[Federal Register Volume 87, Number 47 (Thursday, March 10, 2022)]
[Notices]
[Pages 13744-13747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05040]



[[Page 13744]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6277-N-02]


Fair Market Rents for the Housing Choice Voucher Program, 
Moderate Rehabilitation Single Room Occupancy Program, and Other 
Programs Fiscal Year 2022; Revised

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

ACTION: Notice of Revised Fiscal Year (FY) 2022 Fair Market Rents 
(FMRs) and Discussion of Comments on FY 2022 FMRs.

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SUMMARY: This notice updates the FY 2022 FMRs for 12 areas based on new 
survey data. Further, HUD responds to comments received on the FY 2022 
FMRs.

DATES: Applicable Date: The revised FY 2022 FMRs for these 12 areas are 
applicable on April 11, 2022.

FOR FURTHER INFORMATION CONTACT: Questions related to use of FMRs or 
voucher payment standards should be directed to the respective local 
HUD program staff. 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 (toll-free), email the Program 
Parameters and Research Division via <a href="/cdn-cgi/l/email-protection#8bfbfbf9efcbe3feefa5ece4fd"><span class="__cf_email__" data-cfemail="6515151701250d10014b020a13">[email protected]</span></a>, or access the 
information on the HUD USER website: http://www.huduser.gov/portal/datasets/fmr.html.

SUPPLEMENTARY INFORMATION: On August 6, 2021, HUD published the FY 2022 
FMRs, requested comments on the FY 2022 FMRs, and outlined procedures 
for requesting a reevaluation of an area's FY 2022 FMRs (86 FR 43260). 
This notice revises FY 2022 FMRs for 12 areas based on data provided to 
HUD. In addition to providing revised FY 2022 FMRs, this notice also 
provides responses to the public comments HUD received on the notice 
referenced above.

I. Revised FY 2022 FMRs

    The FMRs appearing in the following table supersede the use of the 
FY 2021 FMRs for the twelve areas that provided statistically valid 
data. The updated FY 2022 FMRs are based on surveys conducted by the 
area public housing agencies (PHAs) and reflect the estimated 40th 
percentile rent levels trended to Fiscal Year 2022.
    The FMRs for the affected areas are revised as follows:

----------------------------------------------------------------------------------------------------------------
                                                         FMR by number of bedrooms in unit
   2022 Fair market rent area    -------------------------------------------------------------------------------
                                       0 BR            1 BR            2 BR            3 BR            4 BR
----------------------------------------------------------------------------------------------------------------
Abilene, TX MSA.................            $688            $732            $945          $1,288          $1,598
Asheville, NC HUD Metro FMR Area           1,188           1,209           1,378           1,879           2,359
Boston-Cambridge-Quincy, MA-NH             1,803           1,986           2,399           2,966           3,253
 HUD Metro FMR Area.............
Bremerton-Silverdale, WA MSA....           1,174           1,368           1,765           2,435           2,909
Iron County, UT.................             615             757             926           1,268           1,585
New York, NY HUD Metro FMR Area.           2,018           2,054           2,340           2,952           3,173
Portland, ME HUD Metro FMR Area.           1,143           1,330           1,721           2,195           2,689
Portland-Vancouver-Hillsboro, OR-          1,416           1,512           1,735           2,451           2,903
 WA MSA.........................
San Diego-Carlsbad, CA MSA......           1,573           1,739           2,232           3,099           3,795
Santa Maria-Santa Barbara, CA              1,875           2,157           2,516           3,316           3,790
 MSA............................
Seattle-Bellevue, WA HUD Metro             1,674           1,739           2,044           2,796           3,285
 FMR Area.......................
Transylvania County, NC.........             706             711             935           1,156           1,364
----------------------------------------------------------------------------------------------------------------

    HUD has published these revised FMR values on the HUD USER website 
at: http://www.huduser.gov/portal/datasets/fmr.html. HUD has also 
updated the FY 2022 Small Area FMRs (SAFMRs) for metropolitan areas 
with revised FMRs, which may be found at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html. HUD has also updated the 50th 
percentile rents for all FMR areas, which are published at http://www.huduser.gov/portal/datasets/50per.html.

