[Federal Register Volume 72, Number 133 (Thursday, July 12, 2007)]
[Notices]
[Pages 38398-38458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-3388]



[[Page 38397]]

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Part III





Department of Housing and Urban Development





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Proposed Fair Market Rents for Fiscal Year 2008 for the Housing Choice 
Voucher Program and Moderate Rehabilitation Single Room Occupancy 
Program; Notice

Federal Register / Vol. 72, No. 133 / Thursday, July 12, 2007 / 
Notices

[[Page 38398]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5152-N-01]


Proposed Fair Market Rents for Fiscal Year 2008 for the Housing 
Choice Voucher Program and Moderate Rehabilitation Single Room 
Occupancy Program

AGENCY: Office of the Assistant Secretary for Policy Development and 
Research, HUD.

ACTION: Notice of Proposed Fiscal Year (FY) 2008 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. 
Today's notice proposes FMRs for FY2008. The proposed numbers 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.
    The proposed FY2008 FMR areas are based on current Office of 
Management and Budget (OMB) metropolitan area definitions and include 
HUD modifications, that were first used in the determination of FY2006 
FMR areas. The changes OMB made to the metropolitan area definitions in 
December 2006 are also incorporated. This means that there are two new 
one-county Metropolitan Statistical Areas (MSAs), and a few areas where 
MSA name changes add or delete a primary city name.
    Proposed FY2008 FMRs are based on 2000 Census data updated with 
more current survey data. For the first time, HUD is using data from 
the Census Bureau's American Community Survey (ACS). HUD is largely 
replacing the accumulated 2001-through-2005 FMR update factors from 
various sources with data from ACS's first full implementation year, 
2005. HUD uses ACS data in different ways according to how many 2-
bedroom standard quality and recent mover sample cases are available in 
the FMR area or in its Core-Based Statistical Area (CBSA), as described 
in detail later in this notice. Random digit dialing (RDD) surveys 
performed between 2001 and 2005 may also be used under certain 
conditions. Revised 2005 FMRs based on 2000 Census and 2005 ACS data 
have been updated with Consumer Price Index (CPI) data through the end 
of 2006 and then trended to April 2008, the mid-point of FY2008. 
Proposed FY2008 FMRs are the first to be able to take advantage of the 
full-implementation ACS, a major new Census survey that is being 
conducted annually and that will replace the Decennial Census ``long-
form'' sample survey that is the source of the Decennial Census rent 
information. The ACS will permit more accurate FMR estimates each year 
than were possible using the Decennial Census trending techniques of 
previous FMR estimates.

DATES: Comment Due Date: August 13, 2007.

ADDRESSES: Interested persons are invited to submit comments regarding 
HUD's estimates of the FMRs, as published in this notice, to the Office 
of General Counsel, Rules Docket Clerk, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Room 10276, 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.
    Submission of Hard Copy Comments. To ensure that the information is 
fully considered by all of the reviewers, each commenter that is 
submitting hard copy comments, by mail or hand delivery, is requested 
to submit two copies of its comments to the address above, one 
addressed to the attention of the Rules Docket Clerk and the other 
addressed to the attention of Economic and Market Analysis Division 
staff in the appropriate HUD field office. Due to security measures at 
all federal agencies, submission of comments by mail often results in 
delayed delivery. To ensure timely receipt of comments, HUD recommends 
that any comments submitted by mail be submitted at least 2 weeks in 
advance of the public comment deadline to ensure timely receipt by HUD.
    Electronic Submission of Comments. Since July 2004, HUD has been 
able to receive comments electronically. Interested persons may now 
submit comments electronically through the Federal eRulemaking Portal 
at http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically, because doing so allows the commenter 
maximum time to prepare and submit a comment, ensures timely receipt by 
HUD, and enables HUD to make comments immediately available for viewing 
by other commenters and interested members of the public. Commenters 
should follow instructions provided on that site to submit comments 
electronically.
    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Comments. All comments and communications 
submitted to HUD will be available, without charge, for public 
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above 
address. Due to security measures at the HUD Headquarters building, an 
advance appointment to review the public comments must be scheduled by 
calling the Regulations Division at (202) 708-3055 (this is not a toll-
free number). Copies of all comments submitted are available for 
inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For technical information on the 
methodology used to develop FMRs or a listing of all FMRs, please call 
the HUD USER information line at (800) 245-2691 or access the 
information at the following link on the HUD Web site: http://www.huduser.org/datasets/fmr.html. FMRs are listed at the 40th or 50th 
percentile in Schedule B. For informational purposes, 40th percentile 
recent mover rents for the areas with 50th percentile FMRs will be 
provided in the HUD FY2008 FMR documentation system at http://www.huduser.org/datasets/fmr/fmrs/index.asp?data=fmr08.
    Questions related to use of FMRs or voucher payment standards 
should be directed to the respective local HUD program staff. Questions 
on how to conduct FMR surveys or further methodological explanations 
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 number (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 by FMRs established by 
HUD for different areas. In the Housing Choice Voucher

