60084 Federal Register / Vol. 65, No. 195 / Friday, October 6, 2000 / Proposed Rules

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 888

[Docket No. FR–4589–N–03]

Fair Market Rents for Fiscal Year 2001

for Certain Areas

AGENCY: Office of the Secretary, HUD.

ACTION: Notice of Proposed FMRs for

Certain Areas.

SUMMARY: This notice proposes revised

FMRs that reflect the 50th percentile

rent levels for 39 areas, as determined

by applying the criteria of HUD’s

interim rule amending its FMR

regulations published on October 2,

2000, and trended to April 1, 2001.

DATES: Comments Due Date: November

6, 2000.

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. 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

(7:30 a.m.–5:30 p.m. Eastern Time) at

the above address.

FOR FURTHER INFORMATION CONTACT:

Gerald Benoit, Operations Division,

Office of Rental Assistance, telephone

(202) 708–0477. For technical

information on the development of

schedules for specific areas or the

method used for the rent calculations,

contact Lynn Rodgers, Economic and

Market Analysis Division, Office of

Economic Affairs, telephone (202) 708–

0590, Extension 5735 (e-mail:

lynn_a._rodgers@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(c)(1) of the United States

Housing Act of 1937 (42 U.S.C. 1473f(c))

requires the Secretary to publish FMRs

periodically, but not less 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 projectbased assistance (e.g., the project-based

voucher program); (3) to determine

whether comparability applies to

adjustment of contracts rents for

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. The FMRs

also apply to any other programs

requiring their use. Today’s notice

proposes revised FMRs that reflect the

50th percentile rent levels for 39 areas,

as determined by applying the criteria of

HUD’s interim rule, published on

October 2, 2000, and trended to April 1,

2001.

Raising FMRs for certain areas, which

is part of HUD’s new FMR policy, being

implemented through HUD’s interim

rule, published on October 2, 2000, is

designed to ensure that low-income

families have access to a broad range of

housing opportunities throughout a

metropolitan area. FMRs will be

increased to the 50th percentile 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.

Publication of FMRs

Section 8(c) of the U.S. Housing Act

of 1937 requires the Secretary of HUD

to publish FMRs periodically, but not

less frequently than annually. HUD’s

regulations reflect this statutorily

required process. Section 888.115

provides that HUD will publish FMRs at

least annually. Section 888.115 also

provides that HUD first publish

proposed FMRs and that HUD provide

a comment period for the proposed

FMRs of at least 30 days. After

evaluating the public comments, HUD

will publish the final FMRs (see 24 CFR

888.115).

New paragraph (c) of § 888.113, as

added by the interim rule, published on

October 2, 2000, 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.

(iii) FMR areas that do not meet the test for

continued use of FMRs set at the 50th

percentile will be ineligible to use FMRs 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 § 982.503(f).

Schedule B of this document lists 39

areas for which HUD is proposing to

adopt 50th percentile FMRs for all unit

sizes on the basis of the criteria

specified in § 888.113(c).

Method Used to Develop 50th Percentile

FMRs

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

area. 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

Federal Register / Vol. 65, No. 195 / Friday, October 6, 2000 / Proposed Rules 60085

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.

Specifically, HUD is proposing to

increase FMRs to the 50th percentile

rent for all unit sizes in the 39

metropolitan FMR areas that HUD

determined met the criteria in

§ 888.113(c) of the interim rule,

published on October 2, 2000.

Manufactured Home Space FMRs

FMRs for the rental of manufactured

home spaces in the Housing Choice

Voucher program are now 40 percent of

the applicable Section 8 existing

housing program FMRs for two-bedroom

units. This is unchanged, except that the

manufactured home space rental FMRs

for the 39 areas now are based on the

50th percentile two-bedroom FMR

rather than the 40th percentile FMR.

HUD will consider public comments

requesting modifications of

manufactured home space rental FMRs

where the 40 percent FMRs are thought

to be inadequate. To be considered as a

basis for revising the FMRs, comments

must contain statistically valid survey

data that show the 50th percentile

manufactured home space rent

(including the cost of utilities) for the

entire FMR area. Manufactured home

space FMR revisions are published as

final FMRs in Schedule D of this

document. Once approved, the revised

manufactured home space FMRs

establish new base year estimates that

are updated annually using the same

data used to update the other FMRs,

until they are superseded by rising

FMRs for other housing assisted under

the housing choice voucher program.

