area definitional changes.
Schedule B(1) contains 40th percentile FMRs for most areas, but
provides 50th percentile FMRs for the following metropolitan FMR areas:
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Albuquerque, NM........................ Atlanta-Sandy Springs-Marietta,
GA.
Austin-Round Rock, TX.................. Baton Rouge, LA.
Buffalo-Niagara Falls, NY.............. Chicago-Naperville-Joliet, IL.
Cleveland-Elyria-Mentor, OH............ Dallas-Plano-Irving, TX.
Denver-Aurora, CO...................... Detroit-Livonia-Dearborn, MI.
Fort Lauderdale-Pompano Beach-Deerfield Fort Worth-Arlington, TX.
Beach, FL.
Grand Rapids-Wyoming, MI............... Houston-Baytown-Sugar Land, TX.
Kansas City, MO-KS..................... Las Vegas-Paradise, NV.
Miami-Miami Beach-Kendall, FL.......... Minneapolis-St. Paul-
Bloomington, MN-WI.
Newark-Union, NJ-PA.................... Oakland-Fremont-Hayward, CA.
Oklahoma City, OK...................... Oxnard-Thousand Oaks-Ventura,
CA.
Philadelphia, PA....................... Phoenix-Mesa-Scottsdale, AZ.
Richmond-Petersburg, VA................ Sacramento-Arden-Arcade-
Roseville, CA.
St. Louis, MO-IL....................... Salt Lake City-Ogden, UT.
San Antonio, TX........................ San Diego-Carlsbad-San Marcos,
CA.
San Jose-Sunnyvale-Santa Clara, CA..... Santa Ana-Anaheim-Irvine, CA.
Tampa-St. Petersburg-Clearwater, FL.... Tulsa, OK.
Virginia Beach-Norfolk-Newport News, VA- Washington-Arlington-
NC. Alexandria, DC-VA-MD-WV.
West Palm Beach-Boca Raton-Boynton Wichita, KS.
Beach, FL.
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For informational purposes, Schedule B(2) of this document provides
the 40th percentile FMR standard for the 38 areas that have a 50th
percentile rent shown in Schedule B(1). FMR areas are listed by State;
a FMR area that covers parts of two States will be shown under each
State listing.
FMRs for the Moderate Rehabilitation program are 120 percent of the
Schedule B(1) Fair Market Rents (see 24 CFR 882.408(a) and
888.113(e)(1)). The payment standard amount for a single-room occupancy
unit in the Rental Voucher program is 75 percent of the efficiency FMR
listed in Schedule B(1).
Manufactured home space rents are set at 40 percent of the Schedule
B(1) FMR and include utilities. Exceptions to this calculated rent are
based on surveys of space rents plus utilities and are shown on
Schedule D.
IV. Metropolitan Area Definitions
A housing market area is a geographic area where housing units of
similar characteristics are in competition with each other. With a few
exceptions identified below, HUD uses OMB-defined metropolitan areas as
the geographic basis for defining housing markets because of the
correspondence that typically exists between these definitions and
housing market area definitions.
As part of the 2000 Census process, OMB released new metropolitan
area definitions on June 6, 2003, and updated them on February 18,
2004. The new 2000 Census-based metropolitan area standards use
somewhat different terminology than previously in use. The 1980 and
1990 Census-based standards identified two types of metropolitan areas:
(1) Metropolitan Statistical Areas (MSAs), and (2) Consolidated
Metropolitan Statistical Areas (CMSAs). CMSAs were large metropolitan
areas that had two or more large, distinct subparts referred to as
Primary Metropolitan Statistical Areas (PMSAs). For instance, the
Baltimore-Washington metropolitan area was categorized as a CMSA, and
it was split into a Baltimore PMSA and a Washington, DC PMSA. Counties
were the building blocks for metropolitan area definitions except in
New England, where aggregations of townships were used to define
metropolitan areas. HUD FMR areas were defined using MSA and PMSA
definitions.
