[Federal Register Volume 82, Number 169 (Friday, September 1, 2017)]
[Notices]
[Pages 41637-41645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18431]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6021-N-02]


Fair Market Rents for the Housing Choice Voucher Program, 
Moderate Rehabilitation Single Room Occupancy Program, and Other 
Programs Fiscal Year 2018 and Adoption of Methodology Changes for 
Estimating Fair Market Rents

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

ACTION: Notice of Fiscal Year (FY) 2018 Fair Market Rents (FMRs) and 
adoption of methodology changes for estimating FMRs.

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
(USHA), as amended by the Housing Opportunities Through Modernization 
Act of 2016 (HOTMA), requires the Secretary to publish FMRs not less 
than annually, adjusted to be effective on October 1 of each year. 
Section 8(c)(1)(B) of USHA, as amended by HOTMA, requires that HUD 
publish for comment a notice of proposed material changes in the 
methodology for estimating FMRs and a notice containing HUD's final 
decisions regarding such proposed substantial methodological changes. 
On May 26, 2017, HUD published a notice proposing changes to the 
methodology used for estimating FMRs and requested public comment.
    This notice adopts HUD's May 26, 2017 proposed material changes to 
the methodology for estimating FMRs and notifies interested parties 
that FY 2018 FMRs are available at www.huduser.gov. This notice also 
describes the methods used to calculate the FY 2018 FMRs and enumerates 
the procedures for Public Housing Agencies (PHAs) and other interested 
parties to request reevaluations of their FMRs as required by HOTMA. 
Lastly, this notice responds to public comments HUD received on its May 
26, 2017 notice.

DATES: 
    Comment Due Date: October 2, 2017.
    Applicability Date: October 2, 2017 unless HUD receives a request 
for reevaluation of specific area FMRs as described below.

ADDRESSES: HUD invites interested persons to submit comments regarding 
the FMRs and to request reevaluation of the FY 2018 FMRs to the 
Regulations Division, Office of General Counsel, Department of Housing 
and Urban Development, 451 Seventh Street SW., Room 10276, Washington, 
DC 20410-0001. Communications must refer to the above docket number and 
title and should contain the information specified in the ``Request for 
Comments/Request for Reevaluation'' section. There are two methods for 
submitting public comments.
    1. Submission of Comments by Mail. Comments or requests for 
reevaluation may be submitted by mail to the Regulations Division, 
Office of General Counsel, Department of Housing and Urban Development, 
451 7th Street SW., Room 10276, Washington, DC 20410-0500. Due to 
security measures at all federal agencies, however, submission of 
comments by mail often results in delayed delivery. To ensure timely 
receipt of comments or reevaluation requests, HUD recommends that 
comments or requests submitted by mail be submitted at least two weeks 
in advance of the deadline. HUD will make all comments or reevaluation 
requests received by mail available to the public at http://www.regulations.gov.
    2. Electronic Submission of Comments. Interested persons may submit 
comments or reevaluation requests electronically through the Federal 
eRulemaking Portal at http://www.regulations.gov. HUD strongly 
encourages commenters to submit comments or reevaluation requests 
electronically. Electronic submission of comments or reevaluation 
requests allows the author maximum time to prepare and submit a comment 
or reevaluation request, ensures timely receipt by HUD, and enables HUD 
to make them immediately available to the public. Comments or 
reevaluation requests submitted electronically through the http://www.regulations.gov Web site can be viewed by other submitters and 
interested members of the public. Commenters or reevaluation requestors 
should follow instructions provided on that site to submit comments or 
reevaluation requests electronically.

    Note:  To receive consideration as public comments or 
reevaluation requests, comments or requests must be submitted 
through one of the two methods specified above. Again, all 
submissions must refer to the docket number and title of the notice.