II. Public Comments on FY 2021 FMRs

    This summary of comments addresses the most significant concerns 
raised by the commenters. Commenters are identified in the summary by 
the last four numbers of the electronic rulemaking number used at 
www.regulations.gov.
    The public comment period for the August 6, 2021, notice closed on 
September 30, 2021, and HUD received 99 distinct comments relating to 
the notice. The comments were from housing authorities, community 
development agencies, homeless shelters, healthcare providers, social 
workers, counselors, and nonprofit social service providers.

Concerns Regarding the Accuracy of the Current FMR Methodology

    Commenters noted concerns with the methodology used to calculate 
the FMRs in light of rapid changes in housing costs. One commenter 
stated that the current FMR calculations are inadequate for rural 
counties because it is often difficult to gather valid data in rural 
counties, and the use of contiguous county data may not accurately 
reflect the rates present within the jurisdiction and suggested that 
HUD should develop a methodology that would accurately reflect the FMRs 
for rural areas. Another commenter noted that HUD's use of the 40th 
percentile in calculating FMR rates limits the available housing to 
individuals in the voucher plans.
    Other commenters stated that the use of the 2019 American Community 
Survey (ACS) data does not adequately represent a tightening rental 
market, even if the survey was an accurate representation of the FMR in 
previous years. Commenters stated that using current local data from 
reliable sources would more accurately reflect the changes in the 
rental market since 2019. One commenter suggested that HUD use 
commercial data to calculate the FMRs, as the data may be more up-to-
date and accurately reflect the individual markets and would ensure 
that the gross rent data used in the calculation is accurate to current 
markets, which the commenter stated would prove more effective than 
HUD's previous research into the trend factor. Another commenter 
supported HUD's previously announced intent to explore alternative 
methodologies for FMR calculation. One commenter supported their 
jurisdiction's FMR value.
    HUD Response: HUD's current regulations require it to set the FMR 
at the 40th percentile rent paid by recent movers. Assessing the 
accuracy of FMRs is difficult because at any given time the true 40th 
percentile rent paid by recent

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movers is unknown. Commercial sources of rent data do not provide an 
estimate of the 40th percentile rent paid by recent movers, and what 
data they do provide are often not based on the entirety of the rental 
market, such as by building type or by geographic area. Survey-based 
estimates of rent are subject to sampling and non-sampling error. For 
the Voucher program, HUD's policy addresses these sources of 
uncertainty by allowing the payment standard to be set from 90-110 
percent of the FMR, as well as above 110 percent of the FMR through the 
use of exception payment standards. HUD has provided for expedited 
waivers of payment standard regulation per PIH Notice 2021-34. HUD 
remains committed to continually assessing its FMR calculation 
methodology to attempt to deal with its inherent challenges, through 
both in-house research and working with external research partners.

Small Area FMR Determinations

    A commenter stated that the Small Area Fair Market Rent (SAFMR) 
calculations do not adequately represent the true market rent, citing 
as an example a significant decrease in a county's SAFMR in one ZIP 
Code despite being a high opportunity area. The commenter noted that 
the 2-bedroom SAFMR for the ZIP Code in question was nearly $1000 below 
surrounding ZIP Codes, while other ZIP Codes in their jurisdiction more 
accurately reflect existing local commercial data on current market 
prices. The commenter also noted that the decreased SAFMR for a one-
bedroom in this ZIP Code is $200 less than the fair market rent 
established by a HUD validated rent comparability study of the same 
area from 2019. The commenter stated that a decrease in the SAFMR would 
defeat the intent of calculating fair market rents for specific ZIP 
Codes.
    A commenter opposed allowing certain jurisdictions to opt out or be 
excluded from SAFMR mandates. Commenters noted that the use of excepted 
payment standards, rather than calculating SAFMR for the areas, leaves 
PHAs without the resources and flexibility to adjust to increasing 
rents in the jurisdictions, reducing the availability of affordable 
housing options to voucher holders. Commenters stated that voucher 
holders are being pushed into low-rent areas in jurisdiction that have 
received an exception payment standard, and that residents are not 
receiving reasonable accommodations because reasonable accommodations 
are based on the metro area's FMR, not the exceptionally high local 
rental rates that justified the excepted payment standards, and 
therefore do not provide any value.
    HUD Response: Calculating SAFMRs poses the same challenges as 
metropolitan-level FMRs, with the added difficulty of greater 
uncertainty found in ZIP Code-level rent estimates due to their smaller 
size. HUD will continue to carefully consider how any future changes to 
its FMR calculation affect Small Area FMRs, as well as explore any 
SAFMR-specific methodology changes.
    HUD remains committed to evaluating the operation of the Housing 
Choice Voucher program in areas that are required to set payment 
standards based on Small Area FMRs.