Request for Comments

Through this notice, HUD is

proposing to set 50th percentile FMRs

for 39 metropolitan FMR areas. HUD

seeks public comments on revised FMR

levels for the 39 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 bedroom size categories on the

schedule. Recommendations and

supporting data must reflect the rent

levels that exist within the entire FMR

area.

HUD recommends the use of

professionally-conducted Random Digit

Dialing (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

$10,000–$12,000. Areas with 500 or

more program units usually meet this

cost criterion, and areas with fewer

units may meet it if actual two-bedroom

rents 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 that plan to use the RDD survey

technique should obtain a copy of the

survey guide entitled ‘‘Random Digit

Dialing Surveys; A Guide to Assist

Larger Public Housing Agencies in

Preparing Fair Market Rent Comments.’’

The guide is available from HUD USER

on 1–800–245–2691, or from HUD’s

Worldwide Web site, in Microsoft Word

or Adobe Acrobat format, at the

following address: http://

www.huduser.org/datasets/fmr.html.

HUD prefers, but does not mandate,

the use of RDD telephone surveys, or the

more traditional method described in

the survey guide intended for small

PHAs along with the simplified RDD

methodology. Other survey

methodologies are acceptable as long as

the surveys submitted provide

statistically reliable, unbiased estimates

of the 50th percentile 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 so as to be statistically

representative of the entire rental

housing stock of the FMR area. In

particular, surveys must include units of

all rent levels and be representative by

structure type (including single-family,

duplex and other small rental

properties), age of housing unit, and

geographic location. The decennial

Census should be used as a starting

point and means to verify whether the

sample is representative of the FMR

area’s rental housing stock.

Local rental housing surveys

conducted with alternative methods

must include the following

documentation:

• Identification of the 50th percentile

gross rent (gross rent is rent including

the cost of utilities) and the actual

distribution (or distributions, if more

than one bedroom size is surveyed) of

the surveyed units, rank-ordered by

gross rent.

• An explanation of how the rental

housing sample was drawn and a copy

of the survey questionnaire, transmittal

letter, and any publicity materials.

• An explanation of how the contract

rents of the individual units surveyed

were converted to gross rents. (For RDDtype surveys, HUD requires use of the

Section 8 utility allowance schedule.)

• An explanation of how the survey

excluded units built within two years

prior to the survey date.

• The date the rent data were

collected so that HUD can apply a

trending factor to update the estimate to

the midpoint of the applicable fiscal

year. If the survey has already been

trended to this date, the date the survey

was conducted and a description of the

trending factor used.

• Copies of all survey sheets.

Since FMRs are based on standard

quality units and units occupied by

recent movers, both of which are

difficult to identify and survey, HUD

will accept surveys of all rental units

and apply appropriate adjustments.

Most surveys cover only one- and

two-bedroom units, in which case HUD

will make the adjustments for other size

units consistent with the differentials

established on the basis of the 1990

Census data for the FMR area. When

three- and four-bedroom units are

surveyed separately to determine FMRs

for these unit size categories, the

commenter should multiply the 50th

percentile survey rents by 1.087 and

1.077, respectively, to determine the

FMRs. The use of these factors will

produce the same upward adjustments

in the rent differentials as those used in

the HUD methodology.

Findings and Certifications

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 Housing Choice

Voucher Program is categorically

excluded from the Department’s

National Environmental Policy Act

procedures under 24 CFR 50.19(c)(d).

Regulatory Flexibility Act

The undersigned, in accordance with

the Regulatory Flexibility Act (5 U.S.C.

605(b)) certifies that this notice would

not have a significant economic impact

on a substantial number of small entities

because the proposed FMRs will not

change the rent from that which would

be charged if the rental unit were not in

the housing choice voucher program.

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 be codified in 24

60086 Federal Register / Vol. 65, No. 195 / Friday, October 6, 2000 / Proposed Rules

CFR part 888, are proposed to be

amended as follows:

Dated: October 2, 2000.

Andrew 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 three 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

Dallas, TX—Henderson County

Washington, DC–MD–VA–WV—

Berkeley and Jefferson Counties in

West Virginia; and Clarke, Culpeper,

King George and Warren Counties in

Virginia

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-roomoccupancy (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

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.

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[FR Doc. 00–25679 Filed 10–5–00; 8:45 am]

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