The Efficiency FMR is computed from a 2000 Census Base Efficiency Rent and updated using the same update factors derived for the 2-Bedroom FMR. The Efficiency FMR may be separately rebenchmarked from the 2-Bedroom FMR by a special RDD of Efficiency rental units.
The actual 2000 Census Efficiency Base Rent and Revised Final 2005 Efficiency FMR for Becker County, MN are: $263 and $293. All FMRs are 40th percentile rents. The update factors used to derive the Revised Final 2005 Efficiency FMR are summarized in the table below. The sources of the update factors are the same as the sources for the 2-Bedroom FMR update factors.
| Efficiency FMR Update Process for Becker County, MN |
||
|---|---|---|
| Data Year | Amount | Change from Previous* |
| 2000 Census Base | $263 | - |
| 2001 | $271 | 3.0% |
| 2002 | $278 | 2.4% |
| 2003 | $278 | 0.0% |
| 2004 | $287 | 3.1% |
| FY 2005 Final | $293 | 3.0% |
| FY 2005 Revised Final | $293 | No Change |
The remainder of this page demonstrates how the 2000 Census Efficiency Base Rent is computed.
FMR estimates are calculated for 2-bedroom units, the most common size of rental units, and therefore the most reliable to survey and analyze. After each decennial Census, rent relationships between 2-bedroom units and other unit sizes are calculated and used to set FMRs for other units. This is done because it is much easier to update 2-bedroom estimates and to use pre-established cost relationships with other bedroom sizes than it is to develop independent FMR estimates for each bedroom size.
Adjustments are made to the Census results 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 range for efficiency units is between 0.65 and 0.83 of the 2-bedroom unit FMR. In Becker County, MN, the efficiency unit base FMR is restricted to be between $263 and $335.
Bedroom rents for a given FMR area are further adjusted if the differentials between bedroom-size FMRs were inconsistent with normally observed patterns.
In computing 2000 Census RentBedroom Rents, HUD actually uses data on rent distributions
that are prohibited from public release under Title XIII to protect the
confidentiality of respondents. The distributions used in this demonstration
are rounded versions of the actual, protected data.
The rounding scheme is as follows:
0, count = 0
1 to 7, count = 4
all other counts are rounded to the nearest 5 (e.g., 10, 15, 20, 25, etc.)
CALCULATIONS USING THE ROUNDED DATA MAY NOT PRODUCE THE SAME RESULT AS CALCULATIONS
USING THE PROTECTED DATA. THE DIFFERENCE BETWEEN HUD'S ACTUAL RESULTS AND THOSE
DEMONSTRATED HERE IS INVERSELY RELATED TO THE SIZE OF THE FMR AREA. THAT IS,
THE LARGER THE AREA, THE CLOSER THE CALCULATION BASED ON THE
ROUNDED DATA IS LIKELY TO BE TO THE CENSUS BASE FMR COMPUTED FROM THE PROTECTED DATA.
HUD uses rents for recent movers in standard quality units to set the Census 2000 Base Rent.
"Standard Quality" units and rents are determined by limiting the full Census sample by including only responses
meeting the following criteria:
a. Occupied rental units paying cash rent
b. Specified renter ? on 10 acres or less
c. with full plumbing
d. with full kitchen
e. built before 1999
f. meals not included in rent
"Recent Mover" rents are determined by further limiting the "Standard Quality" sample with the following
additional criterion:
g. moved in within the last two years
The 2000 Census did not include a question that could be used to filter public or assisted housing from the rental distributions, however HUD is required to ensure that FMRs exclude non-market rental housing in their computation. Therefore, HUD excludes all units falling below a specified rent level determined from public housing rents in HUD's program databases as likely to be either assisted housing or otherwise at a below-market rent (perhaps due to quality problems not otherwise captured by the Census questions). The "public housing" rent cut-off for efficiency units in Becker County, MN is $199.
The following table and calculations demonstrate how the 40th percentile Census 2000 Efficiency Base Rent is determined for Becker County, MN using the public distribution of recent mover rents for efficiency units in the FMR area.
| Portion of Recent Mover Rent Distribution | Gross Rent Dollar Range | Number of Units | Percent of Eligible Distribution | Cumulative Percent |
|---|---|---|---|---|
| Units below interval containing public housing rent level of $199 |
$1 to $174 | 0 | Not in Distribution | Not in Distribution |
| Units in interval containing public houising rent level of $199 |
$175 to $198 | 0.00 | Not in Distribution | Not in Distribution |
| $199 to $199 | 0.00 | 0.0% | 0.0% | |
| Units below interval containing 40th percentile recent mover rent of $330 |
$200 to $324 | 8 | 36.4% | 36.4% |
| Units in interval containing 40th percentile recent mover rent of $330 |
$325 to $349 | 4 | 18.2% | 54.5% |
| Units above interval containing 40th percentile recent mover rent of $330 |
$350 or more | 10 | 45.5% | 100.0% |
| Total units Above Public Housing Rent in Recent Mover Rent Distribution | 22.00 |
There were no recent mover efficiency units in the rent interval containing the Public Housing Rent level of $199.