The terms ``Consolidated Metropolitan Statistical Area'' and
``Primary Metropolitan Statistical Area'' are now obsolete. Under the
2000 standards, the term ``Metropolitan Statistical Area'' is used for
all metropolitan areas. These areas are also referred to as Core-Based
Statistical Areas (CBSAs). A large metropolitan CBSA area may be
divided into ``Metropolitan Divisions,'' which consist of a county or
group of counties within a Metropolitan Statistical Area that has a
population core of at least 2.5 million. A Metropolitan Division is
similar in concept to the now obsolete Primary Metropolitan Statistical
Area concept. Special note should be made of the fact that the new
metropolitan area definitions are county-based. This results in
significant changes in how some New England metropolitan areas are
defined.
While a Metropolitan Division is a subdivision of a large
Metropolitan Statistical Area, it functions as a distinct social,
economic, and cultural area within the larger region. Metropolitan
Divisions are given separate statistical identities (e.g., Census
reports will provide separate estimates for these areas). Federal
agencies that had been using Primary Metropolitan Statistical Areas for
program administrative and fund allocation purposes were directed by
OMB to consider replacing them with Metropolitan Divisions because of
the conceptual similarities.
Many metropolitan areas have been revised to include counties
previously designated as nonmetropolitan areas. Some of these formerly
nonmetropolitan counties will find that the proposed FY2005 FMRs are
substantially higher. Counties with substantial increases in the FMR
may find program implementation difficult because of insufficient
funding. These counties should apply to the Office of Public and Indian
Housing for exception rents below 90 percent of the FMR standard (See
24 CFR 982.503) when appropriate.
The revised OMB definitions identify two types of nonmetropolitan
areas. A ``Micropolitan Area'' consists of one or
[[Page 48042]]
more counties that meet certain population size and other criteria.
Remaining nonmetropolitan areas consist of individual nonmetropolitan
counties that lack the ``Micropolitan Area'' designation.
HUD has made two changes to OMB area definitions in establishing
proposed FY2005 FMR areas. One change is legislatively mandated, and
requires establishing separate FMRs for Westchester County, New York,
even though it is part of the New York City Metropolitan Area. The
other change relates to Virginia independent cities, which are treated
as county-equivalents by the Census but which are too small to be
considered distinct housing market areas. For FMR program purposes,
Virginia independent cities are associated with a metropolitan area or
nonmetropolitan county. Independent cities that fall within
metropolitan or micropolitan areas are considered a part of those areas
and will be listed in their respective metropolitan, micropolitan, or
nonmetropolitan area.
Virginia Nonmetropolitan County FMR Area and Independent Cities Included
With County
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County Cities
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Allegheny................................. Clifton Forge, Covington.
Carroll................................... Galax.
Greensville............................... Emporia.
Rockbridge................................ Buena Vista and Lexington.
Southhampton.............................. Franklin.
Wise...................................... Norton.
------------------------------------------------------------------------
Fiftieth percentile FMRs were originally assigned to 39 areas.
Current OMB definitions split four of these areas into metropolitan
divisions: Chicago, Detroit, Philadelphia and Washington, DC. The core
part of these areas remains qualified for 50th percentile FMRs, but the
parts put into separate metropolitan divisions are no longer qualified.
In addition, the merger of Bergen-Passaic into the New York City
Division means that those counties are no longer qualified to have 50th
percentile FMRs. Therefore, under the new metropolitan area
definitions, only 38 areas have 50th percentile FMRs.
V. Method Used To Develop FMRs
FMR Standard: FMRs are gross rent estimates that include both
shelter rent paid by the tenant to the landlord, and the cost of
tenant-paid utilities, except telephones. HUD sets FMRs to assure that
a sufficient supply of rental housing is available to program
participants. To accomplish this objective, FMRs must be both high
enough to permit a selection of units in neighborhoods and low enough
to serve as many families as possible.
FMRs are set at a percentile within the rent distribution of
standard quality rental housing units in each FMR area (see 24 CFR
888.113). FMRs are based on the distribution of rents for units that
are occupied by recent movers. The distribution does not include rents
for units less than two years old and is adjusted for public housing
units.