Concerns Regarding the FMR Reevaluation Process

    Commenters raised concerns about the current reevaluation process 
for FMRs. Commenters noted that the reevaluation surveys require a 
significant amount of time and funding and stated that HUD should 
provide funding for PHAs who elect to provide local rent surveys. A 
commenter suggested that address-based mail surveys could be conducted 
at a lower cost than HUD anticipates, and that a yearly allocation of 
$5,000 to each PHA would allow PHAs to conduct the necessary 
reevaluation surveys.
    One commenter noted that rural PHAs are often unable to meet the 
regulatory requirements for reevaluation surveys. The commenter noted 
that although small, nonmetro counties may conduct surveys with one or 
more contiguous nonmetro county to obtain a sufficient number of 
results, this methodology does not provide many options to rural 
counties that face lower FMRs than neighboring counties. Furthermore, 
this commenter noted that rural PHAs often do not have the necessary 
capacity to conduct an in-house survey or the funds to hire outside 
consultants. The commenter noted their previous request for 
reevaluation in fiscal year 2021 cost the PHA over $27,000 and was 
ultimately rejected by HUD as they only received 13 valid responses in 
a county of 34,000 people. As a result, this commenter stated that FMRs 
may continue to be inaccurate even if the PHA attempts to request 
reevaluation if the jurisdiction's PHA is unable to conduct a valid 
survey.
    HUD Response: HUD is committed to working with PHAs who are 
interested in conducting local rental market surveys, and has accepted 
surveys and issued revised FMRs for small non-metropolitan counties 
numerous times. Surveys and data collection are often inherently 
expensive, and their costs are beyond HUD's control. In addition, HUD's 
ability to provide funds to PHAs for local rental market surveys is 
dependent on the availability of funds and their authorized uses 
specified in annual appropriations statutes.

Requests for Additional Flexibilities in PHA Implementation

    A commenter stated that HUD has additional authority under the 
CARES Act to implement a ``hold harmless policy'' for FMRs in areas 
that experienced significant FMR reductions. This waiver would be in 
light of the additional challenges created by the COVID-19 pandemic and 
would be limited to PHAs that experienced a significant FMR decrease 
that could not be accounted for through the existing flexibilities in 
payment standards. The commenter noted that the waiver would be aimed 
at increasing depressed voucher utilization rates.
    Another commenter suggested that increased flexibilities for 
payment standards should be implemented through permanent statutory 
changes. This would include allowing PHAs to utilize payment standards 
between 80 and 120 percent of the FMR, with up to 130 percent available 
as a reasonable accommodation for a person with a disability and would 
ultimately reduce the burden of inaccurate FMRs for PHAs.
    Another commenter requested authorization to increase their 
jurisdiction's payment standards to 120 percent or greater for all 
SAFMRs in their jurisdiction. The commenter also requested that all ZIP 
Codes be grouped under one payment standard to reduce administrative 
burdens on the PHA. The commenter stated that this flexibility would 
provide additional access to safe housing in high opportunity areas for 
voucher holders.
    HUD Response: Declines in FMR are limited by regulation to 10 
percent. Additionally, at the PHA's discretion, they may ``hold 
harmless'' any in-place household from a payment standard reduction. 
Requests for exception payment standards should be made to local HUD 
Field Offices. PHAs operating under Small Area FMRs may group ZIP Codes 
into one payment standard area as long as the combined payment standard 
is within 90-110 percent of the Small Area FMR.

