57654 Federal Register / Vol. 70, No. 190 / Monday, October 3, 2005 / Notices 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–4995–N–03] 

Final Fair Market Rents for the Housing 

Choice Voucher Program and 

Moderate Rehabilitation Single Room 

Occupancy Program for Fiscal Year 

2006 

AGENCY: Office of the Secretary, HUD. 

ACTION: Notice of Final Fair Market 

Rents (FMRs) for Fiscal Year 2006. 

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. The primary uses of FMRs are 

to determine payment standard amounts 

for the Housing Choice Voucher 

program, to determine initial renewal 

rents for some expiring project-based 

Section 8 contracts, to determine initial 

rents for housing assistance payment 

(HAP) contracts in the Moderate 

Rehabilitation Single Room Occupancy 

program, and to serve as a rent ceiling 

in the HOME rental assistance program. 

Today’s notice provides final FY2006 

FMRs for all areas that reflect the 

estimated 40th and 50th percentile rent 

levels trended to April 1, 2006. Today’s 

notice, however, does not include final 

determinations on 50th percentile rent 

levels, as proposed in HUD’s notice 

published on August 25, 2005. The 30- 

day public comment period on that 

notice ended September 26, 2005, and 

HUD is evaluating the public comments. 

A notice that provides final 

determinations on 50th percentile FMRs 

will be issued subsequently, and as 

further discussed in Section VII of this 

notice. 

This notice also invokes the 

Secretary’s authority to waive regulatory 

requirements for exception FMRs in 

areas affected by Hurricane Katrina and 

by displacement of residents of the 

affected area. 

DATES: The FMRs published in this 

notice are effective on October 1, 2005. 

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 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, a table of 40th 

percentile recent mover rents for those 

areas currently at the 50th percentile 

FMRs will be provided on the same Web 

site noted above. Any 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 

(202) 708–0590. Questions about 

disaster-related FMR exceptions should 

be referred to the respective local HUD 

office. 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 U.S. Housing Act of 

1937 (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 

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 (non-luxury) nature 

with suitable amenities. In addition, all 

rents subsidized under the Housing 

Choice Voucher program must meet 

reasonable rent standards. The final 

FY2006 FMRs are the first to be 

calculated using the revised Office of 

Management and Budget (OMB) 

statistical area definitions that were 

issued in 2003. The new definitions are 

county-based. 

Electronic Data Availability: This 

Federal Register notice is available 

electronically from the HUD news page: 

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. 

Information on how FMRs are 

determined, including detailed 

calculations, is available at: http:// 

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

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. 

The Department’s regulations at 24 

CFR part 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.) Final 

FY2006 FMRs are published on or 

before October 1, 2005, as required by 

section 8(c)(1) of the USHA. 

III. Proposed FY2006 FMRs 

On June 2, 2005 (70 FR 32402), HUD 

published proposed FY2006 FMRs. In 

the proposed FY2006 FMRs notice, 

HUD advised that the assessment, as 

directed by HUD’s regulations, on 

eligibility or ineligibility for 50th 

percentile FMRs would be addressed by 

a subsequent notice. The subsequent 

notice on 50th percentile FMRs was 

published on August 25, 2005, and is 

further discussed in Section VII of this 

notice. 

As noted in the preamble to the 

proposed FMRs, the FMRs for FY2006 

were based on a change in metropolitan 

area definitions. HUD is using the 

county-based statistical areas as defined 

by OMB, with some modifications. The 

only modifications made are to permit 

OMB-defined metropolitan areas to be 

divided into more than one FMR area 

when necessary to minimize changes in 

FMRs due solely to the use of the new 

definitions. All proposed metropolitan 

FMR areas consist of areas within new 

OMB metropolitan areas. In general, any 

parts of old metropolitan areas, or 

formerly nonmetropolitan counties, that 

would have more than a 5 percent 

increase or decrease in their FMRs as a 

result of implementing the new OMB 

metropolitan definitions are defined as 

separate FMR areas. 