[[Page 38399]]

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 (nonluxury) 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 Web site at 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. Complete documentation of the 
methodology and data used to compute each area's Proposed FY2008 FMRs 
is available at http://www.huduser.org/datasets/fmr/fmrs/index.asp?data=fmr08.

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.
    HUD's regulations at 24 CFR 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).
    In addition, HUD's regulations at 24 CFR 888.113 set out procedures 
for HUD to assess whether areas are eligible for FMRs at the 50th 
percentile. For FY2008, no new areas have become eligible for 50th 
percentile rents. Areas that qualified for 50th percentile FMRs and 
were at this FMR for 3 years were reviewed in FY2006. The 14 areas that 
were allowed to continue to use the 50th percentile rents will be 
reviewed again in FY2009, to measure their continued progress towards 
deconcentration. These areas are listed in the table \1\ below:
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    \1\ As shown in the table, HMFA is an acronym for HUD Metro FMR 
Area, which is a MSA sub-area, or the remaining portions of a MSA 
after sub-areas have been determined.

Albuquerque, NM MSA                         Austin-Round Rock, TX MSA.
Chicago-Naperville-Joliet, IL HMFA          Denver-Aurora, CO MSA.
Fort Worth-Arlington, TX HMFA               Grand Rapids-Wyoming, MI
                                             HMFA.
Houston-Baytown-Sugar Land, TX HMFA         Kansas City, MO-KS HMFA.
Las Vegas-Paradise, NV MSA                  Orange County, CA HMFA.
Phoenix-Mesa-Scottsdale, AZ MSA             Richmond, VA HMFA.
Virginia Beach-Norfolk-Newport News, VA-NC  Washington-Arlington-
 MSA                                         Alexandria, DC-VA-MD HMFA.
 

    Ten areas that became 50th percentile FMR areas in FY2006, along 
with the above 14 areas allowed to continue, will be evaluated for the 
first time in FY2009. These 10 new areas are:

Baltimore-Towson, MD MSA                    Hartford-West-Hartford-East-
                                             Hartford, CT HMFA.
Honolulu, HI MSA                            Milwaukee-Waukesha-West
                                             Allis, WI MSA.
New Haven-Meriden, CT HMFA                  Providence-Fall River, RI-MA
                                             HMFA.
Riverside-San Bernardino-Ontario, CA MSA    Sarasota-Bradenton-Venice,
                                             FL MSA.
Tacoma, WA HMFA                             Tucson, AZ MSA.
 

    Four newly eligible 50th percentile areas in FY2007 will be 
evaluated in FY2010. These four areas are:

Dallas, TX HMFA                             Fort Lauderdale, FL HMFA.
San Diego-Carlsbad-San Marcos, CA MSA       West Palm Beach-Boca Raton,
                                             FL HMFA.
 