    No Facsimile Comments or Reevaluation Requests. Facsimile (FAX) 
comments or requests for FMR reevaluation are not acceptable.
    Public Inspection of Public Comments and Reevaluation Requests. All 
properly submitted comments and reevaluation requests and 
communications regarding this notice submitted to HUD will be available 
for public inspection and copying between 8 a.m. and 5 p.m. weekdays at 
the above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments and 
reevaluation requests must be scheduled by calling the Regulations 
Division at 202-708-3055 (this is not a toll-free number). Individuals 
with speech or hearing impairments may access this number through TTY 
by calling the Federal Relay Service at 800-877-8339 (toll-free 
number). Copies of all comments and reevaluation requests submitted are 
available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For technical information on the 
methodology used to develop FMRs or a listing of all FMRs, please call 
the HUD USER information line at 800-245-2691 or access the information 
on the HUD USER Web site http://www.huduser.gov/portal/datasets/fmr.html. FMRs are listed at the 40th or 50th percentile in Schedule B. 
For informational purposes, 40th percentile rents for the areas with 
50th percentile FMRs will be provided in the HUD FY 2018 FMR 
documentation system at https://www.huduser.gov/portal/datasets/fmr.html#2018_query and 50th percentile rents for all FMR areas will be 
published at http://www.huduser.gov/portal/datasets/50per.html.
    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 may be addressed to Marie L. Lihn or 
Peter B. Kahn of the Economic and Market Analysis Division, Office of 
Economic Affairs, Office of Policy Development and Research at HUD 
headquarters, 451 7th Street SW., Room 8208, Washington, DC 20410; 
telephone number 202-402-2409 (this is not a toll-free number), or they 
may be reached at <a href="/cdn-cgi/l/email-protection#fb9e969a9fd6938abb938e9fd59c948d"><span class="__cf_email__" data-cfemail="ef8a828e8bc2879eaf879a8bc1888099">[email protected]</span></a>. Persons with hearing or speech 
impairments may access HUD numbers through TTY by calling the Federal 
Relay Service at 800-877-8339 (toll-free number).
    Electronic Data Availability. This Federal Register notice will be 
available electronically from the HUD User page at https://www.huduser.gov/portal/datasets/fmr.html. Federal Register notices also 
are available electronically from https://www.federalregister.gov/

[[Page 41638]]

the U.S. Government Printing Office Web site. Complete documentation of 
the methods and data used to compute each area's FY 2018 FMRs is 
available at https://www.huduser.gov/portal/datasets/fmr.html#2018_query. FY 2018 FMRs are available in a variety of 
electronic formats at https://www.huduser.gov/portal/datasets/fmr.html. 
FMRs may be accessed in PDF as well as in Microsoft Excel. Small Area 
FMRs based on FY 2018 Metropolitan Area Rents for the Dallas, TX HUD 
Metro FMR Area are available in Microsoft Excel format at the same web 
address. Small Area FMRs for all other metropolitan FMR areas are 
available at: http://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing 
assistance to aid lower-income families in renting safe and decent 
housing. Housing assistance payments are limited by FMRs established by 
HUD for different geographic areas. In the Housing Choice Voucher (HCV) 
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. HUD also uses the FMRs to determine initial 
renewal rents for some expiring project-based Section 8 contracts, 
initial rents for housing assistance payment contracts in the Moderate 
Rehabilitation Single Room Occupancy program, rent ceilings for rental 
units in both the HOME Investment Partnerships program and the 
Emergency Solution Grants program, calculation of maximum award amounts 
for Continuum of Care recipients and the maximum amount of rent a 
recipient may pay for property leased with Continuum of Care funds, and 
calculation of flat rents in Public Housing units. 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 
and is typically set at the 40th percentile of the distribution of 
gross rents. HUD's FMR calculations represent HUD's best effort to 
estimate the 40th percentile gross rents paid by recent movers into 
standard quality units in each FMR area. In addition, all rents 
subsidized under the HCV program must meet reasonable rent standards.
    As of October 2, 2000 (65 FR 58870), HUD required FMRs to be set at 
the 50th percentile for areas where HUD determined higher FMRs were 
needed to help families assisted under certain HUD programs find and 
lease decent and affordable housing. On November 16, 2016 (81 FR 
80567), HUD published a Final Rule entitled ``Establishing a More 
Effective Fair Market Rent System; Using Small Area Fair Market Rents 
in the Housing Choice Voucher Program Instead of the Current 50th 
Percentile FMRs'' (Small Area FMR final rule), with an effective date 
of January 17, 2017. The Small Area FMR final rule eliminates the 50th 
percentile FMR provisions in the FMR regulations (24 CFR 888.113)\1\ 
and provides that areas currently designated as 50th percentile areas 
remain 50th percentile areas until their current 3-year eligibility 
period expires. At the end of the 3-year eligibility period, these 
areas revert to 40th percentile FMR status. (If they meet the 
deconcentration criteria specified in 24 CFR 982.503(f), available at: 
https://www.gpo.gov/fdsys/pkg/CFR-2016-title24-vol4/pdf/CFR-2016-title24-vol4-sec982-503.pdf, they may petition HUD to maintain payment 
standards based on 50th percentile rents on that basis.)
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    \1\ Separately from the Small Area FMR regulations, HUD also 
calculates and published 50th percentile rent estimates for the 
purposes of Success Rate Payment Standards as defined at 24 CFR 
982.503(e) (estimates available at: http://www.huduser.gov/portal/datasets/50per.html), which policy was not changed by the Small Area 
FMR rule.
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    The following areas completed their 3 years of 50th percentile 
eligibility in FY 2017 and will revert to 40th percentile FMR status in 
FY 2018:

 FY 2017 50th-Percentile FMR Areas Reverting to 40th Percentile FMRs in
                                 FY 2018
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Albuquerque, NM Metropolitan Statistical Area (MSA).
Chicago-Joliet-Naperville, IL HUD Metro FMR Area.
Denver-Aurora-Broomfield, CO MSA.
Hartford-West Hartford-East Hartford, CT HUD Metro FMR Area.
Urban Honolulu, HI MSA.
Kansas City, MO-KS HUD Metro FMR Area.
Milwaukee-Waukesha-West Allis, WI MSA.
Riverside-San Bernardino-Ontario, CA MSA.
Tacoma, WA HUD Metro FMR Area.
Virginia Beach-Norfolk-Newport News, VA-NC MSA.
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    The following is a list of FMR areas that retain 50th percentile 
FMRs for FY 2018, along with the year that they will revert to 40th 
percentile status:

     FY 2018 50th-Percentile FMR Areas and Year of Reversion to 40th
                             Percentile FMRs
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Bergen-Passaic, NJ HUD Metro FMR Area........................       2020
Baltimore-Columbia-Towson, MD MSA............................       2019
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD..................       2019
San Diego-Carlsbad-San Marcos, CA MSA........................       2020
Spokane, WA HUD Metro FMR Area...............................       2020
Washington, DC-VA-MD HUD Metro FMR Area......................       2019
West Palm Beach-Boca Raton, FL HUD Metro FMR Area............       2019
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II. Procedures for the Development of FMRs and Changes in FMR 
Methodology

    Section 8(c)(1) of the USHA, as amended by HOTMA (Pub. L. 114-201, 
approved July 29, 2016), requires the Secretary of HUD to publish FMRs 
not less than annually. Section 8(c)(1)(A) states that each FMR ``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 . . .'' Section 
8(c)(1)(B) requires that HUD publish, not less than annually, new FMRs 
on the World Wide Web or in any other manner specified by the 
Secretary, and that HUD must also notify the public of when it 
publishes FMRs by Federal Register notice. After notification, the FMRs 
``shall become effective no earlier than 30 days after the date of such 
publication,'' and HUD must provide a procedure for the public to 
comment and request a reevaluation of the FMRs in a jurisdiction before 
the FMRs become effective. Consistent with the statute, HUD is issuing 
this notice to notify the public that FY 2018 FMRs are available at 
https://www.huduser.gov/portal/datasets/fmr.html and will become 
effective on October 2, 2017. This notice also provides procedures for 
FMR reevaluation requests.
    In addition, Section 8(c)(1)(B) of the USHA, as amended by HOTMA, 
requires that HUD publish for comment in the Federal Register a notice 
of proposed material changes in the methodology for estimating FMRs and 
a notice containing HUD's final decisions regarding such proposed 
substantial methodological changes and responses to public comments. On 
May 26, 2017 (82 FR 24377), HUD published a Federal Register notice 
proposing changes to the methodology used to calculate FMRs (Changes to 
Methodology notice) with a comment period that ended on June 26, 2017. 
This notice contains HUD's final decisions on the proposed changes to