The Ability of PHAs To Respond to Rent Increases and FMR Changes 
Through the Use of Payment Standards

    Commenters noted that PHAs can adjust payment standards within

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statutory limits to provide voucher holders access to units above the 
FMRs, thus increasing voucher utilization. However, many commenters 
stated that their jurisdictions were already using the statutory 
maximum payment standard of 110 percent but continue to face challenges 
in finding units for voucher holders, with PHAs continuing to 
experience decreasing success rates. For example, one commenter noted 
that available units in their jurisdiction are listed at 127 percent to 
175 percent of the proposed FMR, beyond the statutory flexibilities 
that PHAs have without HUD approval. Another commenter noted that a 
lack of available units in their jurisdiction within the statutory 
payment standard has caused some one-bedroom voucher holders to rent 
single room units within the payment standards instead.
    Commenters also noted that using payment standards to adjust for 
insufficient FMRs is limited by its effect on individuals with fixed 
incomes or the PHA's ability to provide reasonable accommodations. One 
commenter noted that adjusting their jurisdiction's payment standards 
in response to an FMR decrease would greatly increase the rent burden 
for residents that depend on fixed Social Security or SSI Payments, as 
cost of living increases in those programs are much lower than the rise 
in rent. Other commenters noted that the use of excepted payment 
standards for high-rent areas also limits the availability of 
reasonable accommodations for individuals with disabilities, and 
accommodations may actually lower the value of vouchers in some cases 
if the FMR is insufficient for the area.
    HUD Response: PHAs have a variety of options beyond setting payment 
standards at 110 percent of the FMR. PHAs may pursue exception payment 
standards above 110 percent of FMR, including through the expedited 
waiver process described in PIH Notice 2021-34. PHAs may apply for 
success rate payment standards, which allow for setting payment 
standards using the 50th percentile estimates of rent. PHAs may, with 
HUD approval, establish an exception payment standard of more than 120 
percent of the published FMR if required as a reasonable accommodation 
in accordance with 24 CFR part 8 for a family that includes a person 
with a disability after approval from HUD. Finally, PHAs may adopt 
Small Area FMRs (or use Small Area FMRs as the basis for exception 
payment standards), which may allow for payment standards of up to 160 
percent of the metropolitan FMR in high-rent ZIP Codes.