During the comment period, which 

ended August 1, 2005, HUD received 58 

public comments on the proposed 

Federal Register / Vol. 70, No. 190 / Monday, October 3, 2005 / Notices 57655 

FY2006 FMRs. Over one-half of the 

comments concerned the changes in 

FMRs as a result of using the new OMB 

metropolitan definitions. Other 

comments opposed reductions in their 

FMRs as a result of recent Random Digit 

Dialing (RDD) surveys. Low FMRs were 

cited as a reason for program 

difficulties. Most of the public 

comments received lacked the data 

needed to support FMR changes. The 

comments received are discussed in 

more detail later in this notice. 

All RDD results are being 

implemented with the exception of the 

reduction for New Orleans. This area 

experienced such massive losses to its 

rental housing inventory that the survey 

results are no longer valid. 

IV. FMR Methodology 

As detailed in the June 2, 2005, 

notice, the FY2006 FMRs are based on 

current OMB metropolitan area 

definitions. These definitions have the 

advantages that they are based on more 

current (2000 Census) data, use a more 

relevant commuting interchange, 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 collected 

using 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. The proposed FMR 

area definitions were developed to 

achieve these objectives as follows: 

• FMRs were calculated for each of 

the new OMB metropolitan areas using 

2000 Census data. 

• Subparts of any of the new areas 

that had separate FMRs under the old 

OMB definitions were identified, and 

2000 Census Base Rents for these 

subparts were calculated. Only the 

subparts within the new OMB 

metropolitan area were included in this 

calculation (e.g., counties that had been 

excluded from the new OMB 

metropolitan area were not included). 

• 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. 

• Formerly metro counties removed 

from metro areas get their own FMRs. 

• Proposed FY2006 FMRs were 

calculated using the same information 

used to compute FY2005 Final FMRs 

plus additional update factors. 

A. Data Sources 

FY2005 and FY2006 FMRs for most 

areas were based on 2000 Census data 

updated with more current survey data. 

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 HUDUSER Web site at: http:// 

www.huduser.org/datasets/fmr/ 

CensusRentData/. The area-specific data 

and computations used to calculate final 

FY2006 FMRs and FMR area definitions 

can be found at http:// 

www.huduser.org/datasets/fmr/fmrs/. 

B. FMR Updates From 2005 to 2006 

The 2000 to 2005 update factors in the 

Revised Final FY2005 FMRs, published 

February 28, 2005 (70 FR 9778), are 

used to update the metropolitan area to 

the new OMB definition, as modified by 

HUD. All new FMR areas that are part 

of a new metropolitan area are updated 

with the same 2005-to-2006 

metropolitan area update factor, except 

where RDDs were performed at the 

subarea level. 

Specifically, local Consumer Price 

Index (CPI) data is used to move rents 

from the end of 2003 to the end of 2004 

and the same 15-month trending factor 

is then applied. Regional RDD surveys 

were used to provide update factors for 

areas without local CPI estimates. 

Regional RDDs, however, were not 

conducted in 2004 in anticipation of the 

arrival of American Community Survey 

(ACS) data. Data from the 2004 ACS was 

not available in time for inclusion in the 

final FY2006 FMR publication. 

Therefore, for proposed FY2006 FMRs, 

census region CPI data for Class B and 

C size cities is being used to update 

areas without local CPI update factors. 

Once full-scale ACS data collections 

start to become available in the latter 

part of 2006, sample sizes will be large 

enough to estimate FMRs for the larger 

metropolitan areas on an annual basis 

and for other areas on a two-to four-year 

basis. 

C. Additional RDD Surveys and Other 

Data 

RDDs covering 18 additional areas 

were conducted by HUD in the JulyAugust 2005 period and completed in 

time for use in this publication. In 

addition, one PHA survey was 

submitted. The first column of the 

following table identifies the RDD 

survey area. The second column shows 

the proposed FY2006 FMR as published 

on June 2, 2005. The third column 

shows the final FY2006 FMR. The 

fourth column shows whether or not the 

RDD results were statistically different 

enough to justify replacing the updated 

Census or other survey estimates with 

the RDD results. The survey results were 

as follows: 

TABLE 1.—RESULTS OF RECENT RDD RENT SURVEYS

Area surveyed 

Proposed 

FY2006 

FMR 

Final 

FY2006 

FMR 

RDD result 

New Bedford, MA HMFA ............................................................................................................. 694 753 Increase. 