III. FMR Methodology

    The FY2008 FMRs are based on current OMB metropolitan area 
definitions that were first used in the FY2006 FMRs. The changes OMB 
made to the Metropolitan Area Definitions in December 2006 are 
incorporated. This means there are two new one-county MSAs, and a few 
areas where MSA name changes add or delete a primary city name. These 
definitions have the advantages that they are based on more current 
(2000 Census) data, use a more relevant commuting interchange standard, 
and generally provide a better measure of current housing market 
relationships. HUD had three objectives in defining FMR areas for 
FY2006: (1) To incorporate new OMB metropolitan area definitions so the 
FMR estimation system can employ new data released according to those 
definitions; (2) to better reflect current housing markets; and (3) to 
minimize the number of large changes in FMRs due to use of the new OMB 
definitions. These objectives continue to apply to the proposed FY2008 
FMRs, and area definitions were developed to achieve these objectives 
as follows:
    <bullet> FMR Census Base Rents and Median Family Incomes were 
calculated for each of the new OMB metropolitan areas using 2000 Census 
data.
    <bullet> Subparts of any of the new areas that had separate FMRs 
under the old OMB definitions, and that had a sufficiently large 2000 
Census count of recent mover renter households in standard quality 
units, were identified, and 2000 Census Base Rents and

[[Page 38400]]

Median Family Incomes for these subparts were calculated. Only the 
subparts within the new OMB metropolitan area were included in these 
calculations (e.g., counties that had been excluded from the new OMB 
metropolitan areas were not included).
    <bullet> Metropolitan subparts of new areas that had previously had 
separate FMRs were assigned their own FMRs if their 2000 Census Base 
Rents differed by more than 5 percent from the new OMB area 2000 Census 
Base Rent, or if their 2000 Census Median Family Income differed by 
more than 5 percent from the new OMB area 2000 Census Median Family 
Income.
    <bullet> Former metropolitan counties removed from metropolitan 
areas get their own FMRs.
    At HUD's request, the Census Bureau prepared a special publicly 
releasable census file that permits almost exact replication of HUD's 
2000 Base Rent calculations, except for areas with few rental units. 
This data set is located on HUD's HUD USER Web site at http://www.huduser.org/datasets/fmr/CensusRentData/.