Attached FMR Schedule B(1) provides FY2005 FMRs at the 40th or 50th
percentile of rents paid by recent movers for all areas. The 50th
percentile FMRs were assigned to large metropolitan areas that had high
program concentrations in high poverty areas. Schedule B(2) provides
FY2005 FMRs at the 40th percentile for the 38 areas that are currently
set at the 50th percentile. The 40th percentile rent standard means
that 40 percent of all standard-quality rental housing units rented by
recent movers have rents at or below this dollar amount. Public Housing
Authorities (PHAs) have discretion to increase their payment standards
to 110 percent of published FMRs. Because the variation in rents
between the 40th and 60th percentiles is so small, a 10 percent
increase in a rent set at the 40th percentile produces a rent standard
that is, on average, equal to the 55th percentile of rents paid by
recent movers (i.e., 55 percent of all recent mover rents are below
this rent level).
Data Sources
HUD has used the most accurate and current data available to
develop the FMR estimates. The sources of survey data used for the
base-year estimates are:
(1) The 2000 Census, which provides statistically reliable rent
data for all FMR areas,
(2) Random Digit Dialing (RDD) telephone surveys of individual FMR
areas, which are based on a sampling procedure that uses computers to
select statistically random samples of rental housing, and
(3) American Housing Surveys (AHS) of the largest metropolitan
areas and have statistical accuracy comparable to the decennial Census.
The base-year FMRs are updated using trending factors based on
Consumer Price Index (CPI) data for rents and utilities or on HUD
regional rent-change factors developed from regional RDD surveys. There
are 76 metropolitan areas that are covered by metropolitan CPI surveys.
For all other areas, RDD regional rent-change factors are developed
annually for the metropolitan and nonmetropolitan parts of each of the
10 HUD regions. The RDD factors are used to update the base-year
estimates for all FMR areas that are not covered by a metropolitan CPI
survey.
The decennial Census provides statistically reliable rent data for
use in establishing base-year FMRs. The RDD telephone survey technique
is based on a sampling procedure that uses computers to select
statistically random samples of telephone numbers that are then
contacted to seek information on rental housing. RDD surveys are
conducted for two purposes: (1) For developing FMR estimates for
selected individual FMR areas, and (2) for developing HUD regional
gross rent-change factors. The HUD Regional surveys are conducted
annually. Contingent on funding, HUD conducts 60 to 80 individual FMR
area surveys each year. In late 2005, Census American Community Survey
(ACS) data will begin to become available that will provide highly
reliable annual rent estimates for most metropolitan areas, and
eliminate the need for HUD regional RDD surveys as well as most local
RDD surveys. The ACS will collect the same type of rent data as the
decennial Census. ACS data will be used to replace HUD regional RDD
surveys in FY 2006 FMRs, and area-specific ACS FMR estimates will also
become available for use. The AHS is used to develop between Census
revisions for the largest metropolitan areas on a four-year cycle.
Those surveys used in the FY2005 FMRs were conducted in 2002.
Areas With FMRs Based on 2000 Census Data
For areas where the base-year estimates were developed from the
2000 Census, the 40th and, where appropriate, 50th percentile gross
rent of standard-quality units occupied by recent movers was calculated
separately for each number of bedrooms. The rent distributions were
modified to eliminate public housing units, so that only market-rent
units are considered. FMRs are calculated for all metropolitan areas or
divisions, and all nonmetropolitan counties or micropolitan areas.
The rents for three-bedrooms units continue to reflect HUD's policy
to set higher rents for three-bedroom and larger units than would
result from using normal market rents. This adjustment was intended to
increase the likelihood that the largest families, who have the most
difficulty leasing units, will be successful in finding eligible
program units. The adjustment added 8.7 percent to the three-bedroom
FMRs
[[Page 48043]]
and corresponding increases for four-bedroom and larger units.
The FMR for unit sizes larger than four bedrooms were 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.
A further adjustment was made for areas with local bedroom-size
intervals above or below what are considered to be reasonable ranges.
Experience has shown that highly unusual bedroom ratios typically
reflect inadequate sample sizes or peculiar local circumstances that
HUD would not want to recognize in setting FMRs (e.g., luxury
efficiency apartments in New York City). Bedroom interval ranges were
established based on an analysis of the range of such intervals for all
metropolitan areas. The final ranges used were: efficiency units must
be between .66 and .84 of the two-bedroom FMR, one-bedroom units must
be between .78 and .89 of the two-bedroom unit, three-bedroom units
must be between 1.21 and 1.42 of the two-bedroom unit and four-bedroom
units must be between 1.23 and 1.66 of the two-bedroom unit. Rents were
then adjusted if they were non-sequential (e.g., efficiency rents were
not allowed to be higher than one-bedroom rents).