Taunton-Mansfield-Norton, MA HMFA ........................................................................................ 940 992 Increase. 

Providence-Fall River, RI-MA HMFA .......................................................................................... 891 965 No Change.* 

Davidson County, NC .................................................................................................................. 543 543 No Change. 

Lincoln County, NC ..................................................................................................................... 549 549 No Change. 

Rowan County, NC ...................................................................................................................... 564 593 Increase. 

Aguadilla, PR HMFA ................................................................................................................... 321 352 Increase.* 

Fajardo, PR MSA ........................................................................................................................ 403 403 No Change. 

Arroyo-Patillas, PR HMFA ........................................................................................................... 312 352 No Change.* 

Mayaguez, PR MSA .................................................................................................................... 400 400 No Change. 

Ponce, PR MSA .......................................................................................................................... 349 423 Increase. 

San German-Cabo Rojo, PR MSA .............................................................................................. 364 364 No Change. 

San Juan Guaynabo, PR HMFA ................................................................................................. 403 403 No Change. 

Arecibo, PR HMFA ...................................................................................................................... 330 352 No Change.* 

Caguas, PR HMFA ...................................................................................................................... 362 362 No Change. 

Barranquitas-Aibonito-Quebradillas, PR HMFA .......................................................................... 324 352 No Change.* 

Yauco, PR ................................................................................................................................... 349 352 No Change.* 

57656 Federal Register / Vol. 70, No. 190 / Monday, October 3, 2005 / Notices 

TABLE 1.—RESULTS OF RECENT RDD RENT SURVEYS—Continued 

Area surveyed 

Proposed 

FY2006 

FMR 

Final 

FY2006 

FMR 

RDD result 

Nonmetropolitan Counties, PR .................................................................................................... 309 352 Increase. 

*Providence increased as a result of becoming a 50th percentile FMR area. Other ‘‘No change’’ areas increased as a result of the state minimum FMRs. Aguadilla had an increase resulting from the RDD and a further increase resulting from applying the state minimum. 

HUD is directed by statute to use the 

most recent data available in its FMR 

publications. These RDD survey results 

are being implemented in the revised 

final FY2006 FMR publication 

consistent with that requirement. 

The RDD surveys conducted in Puerto 

Rico included a number of additional 

housing quality questions that were 

used to address the concerns of HUD 

and the Puerto Rico Housing Authority. 

Only one question produced increases 

in FMR estimates; it was related to 

whether a housing unit had hot and 

cold running water. Screening RDD 

results based on that housing quality 

question increased FMR estimates in 

some areas. The Puerto Rico RDD results 

had small recent mover samples, and 

none of the areas had high recent mover 

bonuses. For FMR computation 

purposes, FMR estimates were based on 

a mix of stayer rents inflated by the 

average Puerto Rico recent-mover-tostayer ratio and recent mover rents. 

Using this approach, three areas had 

increases based on RDD results, and 

nine areas showed no change, but there 

were increases over the proposed FMRs 

for five areas that would otherwise be 

below the state minimum FMR. 

HUD also reviewed a survey 

submitted by the St. Mary’s County 

(MD) PHA and data on two-bedroom 

rents submitted by the Housing 

Authority of the County of Santa Clara. 

Neither of these submissions provided 

data that was statistically representative 

of their rental markets. HUD plans to 

conduct surveys of both areas within the 

next few months to address their 

concerns. 

D. Large Bedroom Rents 

FMR estimates are calculated for twobedroom units. This is the most 

common type of rental unit and, 

therefore, the easiest to accurately 

survey and analyze. After each 

Decennial Census, rent ratios between 

two-bedroom units and other unit sizes 

are calculated. These ratios are then 

used to calculate FMRs in future years 

after a two-bedroom FMR is calculated. 