Market Factors Affecting the Supply of Units at FMR Levels

    Commenters noted that the current housing market is competitive. 
Commenters stated that the rental market for voucher holders is already 
somewhat limited by the 40th percentile limitations on the program, and 
a lack of available units for rent has driven rising rent prices. 
Commenters noted that units are being converted to short term rentals, 
affected by the impact of natural disasters, or utilized by new 
residents or temporary college students. This lack of available units 
can be further complicated by the needs of voucher holders, as a 
commenter noted necessary features can drive rent prices above the 
FMRs. Even when the vouchers are sufficient to meet rent, a commenter 
stated that landlords may choose to rent the limited supply to 
residents with the best credit and rental histories, further increasing 
competition within the market.
    Commenters also noted that increasing rents have limited voucher 
holders' housing options due to insufficient FMR rates. When FMR rates 
are below the current market rates, voucher holders face significant 
difficulty in finding units within the allowed range. A commenter noted 
that rent has increased in their jurisdiction by an average of 9.7 
percent, while another noted that rent has been consistently rising in 
the three years since the 2019 ACS survey. A commenter noted that 
increases in rent prices are not being met by increased wages, while 
another commenter noted that their jurisdictions have experienced rapid 
job growth in the area, leading to increased demand and higher prices. 
One commenter noted that the FMRs in their jurisdiction leave little to 
no room for the utility allowance, limiting the available options 
further.
    Other commenters stated that the recent end of rent moratoriums 
imposed by states in response to COVID-19 will result in rapidly 
increasing rents. Commenters noted that the FMR methodology may not 
fully capture these recent changes in rent prices, leaving voucher 
holders with reduced options at the FMR level.
    Commenters also noted that landlords are unwilling to accept 
vouchers as the FMRs are below the rates they can receive on the open 
market, which further reduces voucher holders' options and drives up 
competition for the remaining units. Commenters noted that landlords' 
costs of operation, including taxes, insurance, and repair prices, are 
increasing, forcing landlords to prioritize the higher rates available 
on the open market and reducing the number of single-family rental 
units available to voucher holders. Another commenter stated that while 
they would be interested in accepting voucher holders, the current 
market rates in their jurisdiction are between 52 and 123 percent 
higher than the FMR. Furthermore, a commenter stated that a decrease in 
FMR for their jurisdiction could harm their existing efforts to address 
landlord concerns, which could result in landlords leaving the program 
before PHAs have the chance to resolve previously existing concerns.
    HUD Response: As noted earlier, HUD is committed to continuously 
evaluating its FMR calculation methodology, including considering the 
implications for areas with rapidly rising rents. HUD recognizes the 
interaction of the level of FMR on landlords' decisions to accept 
Housing Choice Vouchers; at the same time, research shows that a 
variety of factors influence landlord participation in the program. 
HUD's setting the FMR at the 40th percentile of rents means that by 
definition a large portion of rental units in any given area will not 
be available to voucher holders, reflecting HUD's desire to provide a 
modest unit for low-income families and maximize the number of families 
served by HUD's limited funds.

Insufficient or Decreasing FMRs Impose Hardships

    Commenters noted that FMRs that decrease or fail to keep up with 
market rents would result in significant hardships for families and 
individuals as the insufficient value would limit the available units 
for voucher holders, would require great effort to find units even from 
voucher holders who are able to find units, and would limit the ability 
of voucher holders to enter new jurisdictions. Commenters noted that 
voucher holders face competition from residents with better credit and 
rental history, require accommodations, or face additional financial 
pressure and burdens from market inflation and disasters, such as the 
COVID-19 pandemic.
    Commenters noted that PHAs are facing decreasing success rates with 
vouchers at the current FMR rates and that additional decreases or gaps 
between the FMR and market rates could further depress success rates, 
leaving more voucher holders homeless. Commenters stated that landlords 
are no longer accepting vouchers and are choosing not to renew voucher 
holders' leases. One commenter also noted that additional COVID-19 
response fundings allocated to PHAs may remain unused if PHAs continue 
to face decreasing

[[Page 13747]]

success rates from below-market FMRs. One commenter further noted that 
this has led to almost a 10 percent increase in rent burdened 
households since 2019 and has led to PHAs being unable to realize their 
full administrative fee potential.
    Commenters also noted that limited availability of units or 
insufficient FMRs can put a strain on homeless shelters and nonprofits, 
as voucher holders may rely on these services when they face difficulty 
using their vouchers. Some commenters also expressed concern that PHAs 
have already raised payment standards to the statutory maximum but 
remain unable to meet market rates due to the FMRs. Furthermore, many 
commenters stated that decreasing FMRs will increase the burden on 
voucher holders and PHAs and could lead to increased housing 
instability or homelessness. One commenter noted that additional 
vouchers issued under the CARES Act to homeless populations are facing 
lower success rates due to a decrease in single-bedroom FMRs for their 
jurisdiction, as the target population of the CARES Act vouchers 
primarily needs one-bedroom units. As a result, many commenters called 
for FMRs to increase this year.
    HUD Response: As noted elsewhere, PHAs are not required to reduce 
the payment standard for in-place tenants in response to declining 
FMRs, and PHAs with declining voucher success rates have a variety of 
options for setting higher payment standards. HUD acknowledges the many 
hardships that low-income household face, as well as challenges faced 
by PHAs and other partners in working with HUD to accomplish its 
mission. Having an accurate FMR is often critical to helping address 
these challenges, and as previously discussed, HUD is committed to its 
ongoing evaluation of its FMR calculation. At the same time, the FMR 
itself cannot solve all the problems associated with keeping low-income 
families housed and preventing homelessness, particularly those arising 
from a low supply of housing in general.

