[Federal Register: January 2, 2001 (Volume 66, Number 1)]
[Rules and Regulations]
[Page 161-220]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
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Part III
Department of Housing and Urban Development
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24 CFR Part 888
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50th Percentile and 40th Percentile Fair Market Rents for Fiscal Year
2001; Final Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 888
[Docket No. FR-4589-N-04]
50th Percentile and 40th Percentile Fair Market Rents for Fiscal
Year 2001
AGENCY: Office of the Secretary, HUD.
ACTION: Notice of Fair Market Rents (FMRs) for Fiscal Year (FY) 2001.
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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
requires the Secretary of HUD to publish FMRs periodically, but not
less frequently than annually to be effective on October 1 of each
year. FMRs are used (1) to establish payment standards for the Housing
Choice Voucher program; (2) to determine initial contract rents in new
commitments for Section 8 project-based assistance (currently available
chiefly in the project-based voucher program); (3) to determine whether
comparability applies to adjustment of contract rents during the term
of existing HAP contracts for the former new construction, substantial
rehabilitation and moderate rehabilitation programs; (4) as a limit on
renewal rents for certain Section 8 projects (including mark-up-to-
market projects); and (5) to determine maximum subsidy levels for HOME
tenant-based rental assistance, and maximum rent levels in HOME
multifamily rental housing. Other programs may also require the use of
FMRs.
This notice sets final FMRs that reflect the 50th percentile rent
levels for 39 areas, as determined by applying the criteria specified
in HUD's interim rule amending the HUD regulation that establishes the
methodology for setting FMRs for existing housing (24 CFR 888.113). The
interim was published on October 2, 2000 (65 FR 58870), and became
effective on December 1, 2000. To combine final Fiscal Year 2001 FMRs
for all areas in one publication, this notice also re-publishes the
40th percentile rents for all other areas.
EFFECTIVE DATE: The 50th percentile FMRs published in this notice are
effective on January 2, 2001. The 40th percentile FMRs were previously
effective on October 1, 2000.
Electronic Data Availability: This Federal Register Notice is
available electronically from the HUD news page: http://
www.hudclips.org/cgi/index.cgi. Federal Register Notices also are
available electronically from the U.S. Government Printing Office web
site: http://www.access.gpo.gov/su_docs/aces/aces140.html.
The data set of the 50th percentile FMRs is available
electronically on the HUD web page: http://www.huduser.gov/datasets/
pdrdatas.html.
FOR FURTHER INFORMATION CONTACT: Gerald Benoit, Director, Real Estate
and Housing Performance Division, Office of Public and Assisted Housing
Delivery, telephone (202) 708-0477. For technical information on the
development of schedules for specific areas or the method used for the
rent calculations, contact Marie L. Lihn, Economic and Market Analysis
Division, Office of Economic Affairs, telephone (202) 708-0590,
Extension 5866 (e-mail: Marie_L._Lihn@hud.gov). Hearing-or speech-
impaired persons may use the Telecommunications Devices for the Deaf
(TTY) by contacting the Federal Information Relay Service at 1-800-877-
8339. (Other than the ``800'' TTY number, telephone numbers are not
toll free.)
SUPPLEMENTARY INFORMATION: Section 8 of the United States Housing Act
of 1937 (the Act) (42 U.S.C. 1437f) authorizes housing assistance to
help lower income families rent decent, safe, and sanitary housing. The
amounts of the housing assistance payments are limited by ``fair market
rents'' (FMRs) established by HUD for all areas, and for different size
units (expressed as number of bedrooms in a unit).
In the HUD voucher program, the FMR is used to determine the
``payment standard'' (the maximum monthly subsidy) for assisted
families (see Section 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, safe, and sanitary rental
housing of a modest (non-luxury) nature with suitable amenities.
FMRs are estimates of rent plus the cost of utilities, except
telephone. FMRs are housing market-wide estimates of rents that provide
opportunities to rent standard quality housing throughout the
geographic area in which rental housing units are in competition.
The level at which FMRs are set is expressed as a percentile point
within the rent distribution of standard quality rental housing units
in the FMR area. FMRs are set at either the 40th or 50th percentile
rent--the dollar amount below which the rent for 40 or 50 percent of
standard quality rental housing units falls. The 40th or 50th
percentile rent is drawn from the distribution of rents of all units
that are occupied by recent movers. Adjustments are made to exclude
public housing units, newly built units and substandard units.
50th Percentile FMRs
Raising FMRs for certain areas to the 50th percentile rent level as
provided in the interim rule, effective December 1, 2000, is designed
to give lower-income families who participate in the voucher program
access to a broader range of housing opportunities throughout a
metropolitan area. FMRs have been increased to the 50th percentile rent
in those metropolitan areas where a FMR increase is most needed to
promote residential choice, help families move closer to areas of job
growth, and deconcentrate poverty. New paragraph (c) Of Section 888.113
provides as follows:
(c) Setting FMRs at the 50th percentile rent to provide a broad
range of housing opportunities throughout a metropolitan area.