This is done because it is much easier 

to obtain accurate two-bedroom 

estimates, and then to use preestablished cost relationships with other 

bedroom sizes to update those rent 

estimates, than it is to develop 

independent FMR estimates for each 

bedroom size. A publicly releasable 

version of the data file that permits 

derivations of rent ratios from the 2000 

Census, as well as demonstrations of 

how the data are used, are available at 

http://www.huduser.org/datasets/fmr/ 

fmr.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 threebedroom 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 fourbedroom FMR for each extra bedroom. 

For example, the FMR for a fivebedroom unit is 1.15 times the fourbedroom FMR, and the FMR for a sixbedroom unit is 1.30 times the fourbedroom FMR. FMRs for single-room 

occupancy units are 0.75 times the zerobedroom (efficiency) FMR. 

A further adjustment is made for areas 

with local bedroom-size intervals above 

or below what are considered to be 

reasonable ranges or where sample sizes 

are inadequate to accurately measure 

bedroom rent differentials. Experience 

has shown that highly unusual bedroom 

ratios typically reflect inadequate 

sample sizes or peculiar local 

circumstances that HUD would not 

want to utilize in setting FMRs (e.g., 

luxury efficiency apartments in New 

York City that rent for more than typical 

one-bedroom units). Bedroom interval 

ranges were established based on an 

analysis of the range of such intervals 

for all areas with large enough samples 

to permit accurate bedroom ratio 

determinations. The final ranges used 

were: Efficiency units are constrained to 

fall between 0.65 and 0.83 of the twobedroom FMR, one-bedroom units must 

be between 0.76 and 0.90 of the twobedroom unit, three-bedroom units must 

be between 1.10 and 1.34 of the twobedroom 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 (e.g., efficiency rents 

were not allowed to be higher than onebedroom rents and four-bedroom rents 

were set at a minimum of 3 percent 

higher than three-bedroom rents). 

For nonmetropolitan counties with 

few rental units and small Census 

recent-mover rent samples, Censusdefined 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 200 

two-bedroom Census-tabulated 

observations. 

E. State Minimums 

In response to comments received on 

the FY2005 and the proposed FY2006 

FMRs, a state minimum policy similar 

to that used prior to FY2005 has been 

implemented. The rationale for having a 

state minimum FMR is that some lowincome, low-rent nonmetropolitan 

counties have Census-based FMR 

estimates that appear to be below longterm operating costs for standard quality 

rental units and raise concerns about 

housing quality. Housing quality 

problems are limited in most parts of 

the country and have little impact on 

FMR estimates. The exception to this 

generality within the continental United 

States occurs in some nonmetropolitan 

areas with unusually low rents. State 

minimum FMRs have been set at the 

respective state-wide median 

nonmetropolitan rent level, but are not 

allowed to exceed the U.S. median 

nonmetropolitan rent level. This change 

primarily affects small nonmetropolitan 

counties in the South with low rents. 

V. Public Comments 

Form letters were received from the 

tenants and landlords of Section 8 

housing in Taunton, MA. Taunton used 

to be part of the Boston metropolitan 

area and is now part of the Providence 

Federal Register / Vol. 70, No. 190 / Monday, October 3, 2005 / Notices 57657 

metropolitan area. The 2000 Census 

data shows that Taunton’s rents are 

more than 5 percent higher than those 

for the Providence metropolitan area. 

Taunton is therefore established as a 

separate FMR area, the TauntonMansfield-Norton, MA HMFA, but the 

Taunton comments objected to the fact 

that its FMRs were decreased because it 

had been removed from the Boston 

metropolitan area. The social services 

office and the town government of 

Mansfield also submitted comments 

stating that FMRs were too low and 

would hinder Mansfield in meeting the 

Massachusetts State requirement for a 

10 percent affordable housing stock. 