A. Data Sources--2000 Census and 2005 American Community Survey

    Proposed FY2008 FMRs are based on 2000 Census data updated with 
more current survey data. For the first time, HUD is using data from 
the Census Bureau's ACS; the ACS data are from 2005, the full survey's 
first implementation year. While the Census Bureau intends for the ACS 
to replace the decennial census sample ``long form'' for collecting 
detailed socio-economic data, the ACS has several important 
distinctions from the decennial long form. These include:
    <bullet> The ACS is conducted on a continuous ``rolling'' basis 
throughout the year. As a result, survey responses do not correspond to 
a particular date, whereas the long form responses are as of the census 
date of April 1. This has implications for the as-of date assumed for 
ACS-based rents. The ``as of'' date for ACS-based rents is set at June 
30, 2005.
    <bullet> The ACS has about one-fifth the sample size of the 
decennial long form, which surveyed approximately one out of every six 
households. This means that an adequate sample size for one-year ACS 
data will be available only for very large population geographic areas, 
and that data for smaller areas will be accumulated over 3 or 5 years 
to form the basis of decennial long form equivalent estimates.
    In the proposed FY2008 FMRs, HUD is largely replacing the 
accumulated 2001-through-2005 FMR update factors from various sources 
with 2005 ACS data (RDDs performed between 2001 and 2005 will be used 
under certain conditions described below). HUD uses ACS data in 
different ways according to how many two-bedroom standard quality and 
recent mover sample cases are available in the FMR area or the CBSA. 
FMR areas are classified into four ACS data availability categories:
    ACS-1. FMR Areas that have at least 200 sample cases of two-bedroom 
standard quality rents. ACS-1 areas may be entire MSAs, sub-areas that 
are assigned the CBSA base rents, other sub-areas, or large 
nonmetropolitan counties.
    ACS-2. FMR Areas that are sub-areas of CBSAs where the sub-area is 
not assigned the CBSA base rent, and the sub-area does not have at 
least 200 sample cases of two-bedroom standard quality rents, but the 
CBSA containing the sub-area does have at least 200 sample cases of 
two-bedroom standard quality rents.
    ACS-3. FMR Areas that are MSAs or nonmetropolitan counties that 
have fewer than 200 sample cases of two-bedroom standard quality rents, 
or sub-areas of CBSAs that have fewer than 200 sample cases of two-
bedroom standard quality rents.
    ACS-4. FMR Areas that have at least 200 sample cases of two-bedroom 
recent mover rents. ACS-4 areas may be entire MSAs, sub-areas that are 
assigned CBSA rents, other sub-areas, or large nonmetropolitan 
counties. By definition, these areas are a subset of ACS-1 areas.
    In ACS-1 FMR areas, the 2000 Census-to-2005 ACS update factor is 
the ratio of the 2005 ACS two-bedroom standard quality rent to the 2000 
Census two-bedroom standard quality rent for the FMR Area.
    In ACS-2 FMR areas, the 2000 Census-to-2005 ACS update factor is 
either (1) the ratio of the 2005 ACS two-bedroom standard quality rent 
to the 2000 Census two-bedroom standard quality rent for the CBSA 
containing the FMR Area, or (2) the ratio of the 2005 ACS two-bedroom 
standard quality rent to the 2000 Census two-bedroom standard quality 
rent for the entire state (or population-weighted average of states) 
containing the FMR area, whichever brings its 2005 updated rent closer 
to the value of its CBSA 2005 updated rent.
    In ACS-3 FMR areas, the 2000 Census-to-2005 ACS update factor is 
the ratio of the 2005 ACS two-bedroom standard quality rent to the 2000 
Census two-bedroom standard quality rent for the parts of the state not 
in ACS-1 or ACS-2 FMR areas, or the population-weighted average factor 
across such parts of the states containing each multi-state FMR area. 
In cases where there are fewer than 200 sample cases of 2005 ACS two-
bedroom standard quality rents in the parts of the state not in ACS-1 
or ACS-2 areas, HUD uses the ratio of the 2005 ACS two-bedroom standard 
quality rent to the 2000 Census two-bedroom standard quality rent for 
the entire state containing the FMR area as the update factor.
    In ACS-4 FMR areas, the local 2005 ACS recent mover rent becomes a 
new base rent for 2005, if the updated 2000 Census base rent is outside 
its 90 percent confidence interval and the recent mover rent is greater 
than the local standard quality rent. This means that the ACS is used 
to replace the updated 2000 base rent with a 2005 local ACS base rent.

B. Data Sources--Legacy RDDs

    The Department regularly obtains additional rent survey data to 
update the FMRs in the form of RDD telephone rent surveys meeting the 
Department's statistical criteria for updating FMRs. HUD conducted 
numerous RDD surveys between 2001 and 2005, and also accepted a number 
of non-HUD RDD surveys to update FMRs during this time period. Since 
these RDDs were performed according to the FMR area geography in place 
at the time, they may not provide usable coverage of FY2008 FMR areas. 
RDD surveys performed between 2001 and 2005 are used to update or 
replace 2000 Census base rents in ACS-2 and ACS-3 FMR areas under the 
following conditions (in ACS-1 and ACS-4 FMR areas the ACS results are 
deemed superior to legacy RDD results and legacy RDDs are not evaluated 
\2\):
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    \2\ The results of certain special case RDDs performed in ACS-1, 
ACS-2, and ACS-4 areas that, for example, adjusted bedroom rent 
ratios derived from the 2000 Census, may still be used on a case-by-
case basis as noted in the FY2008 FMR Documentation System; see 
http://www.huduser.org/datasets/fmr/fmrs/index.asp?data-fmr08.
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    <bullet> The RDD was the most recent RDD performed for the area.
    <bullet> The RDD is ``Accepted,'' meaning the updated 2000 Census 
base rent for the RDD area (prorated to the RDD month) is outside the 
95 percent confidence interval of the RDD.
    <bullet> If the Accepted RDD area covers at least 75 percent of the 
population of the FMR area, and the FMR area's population in the 
Accepted RDD area is at least 75 percent of the Accepted RDD area, the 
new base rent is the Accepted RDD result. If these conditions do not 
hold, the RDD is not used.