(1) HUD will set the FMRs at the 50th percentile rent for all unit
sizes in each metropolitan FMR area that meets all of the following
criteria at the time of annual publication of the FMRs:
(i) The FMR area contains at least 100 census tracts;
(ii) 70 percent or fewer of the census tracts with at least 10 two
bedroom rental units are census tracts in which at least 30 percent of
the two bedroom rental units have gross rents at or below the two
bedroom FMR set at the 40th percentile rent; and
(iii) 25 percent or more of the tenant-based rental program
participants in the FMR area reside in the 5 percent of the census
tracts within the FMR area that have the largest number of program
participants.
(2) If the FMRs are set at the 50th percentile rent in accordance
with paragraph (c)(1) of this section, HUD will set the FMRs at the
50th percentile rent for a total of three years.
(i) At the end of the three-year period, HUD will continue to set
the FMRs at the 50th percentile rent only so long as the concentration
measure for the current year is less than the concentration measure at
the time the FMR area first received an FMR set at the 50th percentile
rent. HUD will publish FMRs based on the 40th percentile rent for FMR
areas that do not qualify for continued use of the 50th percentile
rent.
(ii) For purposes of this section, the term ``concentration
measure'' means the percentage of tenant-based rental program
participants in the FMR area who reside in the 5 percent of the census
tracts within the FMR area that have the largest number of program
participants.
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(iii) FMR areas that do not meet the test for continued use of FMRs
set at the 50th percentile will be ineligible to use FMR set at the
50th percentile for a period of three years.
(iv) A PHA whose jurisdiction includes one or more FMR areas that
are no longer eligible to use FMRs set at the 50th percentile may be
eligible for a higher payment standard under Section 982.503 (f).
Schedule B of this document lists the FMRs for all areas. Schedule
B includes FMRs set at the 50th percentile rent for 39 FMR areas in
accordance with Section 888.113 (c), and at the 40th percentile rent
for all other FMR areas. In Schedule B, an asterisk identifies each of
the 39 FMR areas for which HUD has determined 50th percentile FMRs.
HUD has set 50th percentile FMRs for the following metropolitan FMR
areas:
Albuquerque, NM
Atlanta, GA
Austin-San Marcos, TX
Baton Rouge, LA
Bergen-Passaic, NJ
Buffalo-Niagara Falls, NY
Chicago, IL
Cleveland-Lorain-Elyria, OH
Dallas, TX
Denver, CO
Detroit, MI
Fort Lauderdale, FL
Fort Worth-Arlington, TX
Grand Rapids-Muskegon-Holland, MI
Houston, TX
Kansas City, MO-KS
Las Vegas, NV-AZ
Miami, FL
Minneapolis-St. Paul, MN-WI
Newark, NJ
Norfolk-Virginia Beach-Newport News, VA-NC
Oakland, CA
Oklahoma City, OK
Orange County, CA
Philadelphia, PA-NJ
Phoenix-Mesa, AZ
Richmond-Petersburg, VA
Sacramento, CA
Salt Lake City-Ogden, UT
San Antonio, TX
San Diego, CA
San Jose, CA
St. Louis, MO-IL
Tampa-St. Petersburg-Clearwater, FL
Tulsa, OK
Ventura, CA
Washington, DC-MD-VA
West Palm Beach-Boca Raton, FL
Wichita, KS
Manufactured Home Space FMRs Based on 50th Percentile Rent
As in the past, FMRs for the rental of manufactured home spaces in
the tenant-based Housing Choice Voucher program are set at 40 percent
of the applicable Section 8 existing housing program FMRs for two-
bedroom units (section 888.113(e)). The manufactured home space FMR for
each of the 39 areas for which HUD has set 50th percentile FMR, is set
a 40 percent of the two-bedroom 50th percentile FMR.
Consideration of Public Comment
In response to the October 6, 2000 proposed 50th percentile FMRs
for 39 areas, HUD received six public comments. No rental housing
survey information was submitted with any of the comments. Two comments
specifically discussed the implementation of the provisions under the
interim rule and were not related to FMR areas. The six comments
received and responses are summarized below:
Comment: The Housing Authority of the City of New Braunfels, Texas
says its jurisdiction has high rents that are more comparable to Austin
than San Antonio and that it has a very high turn-back rate for its
Housing Choice Voucher program.
Response: The New Braunfels PHA does not appear to have taken
advantage of its discretion to raise payment standards to 110 percent
of the FMR. If the PHA were to continue to experience high turn-back
rates, despite having increased its payment standard to 110 percent of
the FMR, it could qualify for the success rate payment standard based
on a 50th percentile rent. HUD also provides several additional
mechanisms for obtaining exception payment standards above 110 percent
of the 40th percentile FMR. (See 24 CFR 982.503.)