New Bedford was not significantly 

affected by the geography change, but 

requested a survey because it believed 

its proposed FMRs are too low. RDD 

surveys of the Taunton-MansfieldNorton and New Bedford subareas of 

Providence were conducted. Both areas 

received higher FMRs as a result of the 

surveys. 

The Milford Housing Authority 

(representing the Eastern Worcester, MA 

HMFA) also submitted comments 

objecting to the significant FMR 

reduction that resulted from its being 

removed from the Boston metropolitan 

area and placed in the Worcester, MA 

metropolitan area. A few tenants also 

filed comments requesting that Milford 

remain part of Boston. Data from the 

2000 Census showed that Eastern 

Worcester’s rents are more than 5 

percent higher than those for the 

Worcester metropolitan area, and there 

is a separate FMR area, Eastern 

Worcester County, MA HMFA. No 

change in the proposed FMRs was 

warranted. The Citizens Housing and 

Planning Association of MA requested 

that HUD use the city-town building 

blocks in Census Bureau NECTA area 

definitions rather than county-based 

areas. 

The Lexington and Lincolnton public 

housing agencies (PHAs) of North 

Carolina, representing Davidson and 

Lincoln counties, respectively, protested 

the large FMR decreases that resulted 

from these counties being removed from 

metropolitan areas under the new OMB 

definitions and being redefined as 

nonmetropolitan counties with their 

own FMRs. Davidson County formerly 

was in the Greensboro-Winston-SalemHigh Point MSA and Lincoln was in the 

Charlotte-Gastonia-Rock Hill MSA. 

Surveys were conducted of these two 

counties, as well as Rowan County, 

which was also formerly part of the 

Charlotte metropolitan area. Only 

Rowan County received a survey-based 

increase. 

The Chatham County Housing 

Authority protested the change in area 

definitions for what had been the 

Raleigh-Durham-Chapel Hill 

metropolitan area. This metropolitan 

area was split into three metropolitan 

areas, and Chatham County was defined 

to be part of the new Durham HMFA. 

The Homeless Services Network, 

serving the Charlotte-Gastonia-Concord, 

NC-SC HMFA, also protested the 

reduced FMRs that were proposed for 

some counties in the newly defined 

areas. In each of these instances, the 

2000 Census data and OMB definitions 

used supported the proposed FMR area 

definitions and the FMR estimates. 

The South Carolina Regional Housing 

Authority Number 1 opposed the 

creation of a new one-county 

metropolitan area, the Anderson, SC 

MSA. It also complained about 

inconsistencies and inequities in FMRs 

among nonmetropolitan counties. A 

number of other criticisms of very low 

nonmetropolitan FMRs were raised in 

other comments both this year and last 

year. Many of the concerns about 

nonmetropolitan FMRs are addressed by 

state minimum FMRs. 

A number of other comments were 

received on the new metropolitan area 

definitions. Island County, WA, 

formerly part of the Seattle metropolitan 

area but now a nonmetropolitan county, 

submitted a request that it be made part 

of the Mount Vernon-Anacortes, WA 

MSA. Island County, however, failed to 

meet the OMB commutation test to 

become part of that metropolitan area. 

Simpson Property Group, LP argued that 

Broomfield County, CO should be 

placed in the Boulder metropolitan area 

rather than the Denver metropolitan 

area. This request is not supported by 

the data used to determine to which 

area a county is most closely aligned. 

Lafayette, IN, and Rochester, MN, both 

expressed concern that adding a 

nonmetropolitan county reduced their 

FMRs. Rochester, MN, reiterated its 

comments filed for the FY2005 FMRs 

that the reduction in the FMRs for the 

large bedroom-size rents was based on 

flawed Census 2000 data and HUD 

should not increase all bedroom FMRs 

at the same rate. No acceptable factual 

data were submitted to support this 

group of requests or to indicate why 

2000 Census data should not be used. 

Comments on proposed San Francisco 

FMRs were filed by the local housing 

authority, the Mayor, the Housing 

Rights Committee, and U.S. 