The 40th percentile recent mover rent for Becker County, MN is computed by linear interpolation over the 4 units in the rent range $325 to $349. Linear interpolation uses the assupmtion that the 4 units' rents are uniformly distributed in the rent range around the 40th percentile. Under this assumption, the proportion of the rent interval ($25) that needs to be added to the lower limit of the interval to reach the 40th percentile rent is the same as the proportion of units in the interval that needs to be added to the units in lower rent intervals to reach 40 percent of units in the distribution.
40 percent of units = 0.4 x 22.00 = 8.80
Units below the 40th percentile rent interval = 8.00 + 0.00 = 8.00
Units in 40th percentile rent interval needed to reach 40 percent of units = 8.80 - 8.00 = 0.80
Additional Units as Proportion of Interval = 0.80 / 4.00 = 0.2
Dollars Added to Lower Limit of Interval to reach 40th percentile rent = 0.2 x $25 = $5
40th percentile recent mover rent = $325 + $5 = $330
Before using the Census 2000 recent mover rent as the base FMR, HUD checks the standard quality rent for the area to ensure that the recent mover rent is high enough to reach as the 40th percentile standard quality units. The recent mover rent may be below the standard quality rent in areas where rental housing markets are particularly stressed such that recent mover rents will not cover the expenses of operating standard quality units.
The following table and calculations demonstrate how the 40th percentile Census 2000 standard quality is determined for Becker County, MN using the public distribution of standard quality rents for the FMR area.
| Portion of Standard Quality Rent Distribution | Gross Rent Dollar Range | Number of Units | Percent of Eligible Distribution | Cumulative Percent |
|---|---|---|---|---|
| Units below interval containing public housing rent level of $199 |
$1 to $174 | 8 | Not in Distribution | Not in Distribution |
| Units in interval containing public houising rent level of $199 |
$175 to $198 | 3.84 | Not in Distribution | Not in Distribution |
| $199 to $199 | 0.16 | 0.3% | 0.3% | |
| Units below interval containing 40th percentile standard quality rent of $304 |
$200 to $299 | 18 | 35.2% | 35.5% |
| Units in interval containing 40th percentile standard quality rent of $304 |
$300 to $324 | 15 | 29.3% | 64.8% |
| Units above interval containing 40th percentile standard quality rent of $304 |
$325 or more | 18 | 35.2% | 100.0% |
| Total Units Above Public Housing Rent in Standard Quality Rent Distribution | 51.16 |
The numbers of units with standard quality rents above and below the Public Housing Rent level of $199 are determined using linear interpolation over the 4 units in the rent range $175 to $199. Linear interpolation uses the assupmtion that the 4 units' rents are uniformly distributed in the rent range around the Public Housing Rent level. Under this assumption, the proportion of the rent interval ($25) that is below the Public Housing Rent level is the same as the proportion of units with rents in the interval (4) that have rents below the Public Housing Rent level.
Proportion of rent interval below the Public Housing Rent Level: ($199 - $175) / $25 = 0.9600
Units in the Public Housing Rent Level Interval below the Public Housing Rent Level: 0.9600 x 4 = 3.84
The 40th percentile standard quality rent for Becker County, MN is computed by linear interpolation over the 15 units in the rent range $300 to $324. Linear interpolation uses the assupmtion that the 15 units' rents are uniformly distributed in the rent range around the 40th percentile. Under this assumption, the proportion of the rent interval ($25) that needs to be added to the lower limit of the interval to reach the 40th percentile rent is the same as the proportion of units in the interval that needs to be added to the units in lower rent intervals to reach 40 percent of units in the distribution.
40 percent of units = 0.4 x 51.16 = 20.46
Units below the 40th percentile rent interval = 18 + 0.16 = 18.16
Units in 40th percentile rent interval needed to reach 40 percent of units = 20.46 - 18.16 = 2.30
Additional Units as Proportion of Interval = 2.30 / 15 = 0.1536
Dollars Added to Lower Limit of Interval to reach 40th percentile rent = 0.1536 x $25 = $4
40th percentile standard quality rent = $300 + $4 = $304
Since the standard quality rent of $304 is not higher than the recent mover rent of $330, the recent mover rent of $330 is the unadjusted 2000 Census Base Rent for Efficiency Units in Becker County, MN.
The unadjusted 2000 Census Efficiency Base Rent of $330 is inside of the reasonable range of $263 to $335 and is therefore not adjusted for reasonableness.
The difference between the actual 2000 Census Efficiency Base Rentof $263 and the demonstration 2000 Census Efficiency Base Rent of $330 computed here is due to the effects of rounding on the public distribution as described above.
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