The Impact of COVID-19 and Other Disasters May Not Be Accurately 
Reflected in the FMRs

    Commenters noted that the COVID-19 pandemic has greatly affected 
the housing market, leading to potentially inaccurate FMRs for Fiscal 
Year 2022. Commenters stated that the pandemic has worsened an existing 
housing crisis by increasing rents and decreasing affordable housing 
supply, leading to rapidly increasing rental prices. One commenter 
stated that recent data shows average rents have increased 9.4 percent 
on average since March 2020, with anecdotal evidence pointing to more 
drastic increases in recent months. Commenters also stated that the 
nature and impact of the pandemic requires additional steps to keep 
people in their homes, while PHAs need additional support and resources 
to respond to additional burdens imposed by the pandemic. Some 
commenters noted that the expiration of state rent moratoriums will 
artificially affect the calculation of FMRs, as landlords will begin 
raising rents after the moratoriums expire. This would result in 
voucher holders facing difficulty in finding units within the FMRs 
calculated prior to the end of the moratorium.
    Other commenters noted that the COVID-19 pandemic has driven 
population changes in certain areas, as higher-income new residents 
purchase units that would otherwise be available as rental units. This 
decrease in the supply of rental units has driven up rent prices, which 
the FMR methodology may not be able to account for without updated 
local data.
    Commenters also noted that other disasters have contributed to 
limited housing supply, such as floods and hurricanes. These disasters 
can limit the housing supply through permanent or temporary damage to 
units, ultimately driving prices up due to both increased demand from 
displaced residents and decreased supply. For example, one commenter 
noted that flooding in their jurisdiction affected over 700 homes, 
increasing an existing deficit in affordable units.
    HUD Response: The COVID-19 pandemic has caused widespread 
volatility in the U.S. economy, including in many of the nation's 
rental markets. Similarly, natural disasters often cause major 
consequences to housing markets of the areas they affect. In 
calculating FMRs, HUD is limited by the availability of data and its 
requirement to calculate FMRs using the current methodology. HUD is 
committed to evaluating the ongoing impacts of these disasters and 
adjusting its policies as needed to meet its mission.

Requests for Reevaluations

    Commenters submitted valid requests for reevaluation for 28 FMR 
areas, as well as 10 requests that did not meet HUD requirements. 
Commenters requesting or in support of a reevaluation for the FY 2022 
FMRs stated that the proposed FMRs were not an accurate representation 
of their area's rental market. Many commenters stated that they would 
undertake a local rent survey as part of their request for 
reevaluation. Other commenters stated that prior rent surveys are no 
longer accurate predictors of rental prices in the market and that new 
data would more accurately reflect the current market. One commenter 
stated they did not have the resources to conduct a formal rent survey 
in line with HUD's requirements and submitted other data points 
instead. One commenter requested a reevaluation without any discussion 
of the market conditions in their jurisdiction or a discussion of rent 
survey data.
    HUD Response: HUD published the list of areas requesting 
reevaluation on October 20, 2021, and the list of areas without a 
submission of rental market data on January 10, 2022. This notice 
provides the revised FMRs for areas that submitted survey data and 
concludes the FY 2022 FMR re-evaluation process.

III. Environmental Impact

    This Notice involves establishment of a rate and does not 
constitute a development decision affecting the physical condition of 
specific project areas or building sites. Accordingly, under 24 CFR 
50.19(c)(6), this Notice is categorically excluded from environmental 
review under the National Environmental Policy Act of 1969 (42 U.S.C. 
4321).

Todd M. Richardson,
General Deputy Assistant Secretary, Office of Policy Development and 
Research.
[FR Doc. 2022-05040 Filed 3-9-22; 8:45 am]
BILLING CODE 4210-67-P


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