State minimum FMRs will no longer be used. Instead, for low-
population nonmetropolitan counties with small Census recent-mover rent
samples, Census-defined county group data were used as the basis for
determining rents for each bedroom size. (Census county groups consist
of an aggregation of counties with similar social and economic
characteristics.) This adjustment was made to protect against
unrealistically high or low FMRs due to insufficient sample sizes. The
areas covered by this new estimation method have less 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, the year in
which these FMRs will be in effect. Update factors were based either on
the area-specific 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 December of 2000, followed by the annual CPI data
for 2001, 2002, and 2003. An annual trending factor of three percent,
based on the average annual increase in the median gross rent as
measured in the 1990 and 2000 Census, was used to update estimates from
the last date for which CPI data were available until the midpoint of
the fiscal year in which the estimates were used. Trending to cover the
period from January 1, 2004, to April 1, 2005, was needed. 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.
The use of the 2000 Census rent data and the change in OMB area
definitions resulted in significant revisions for a large number of FMR
areas this year. The availability of more detailed local information on
public housing, which is excluded from FMR estimates, also affected
these estimates. Because of extensive metropolitan geographical
definitional changes, FMRs for many old and new areas cannot be
directly compared. Counties offer the best unit of comparison, but
don't work well in New England. Approximately 22 percent of all
counties have proposed FY2005 FMRs that are less than their final
FY2004 FMRs, and 36 percent of counties had increases of more than 10
percent over the FY2004 FMRs as a result of rebenchmarking. A
disproportionate number of areas with increases are small
nonmetropolitan counties.
A number of RDDs will be conducted in the summer of 2004 for
metropolitan areas with unusual changes to ensure that their FY2005
FMRs are accurate. Areas where completed surveys show that an increase
over proposed FMR levels is warranted will be given higher FMRs in the
final FMR publication.
Areas With FMRs Based on Local RDD Survey Data
HUD uses RDD telephone surveys to obtain statistically reliable FMR
estimates for selected areas. 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. Both one- and
two-bedroom units are used because there usually are consistent
relationships between one- and two-bedroom rents in local housing
markets, and use of data on one-bedroom rents can be used to improve
the accuracy of two-bedroom FMR estimates. One-bedroom survey rents are
converted into two-bedroom equivalent rents using the average Census
differential between one- and two-bedroom rents.
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. Such 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 of the estimates will be within five
percent of the actual 40th or 50th percentile value.
A number of RDD surveys were conducted after the 2000 Census.
Approximately one-half of these could not be used because of large
changes in the OMB-defined geographic area. Of the areas which did not
change or changed very little under the new OMB definitions, RDD survey
results are used to replace FMR estimates rebenchmarked using the 2000
Census only when the Census-based estimate is outside the 95 percent
confidence interval of the RDD survey estimate (i.e., there is only a
five percent likelihood that the Census-based estimate is correct). For
areas where the RDD survey results are determined to have a
statistically significant difference, RDD surveys are used to provide a
rebenchmarked FMR instead of the Census. These estimates are updated in
essentially the same manner as Census estimates.
The proposed FMRs include RDD surveys completed in 2001 and 2002.
Survey results for surveys conducted in 2000 produced contract rent
estimates very similar to the Census estimates, so they are not used.
The survey estimate confidence intervals are partly dependent on the
FMR standard
[[Page 48044]]
selected. The RDD surveys used in place of Census data for Schedule
B(1) were for the following areas:
2001 Surveys: Muncie, IN; New Orleans, LA; Orlando, FL; Riverside,
CA; San Jose, CA; Payne County, OK; Jackson County, NC; McDowell
County, NC; and Polk County, NC.
2002 Surveys: Baltimore, MD; Jacksonville, FL; Pittsburgh, PA;
Norfolk, VA; St. Louis, MO; and Salinas, CA.
The RDD surveys used in place of Census-based estimates for
Schedule B(2) were for the following areas:
2001 Surveys: Buffalo, NY; Minneapolis, MN; and San Jose, CA.
2002 Surveys: Norfolk, VA and St. Louis, MO.
Areas With FMRs Based on AHS Data
HUD used 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
of these surveys could not be used because of differences in AHS and
new OMB metropolitan area definitions. Another 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 FMR estimates and were used to
rebenchmark FMRs for the following areas in Schedule B(1): Dallas, TX;
Phoenix, AZ; Portland, OR; and Santa Ana, CA.