Representative Tom Lantos. All 

protested the low FMRs, which were 

reduced last year, and all expressed 

concern that San Francisco’s tight rental 

market was not adequately measured by 

the FMR methodology, which found the 

same large decreases in rents in 2004 as 

indicated by earlier private market 

apartment complex surveys. The Mayor 

requested reinstitution of high 

exception rents for San Francisco. 

Available data from private market 

apartment complex surveys, however, 

show little increase in rents through the 

middle of 2005. San Francisco indicated 

it preferred to conduct its own survey. 

Comments on Puerto Rico’s FMRs 

were submitted by the Departmento de 

la Viviendo, a housing management 

corporation, and the Affordable Housing 

Management Association. They stated 

that Puerto Rico has a unique rental 

housing market and requested that its 

FMRs be based on construction and 

operating costs rather than the costs of 

existing housing. Concern was 

expressed that low FMRs adversely 

affected the Moderate Rehabilitation 

program. It was argued that it was 

inconsistent for Puerto Rico to have 

lower FMRs than the Virgin Islands. 

HUD did not accept any of the Puerto 

Rico arguments as a valid basis for 

changing FMRs, but did conduct 

surveys that resulted in higher FMRs for 

some areas. Market rents for many 

Moderate Rehabilitation units are higher 

than typical rent levels, but this is not 

a basis for changing FMRs. The Virgin 

Islands has income and rents that 

current and past survey data show are 

far higher than Puerto Rico’s. The 

statutory guidance on FMRs explicitly 

differentiates between new construction 

rents and rents for existing structures, 

and indicates that rents for existing 

structures are to be based on rents for 

existing rental housing dwelling units. 

An extensive survey of all Puerto Rico 

FMR areas was conducted during the 

summer of 2005. Puerto Rico’s FMRs 

were calculated so as to take into 

consideration all available data that 

might result in upward housing quality 

or other adjustments to rents, and the 

final FMRs are considerably above the 

normal points in which FMRs are 

located within overall rent distributions. 

Many areas expressed concern with 

FMR reductions resulting from either 

recent RDDs or modifications to their 

area definition. These include the 

Oklahoma City Housing Authority, the 

Chicago Area Fair Housing Alliance, the 

Village of North Syracuse Housing 

Authority, and the Bloomington 

Housing Authority. The Oklahoma and 

Chicago concerns were not supported by 

factual data and are inconsistent with 

survey data. The North Syracuse 

problem can be addressed using the 

HUD exception policy. HUD plans to 

conduct a survey of Bloomington, but 

this was delayed until the fall because 

57658 Federal Register / Vol. 70, No. 190 / Monday, October 3, 2005 / Notices 

the respective PHA agreed with HUD 

staff that conducting a survey during the 

summer of 2005 was undesirable 

because it would have omitted the 

significant impact of college student 

renters. 

The National Association of Home 

Builders (NAHB), the Public Housing 

Authorities Directors Association 

(PHADA), the National Association of 

Affordable Housing Lenders (NAAHL), 

and the National Association of Housing 

and Redevelopment Officials (NAHRO) 

provided comments for their 

constituents. NAHB stressed that there 

should be a strict floor on FMR 

reductions, no more than five percent, 

including RDD survey results. HUD 

disagrees that there should be 

constraints on increases or decreases, 

since these are based on factual rent 

relationships and only affect 

prospective voucher leases. 

NAAHL commented that the 

application of the five percent rule is 

uneven because it did not limit 

decreases for FMRs of counties that 

were removed from metropolitan areas. 

They suggested that areas with large 

decreases should be held harmless. 

PHADA also expressed concern for 

formerly metropolitan counties with 

large decreases. HUD disagrees that its 

treatment of nonmetropolitan county 

FMRs is inconsistent with its treatment 

of metropolitan areas. Metropolitan 

areas with more than a five percent 

increase or decrease as a result of the 

new definitions were assigned FMRs 

calculated based on their own data. 

Counties that were removed from FMR 

areas were also given FMRs based on 

their own data. The only difference is 

that use of FMR area data produced 

larger decreases for some of the counties 

removed from metropolitan areas. 