[[Page 38401]]

    FMR area base rents affected by Legacy RDDs from 2001 to 2005 are 
updated to 2005 using the prorated 2000 Census to 2005 ACS update 
factor (from the RDD month to June 2005) for the area.

C. FMR Updates from 2005 to 2006

    Local CPI data is used to move rents from June 2005 to the end of 
2006 for FMR areas with at least 75 percent of their population within 
Class A metropolitan areas covered by local CPI data. Census region CPI 
data is used for FMR areas in Class B and C size metropolitan areas and 
nonmetropolitan areas without local CPI update factors.

D. FMR Updates from 2006 to 2008

    The national 1990 to 2000 average annual rent increase trend of 
1.03 is applied for 1.25 years.

E. Additional Rent Surveys and Other Data

    Post-2005 RDDs are evaluated against the 2005 ACS-based rent 
trended to the RDD month by the appropriate proportion (root) of the 
2005-to-2008 update factors. For example, if the RDD was conducted in 
August 2006, then the appropriate root (14/18) of the 2005-to-2006 CPI-
based update is used to update the 2005 ACS rent. If the RDD was 
conducted in February 2007, then the entire CPI update factor is 
applied to the 2005 rent, and the appropriate root (2/15) of the 
December 2006-to-April 2008 update is applied. If the updated 2005 rent 
is outside the 95 percent confidence interval of the RDD, then the RDD 
is ``Accepted.'' Accepted RDD results are trended to April 2008 using 
the remainder of the 2005-to-2008 update factors.
    The FMR bonuses related to the impact of Hurricane Katrina for 
Baton Rouge, Louisiana, and New Orleans, first applied on March 6, 
2006, are proposed to continue to be applied in the FY2008 FMRs. The 
2005 ACS was conducted largely before the impact of Hurricane Katrina 
or before its effects on the rental market could be detected in the 
survey. Because the ACS indicates that the 2000-to-2005 FMR update 
factors for these areas should be lower than for other data sources 
used in FY2007 and earlier FMRs, HUD is adjusting the bonus percentages 
to 15 percent in Baton Rouge and 35 percent in New Orleans, as 
subsequent research shows that the tight rental market conditions in 
both areas indicate that FMRs should not be reduced.
    The area-specific data and computations used to calculate proposed 
FY2008 FMRs and FMR area definitions can be found at http://www.huduser.org/datasets/fmr/fmrs/index.asp?data=fmr08.

F. Large Bedroom Rents

    FMR estimates are calculated for two-bedroom units. This generally 
is the most common size of rental units, and therefore the most 
reliable to survey and analyze. After each decennial census, rent 
relationships between two-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 two-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. This was last 
done using 2000 Census data. A publicly releasable version of the data 
file used that permits derivations of rent ratios is available at 
http://www.huduser.org/datasets/fmr/CensusRentData/index.html.
    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 bonuses of 8.7 percent to the unadjusted three-
bedroom FMR estimates and adds 7.7 percent to the unadjusted four-
bedroom FMR estimates. The FMRs for unit sizes larger than four 
bedrooms are calculated by adding 15 percent to the four-bedroom FMR 
for each extra bedroom. For example, the FMR for a five-bedroom unit is 
1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 
1.30 times the four-bedroom FMR. FMRs for single-room occupancy units 
are 0.75 times the zero-bedroom (efficiency) FMR.
    A further adjustment was made using 2000 Census data in 
establishing rent ratios 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. HUD's 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 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 ranges 
used were: 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 (i.e., 
efficiency rents were not allowed to be higher than one-bedroom rents 
and four-bedroom rents were not allowed to be lower than three-bedroom 
rents).
    For low-population, nonmetropolitan 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 due to insufficient 
sample sizes. The areas covered by this new estimation method had less 
than the HUD standard of 200 two-bedroom census-tabulated observations.

IV. 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.
    All approved exceptions to these rents that were in effect in 
FY2007 were updated to FY2008 using the same data used to estimate the 
Housing Choice Voucher program FMRs if the respective FMR area's 
definition had remained the same. If the result of this computation was 
higher than 40 percent of the re-benchmarked two-bedroom rent, the 
exception remains and is listed in Schedule D. The FMR area definitions 
used for the rental of manufactured home spaces are the same as the 
area definitions used for the other FMRs. Areas with definitional 
changes that previously had exceptions to their manufactured housing 
space rental FMRs are requested to submit new surveys to justify 
higher-than-standard space rental FMRs if they believe higher space 
rental allowances are needed.