Dallas and Phoenix are 50th percentile FMR areas and the AHS rent
was also used to rebenchmark the FMR for these two areas at the 40th
percentile rent shown in Schedule B(2).
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.
VI. Request for Comments
HUD seeks public comments on FMR levels for specific areas.
Comments on FMR levels must include sufficient information (including
local data and a full description of the rental housing survey
methodology used) to justify any proposed changes. Changes may be
proposed in all or any one or more of the unit-size categories on the
schedule. Recommendations and supporting data must reflect the rent
levels that exist within the entire FMR area.
For the supporting data, 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 approximately $20,000 to $30,000. Areas with 500 or more
program units usually meet this cost criterion, and areas with fewer
units may meet it if actual rents for two-bedroom units are
significantly different from the FMRs proposed by HUD. In addition, HUD
has developed a 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, at a cost of $5,000 or less.
PHAs in nonmetropolitan areas may, in certain circumstances,
conduct surveys of groups of counties. HUD must approve all county-
grouped surveys in advance. 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 the relationship of rents in
that area to the combined rents in the cluster of FMR areas. In
addition, PHAs are advised that counties whose FMRs are based on the
combined rents in the cluster of FMR areas will not have their FMRs
revised unless the grouped survey results show a revised FMR above the
combined rent level.
PHAs that plan to use the RDD survey technique should obtain a copy
of the appropriate survey guide. Larger PHAs should request HUD's
survey guide entitled ``Random Digit Dialing Surveys; A Guide to Assist
Larger Public Housing Agencies in Preparing Fair Market Rent
Comments.'' Smaller PHAs should obtain the guide entitled ``Rental
Housing Surveys; A Guide to Assist Smaller Public Housing Agencies in
Preparing Fair Market Rent Comments.'' These guides are available from
HUD USER on (800) 245-2691, or from HUD's Web site, in Microsoft Word
or Adobe Acrobat format, at the following address: http://www.huduser.org/datasets/fmr.html
.
Other survey methodologies are acceptable in providing data to
support comments, if the survey methodology can provide statistically
reliable, unbiased estimates of the gross rent. Survey samples should
preferably be randomly drawn from a complete list of rental units for
the FMR area. If this is not feasible, the selected sample must be
drawn to be statistically representative of the entire rental housing
stock of the FMR area. Surveys must include units at all rent levels
and be representative 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 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. If the survey is statistically acceptable, HUD
will estimate FMRs for other bedroom sizes using ratios based on the
decennial Census. 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.
HUD will consider increasing manufactured home space FMRs where
public comment demonstrates that 40 percent of the two-bedroom FMR is
not adequate. In order to be accepted as a basis for revising the
manufactured home space FMRs, comments must include a pad rental survey
of the mobile home parks in the area, identify the utilities included
in each park's rental fee, and provide a copy of the applicable public
housing authority's utility schedule.
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:
Dated: July 30, 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 Area FMRs--FMRs are market-wide rent estimates that
are intended to provide housing opportunities throughout the geographic
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area in which rental-housing units are in direct competition.
b. Nonmetropolitan Area FMRs--FMRs also are established for
nonmetropolitan counties and for county equivalents in the United
States, and for FMR areas in Puerto Rico, the Virgin Islands, and the
Pacific Islands.
c. 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 listing in Schedule B(1) 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 Forge and Covington.
Carroll................................... Galax.
Greensville............................... Emporia
Rockbridge................................ Buena Vista and Lexington.
Southhampton.............................. Franklin
Wise...................................... Norton
------------------------------------------------------------------------
2. Bedroom Size Adjustments
Schedule B(1) shows the FMRs for zero-bedroom through four-bedroom
units. 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 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 exception rent FMRs for manufactured home spaces in Schedule D are
listed alphabetically by State.
b. Two nonmetropolitan counties are listed alphabetically on each
line of the nonmetropolitan county listings.
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[FR Doc. 04-17884 Filed 8-3-04; 11:10 am]
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