NAHRO asserted that recent RDD 

results that produced a much higher 

number of FMR reductions than 

increases point to a problem with this 

methodology. HUD does not agree. Data 

from Census Bureau and private market 

rental surveys show that rental vacancy 

levels have been unusually high the past 

few years and that rent changes in many 

areas are minimal or negative. Census 

surveys show the same pattern of 

results. Given this information, it was to 

be expected that FMR surveys would 

produce more decreases than increases 

if a representative selection of FMR 

areas was surveyed. 

A better explanation of the utility 

component of the gross rent in the FMR 

was also requested. This has been 

provided in HUD’s new FMR 

documentation system at http:// 

www.huduser.org/datasets/fmr/ 

fmrs.html. 

VI. 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. No 

new exception requests were filed. 

All approved exceptions to these rents 

that were in effect in FY2005 were 

updated to the midpoint of FY2006 

using the same data used to estimate the 

Housing Choice Voucher program 

FMRs. If the result of this computation 

was higher than 40 percent of the 

rebenchmarked 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. 

VII. 50th Percentile FMR Area 

Designation 

An interim rule published on October 

2, 2000 (65 FR 58870), established 50th 

percentile FMRs for 39 FMR areas. That 

notice required a periodic review of 

areas eligible for 50th percentile FMRs. 

The notice published on August 25, 

2005 (70 FR 50138), provided updated 

information on which areas met the 

50th percentile FMR eligibility criteria 

and requested public comments on the 

proposed changes. Because FY2006 

FMRs have to be issued for effect before 

public comments on the August 25, 

2005, notice can be considered, the 

FMRs published in this notice do not 

implement any of the proposed FMR 

reductions from the 50th to the 40th 

percentile level. This notice does, 

however, provide 50th percentile FMRs 

for the newly eligible areas designated 

in the August 25, 2005, notice. 

HUD asks that areas please take 

special note that unless information is 

submitted that changes the results of the 

eligibility determinations issued in the 

August 25, 2005, notice, the proposed 

reductions in FMRs from the 50th to the 

40th percentile for selected areas will be 

implemented in a subsequent notice. 

HUD intends to issue this subsequent 

notice as quickly as possible after 

review and consideration of the public 

comments on the August 25, 2005, 

notice. 

Because the results of the 50th 

percentile FMR eligibility analysis 

contained in the August 25, 2005, notice 

are not being fully implemented at this 

time, all areas that had 50th percentile 

FMRs in the June 2, 2005, notice of 

proposed FY2006 FMRs continue to 

have them in this notice. In addition, 

the 10 newly designated areas that 

qualified for 50th percentile FMRs are 

assigned them in this notice. Again, 

however, HUD anticipates that the 

subsequent notice to be issued on 50th 

percentile FMRs will be limited to the 

areas listed as eligible for 50th 

percentile FMRs in the August 25, 2005, 

notice and not the June 2, 2005, notice. 

Table 2 identifies the 10 new areas 

(which were identified in the August 25, 

2005, notice). 

TABLE 2.—PROPOSED FY2006 40TH PERCENTILE FMR AREAS THAT SHOULD BE ASSIGNED 50TH PERCENTILE FMRS

Baltimore-Towson, MD MSA ........................................................................................................ Providence-Fall River, RI-MA HMFA. 

Hartford-West Hartford-East Hartford, CT HMFA ......................................................................... Riverside-San Bernardino-Ontario, CA MSA. 

Honolulu, HI MSA ......................................................................................................................... Sarasota-Bradenton-Venice, FL MSA. 

Milwaukee-Waukesha-West Allis, WI MSA .................................................................................. Tacoma, WA HMFA. 

New Haven-Meriden, CT HMFA ................................................................................................... Tucson, AZ MSA. 

Riverside-San Bernardino-Ontario, 

CA, in addition to becoming a 50th 

percentile FMR area, has an additional 

FMR increase based on RDD results. At 

the 50th percentile standard, the RDD 

survey conducted showed a statistically 

significant increase in the 50th 

percentile FMR estimate for the area 

that is reflected in this publication. 