V. Request for Public Comments

    HUD seeks public comments on FMR levels for specific areas. 
Comments on FMR levels must include sufficient

[[Page 38402]]

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 $35,000. Areas with 2,000 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 where 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 at HUD's Web site, in Microsoft Word 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 of FMR areas cover only one- and two-bedroom units. 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 may find it appropriate 
to relax normal sample size requirements.
    HUD will consider increasing manufactured home space FMRs where 
public comment demonstrates that 40 percent of the two-bedroom FMR is 
not adequate. In order to be accepted as a basis for revising the 
manufactured home space FMRs, comments must include a pad rental survey 
of 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: June 27, 2007.
Darlene F. Williams,
Assistant Secretary for Policy, Development and Research.

Fair Market Rents for the Housing Choice Voucher Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage
    a. Metropolitan Areas--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. The 
proposed FY2008 FMRs reflect a change in metropolitan area definitions. 
HUD is using the metropolitan CBSAs, which are made up of one or more 
counties, as defined by the OMB, with some modifications. HUD is 
generally assigning separate FMRs to the component counties of CBSA 
Micropolitan Areas.
    b. Modifications to OMB Definitions--Following OMB guidance, the 
estimation procedure for the FY2008 proposed FMRs incorporates the 
current OMB definitions of metropolitan areas based on the CBSA 
standards as implemented with 2000 Census data, but makes adjustments 
to the definitions to separate subparts of these areas where FMRs or 
median incomes would otherwise change significantly if the new area 
definitions were used without modification. In CBSAs where sub-areas 
are established, it is HUD's view that the geographic extent of the 
housing markets are not yet the same as the geographic extent of the 
CBSAs, but may become so in the future as the social and economic 
integration of the CBSA component areas increases. Modifications to 
metropolitan CBSA definitions are made according to a formula as 
described below.
    Metropolitan area CBSAs (referred to as Metropolitan Statistical 
Areas or MSAs) may be modified to allow for sub-area FMRs within MSAs 
based on the boundaries of old FMR areas (OFAs) within the boundaries 
of new MSAs. (OFAs are the FMR areas defined for the FY2005 FMRs. 
Collectively, they include 1999 definition MSAs/PMSAs, metropolitan 
counties deleted from 1999 definition MSAs/PMSAs by HUD for FMR 
purposes, and counties and county parts outside of 1999 definition 
MSAs/PMSAs referred to as nonmetropolitan counties.) Sub-areas of MSAs 
are assigned their own FMRs when the sub-area 2000 Census Base Rent 
differs by at least 5 percent from the MSA 2000 Census Base Rent (i.e., 
by at most 95 percent or at least 105 percent), or when the 2000 Census 
Median Family Income for the sub-area differs by at least 5 percent 
from the MSA 2000 Census Median Family Income. MSA sub-areas, and the 
remaining portions of MSAs after sub-areas have been determined, are 
referred to as HUD Metro FMR Areas (HMFAs) to distinguish these areas 
from OMB's official definition of MSAs.
    The specific counties and New England towns and cities within each 
state in MSAs and HMFAs are listed in Schedule B.
2. Bedroom Size Adjustments
    Schedule B 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

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each extra bedroom. For example, the FMR for a five-bedroom unit is 
1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 
1.30 times the four-bedroom FMR. FMRs for single-room-occupancy (SRO) 
units are 0.75 times the zero-bedroom FMR.
3. Arrangement of FMR Areas and Identification of Constituent Parts
    a. The FMR areas in Schedule B are listed alphabetically by 
metropolitan FMR area and by nonmetropolitan county within each state. 
The exception rents for manufactured home spaces FMRs are listed 
alphabetically in Schedule D.
    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. 07-3388 Filed 7-11-07; 8:45 am]
BILLING CODE 4210-67-C