Comment: Two Public Housing Authorities (PHAs), The Housing
Authority of the City of New Braunfels, Texas and the Oklahoma City
Housing Authority request additional funding from HUD for their voucher
programs. The New Braunfels PHA requests additional funding for a
higher payment standard, the Oklahoma City PHA requests additional
funding for the new 50th percentile FMRs.
Response: HUD's current procedures provide sufficient funding for
PHAs to cover the increased costs resulting from higher payment
standards or an FMR increase. Any additional costs resulting from the
higher payment standard or higher FMR would be reflected in the PHA's
costs per unit for the current year. Under HUD's renewal regulations
(see 24 CFR 982.102), a PHA experiencing increased per-unit costs in
year 1 will generally receive an increase in its funding in the
following year in light of these higher per-unit costs. This enables
PHAs to increase payment standards where necessary to ensure the
successful use of Housing Choice Vouchers.
Comment: Foothill-West Associates, the administrator of a senior
apartment complex, notes that rents in Butte County, California have
increased countywide by an average of 12-13 percent and requests a
survey by HUD.
Response: HUD is currently developing a list of potential areas
that will be surveyed during the upcoming winter and summer. Chico-
Paradise MSA (Butte County) will be placed on this list as a potential
candidate and its need for a survey will be evaluated in comparison
with the needs of other FMR areas.
Comment: The Council of Large Public Housing Authorities finds that
the proposed rule is too restrictive in that it limits increasing the
FMRs to only 39 metropolitan market areas. CLPHA also is concerned that
the proposed rule lacks transparency because HUD has not identified the
sources of information used to determine eligibility and has not
established a method to appeal the designation of ineligibility.
Response: These comments go to the merits of the interim rule that
provides for increased FMRs and success rate payment standards, rather
than to HUD's calculations of the 50th percentile rent in accordance
with the rule.
Comment: The Dallas Housing Authority supports the efforts of HUD
to increase FMRs.
Calculation Errors
This notice corrects the 3-bedroom FMR for Utica-Rome, NY and makes
it $626.
Other Matters
Environmental Impact
A Finding of No Significant Impact with respect to the environment
as required by the National Environmental Policy Act (42 U.S.C. 4321-
4374) is unnecessary, since the Section 8 Rental Certificate Program is
categorically excluded from the Department's National Environmental
Policy Act procedures under 24 CFR 50.20(d).
Regulatory Flexibility Act
The undersigned, in accordance with the Regulatory Flexibility Act
(5 U.S.C. 605(b)), hereby certifies that this notice does not have a
significant economic impact on a substantial number of small entities,
because 50th percentile FMRs do not change the rent from that which
would be charged if the unit were not in the Section 8 Program.
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Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance program number is
14.156, Lower-Income Housing Assistance Program (Section 8).
Accordingly, the Fair Market Rent Schedules, which will not be
codified in 24 CFR part 888, are amended as follows:
Dated: December 21, 2000.
Andrew M. Cuomo,
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 housing market-wide rent estimates
that are intended to provide housing opportunities throughout the
geographic area in which rental housing units are in direct
competition. The FMRs shown in Schedule B incorporate OMB's most
current definitions of metropolitan areas, with the exceptions
discussed in paragraph (b). HUD uses the OMB Metropolitan Statistical
Area (MSA) and Primary Metropolitan Statistical Area (PMSA) definitions
for FMR areas because they closely correspond to housing market area
definitions.
b. Exceptions to OMB Definitions--The exceptions are counties
deleted from several large metropolitan areas whose revised 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 and Counties Deleted
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 counties 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 listing 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 Forge and Covington.
Augusta................................... Staunton and Waynesboro.
Carroll................................... Galax.
Frederick................................. Winchester.
Greensville............................... Emporia.
Henry..................................... Martinsville.
Montgomery................................ Radford.
Rockbridge................................ Buena Vista and Lexington.
Rockingham................................ Harrisonburg.
Southhampton.............................. Franklin.
Wise...................................... Norton.
------------------------------------------------------------------------
2. Bedroom Size Adjustments
Schedule B 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 the 0 bedroom FMR.
3. FMRs for Manufactured Home Spaces
FMRs for manufactured home spaces in the Housing Choice Voucher
program are 40 percent of the two-bedroom Housing Choice Voucher
program FMRs, with the exception of the areas listed in Schedule D
whose manufactured home space FMRs have been modified on the basis of
public comments. 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.
4. Arrangement of FMR Areas and Identification of Constituent Parts
a. The FMR areas in Schedule B are listed alphabetically by
metropolitan FMR area and by nonmetropolitan county within each State.
The exception FMRs for manufactured home spaces in Schedule D are
listed alphabetically by State.
b. The constituent counties (and New England towns and cities)
included in each metropolitan FMR area is 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.
5. 50th Percentile FMRs
All 50th percentile FMRs are designated by an asterisk to
differentiate them from the 40th percentile FMRs.
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[FR Doc. 00-33374 Filed 12-29-00; 8:45 am]
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