VIII. Katrina Disaster Area FMRs 

The Secretary of HUD has authority to 

modify FMRs to meet changes in rents 

resulting from declared Federal 

disasters. HUD’s past natural disaster 

policy has been to allow PHAs in 

Federal Emergency Management Agency 

(FEMA)-designated disaster areas to 

request exception FMRs of 110 percent 

of published FMRs, and to allow them 

to retain use of those FMRs for a twoVerDate Aug<31>2005 17:42 Sep 30, 2005 Jkt 208001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4703 E:\FR\FM\03OCN2.SGM 03OCN2
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year period. The Department is fully 

aware that the Katrina disaster is much 

larger in scope than previous disasters 

and that the FMRs in this publication 

are based on pre-Katrina data. 

Communities far outside FEMAdesignated disaster areas are being 

significantly impacted by displacees 

seeking housing. HUD’s Office of Public 

and Indian Housing will be issuing a 

notice within the next few weeks that 

addresses how PHAs may obtain 

disaster-related exception FMRs to meet 

local needs. 

IX. HUD Rental Housing Survey Guides 

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 $20,000 to 

$30,000. Areas with 500 or more 

program units usually meet this 

criterion, and areas with fewer units 

may meet it if local rents are thought to 

be significantly different than the FMR 

proposed by HUD. In addition, HUD has 

developed a simplified 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. 

PHAs in nonmetropolitan areas may, 

in certain circumstances, do surveys of 

groups of counties; all county-group 

surveys have to be approved in advance 

by HUD. 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 its relationship to the 

combined rent of the group of FMR 

areas. 

PHAs that plan to use the RDD survey 

technique may obtain a copy of the 

appropriate survey guide by calling 

HUD USER on (800) 245–2691. Larger 

PHAs should request ‘‘Random Digit 

Dialing Surveys; A Guide to Assist 

Larger Housing Agencies in Preparing 

Fair Market Rent Comments.’’ Smaller 

PHAs should obtain ‘‘Rental Housing 

Surveys; A Guide to Assist Smaller 

Housing Agencies in Preparing Fair 

Market Rent Comments.’’ These guides 

are also available on the Internet at 

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 small PHA survey guide. Other 

survey methodologies are acceptable if 

they provide statistically reliable, 

unbiased estimates of the 40th 

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 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 of verification for 

determining whether the sample is 

representative of the FMR area’s rental 

housing stock. All survey results must 

be fully documented. 

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 is prepared to relax 

normal sample size requirements. 

Accordingly, the FMR Schedules, 

which will not be codified in 24 CFR 

part 888, are amended as follows: 

Dated: September 27, 2005. 

Roy A. Bernardi, 

Deputy Secretary. 

Fair Market Rents for the Housing 

Choice Voucher 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 FY2006 

FMRs reflect a change in metropolitan 

area definition where HUD is using 

Core-Based Statistical Areas (CBSA), 

that are made up of one or more 

counties, as defined by 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 FY2006 

FMRs incorporates the 2003 OMB 

definitions of metropolitan areas based 

on the new CBSA standards as 

implemented with 2000 Census data, 

but makes adjustments to the definitions 

to separate subparts of these areas where 

FMRs 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 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 Areas 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 old-definition MSAs/PMSAs, 

metro counties deleted from olddefinition MSAs/PMSAs by HUD for 

FMR purposes, and counties and county 

parts outside of old-definition MSAs/ 

PMSAs referred to as non-metropolitan 

counties.) Sub-areas of MSAs are 

assigned their own FMRs when the subarea 2000 Census Base Rent differs by at 

least 5 percent from (i.e., is at most 95 

percent or at least 105 percent of) the 

MSA 2000 Census Base Rent. MSA 

subareas, and the remaining portions of 

MSAs after sub-areas have been 

determined, are referred to as 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 

the FMR tables. 

2. Bedroom Size Adjustments 

Schedules 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. 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 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. 

57660 Federal Register / Vol. 70, No. 190 / Monday, October 3, 2005 / Notices 

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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