[[Page 41639]]

the FMR methodology and responses to public comments.
    In the Changes to Methodology notice, HUD proposed several 
methodological changes in the way that HUD calculates FMRs. Most of the 
changes focused on the way HUD assessed the statistical quality of the 
ACS estimates or on using as much local information as possible when 
calculating FMRs. The proposed changes were as follows:
    <bullet> Add a ``number of observations'' criterion to the existing 
margin of error criterion when assessing the statistical reliability of 
ACS estimates.
    <bullet> Use ``all-bedroom'' rents when calculating the recent 
mover factor when the two-bedroom rents are not statistically reliable 
before moving to a larger encompassing geography's two-bedroom recent 
mover rents for this factor.
    <bullet> Calculate Small Area FMRs directly, rather than using the 
ratio method, when statistically reliable information at the ZIP Code 
Tabulation Area (ZCTA) level is available. The ratio method would still 
be used when statically reliable data was not available for individual 
ZCTAs.
    <bullet> Link ZCTAs to the smallest metropolitan area available as 
their parent FMR area for the ratio method rather than defaulting to 
the Office of Management and Budget (OMB)--defined metropolitan area as 
the parent. This would allow HUD to take advantage of the differing 
recent mover factors available across subdivided OMB metropolitan areas 
(areas labeled as HUD Metro FMR Areas).
    In response to the Changes to Methodology notice, a total of 22 
individual comments were received and posted on the Regulations.gov 
site at https://www.regulations.gov/docket?D=HUD-2017-0033. Most of the 
comments that addressed the proposed methodology changes responded 
favorably to the changes. HUD provides responses to the public comments 
received later in this preamble (see section VII below). After 
considering all public comments received, HUD has decided to adopt all 
of the proposed methodology changes. HUD calculated the FY 2018 FMRs 
using the revised methodology incorporating the adopted changes.

III. FMR Methodology

    This section provides a brief overview of how HUD computes the FY 
2018 FMRs. For complete information on how HUD determines FMR areas, 
and on how HUD derives each area's FMRs, see the online documentation 
at https://www.huduser.gov/portal/datasets/fmr.html#2018_query.
    In conjunction with the use of 2015 American Community Survey (ACS) 
data, HUD has implemented the following geography changes: Effective 
May 1, 2015, Shannon County, South Dakota (state code 46, county code 
113) changed its name to Oglala Lakota County, South Dakota (state code 
46, county code 102) and effective July 1, 2015, the Wade Hampton 
Census Area, Alaska (state code 02, county code 270) changed its name 
to the Kusilvak Census Area, Alaska (state code 02, county code 158).

A. Base Year Rents

    For FY 2018 FMRs, HUD updates the base rents using the U.S. Census 
Bureau's 5-year ACS data collected between 2011 through 2015 (released 
in December of 2016). One of the changes proposed in the Changes to 
Methodology notice and adopted in this notice addresses the statistical 
reliability of the ACS data used in the FMR calculations. In prior 
years, HUD used ACS estimates where the margin of error of the estimate 
is less than half the size of the estimate itself. For FY 2018 FMRs, 
HUD now pairs this ``margin of error'' test with an additional test 
based on the number of survey observations supporting the estimate. The 
Census Bureau does not provide HUD with an exact count of the number of 
observations supporting the ACS estimate; rather, the Census Bureau 
provides HUD with categories of the number of survey responses 
underlying the estimate, including whether the estimate is based on 
more than 100 observations. Using these categories, HUD requires that, 
in addition to the ``margin of error'' test, ACS rent estimates must be 
based on at least 100 observations in order to be used as base rents.
    For areas in which the 5-year ACS data for two-bedroom, standard 
quality gross rents do not pass the statistical reliability tests 
(i.e., have a margin of error ratio greater than 50 percent or fewer 
than 100 observations), HUD will use an average of the base rents over 
the three most recent years (provided that there is data available for 
at least two of these years),\2\ or if such data is not available, 
using the two-bedroom rent data within the next largest geographic 
area, which for a non-metropolitan area would be the state non-metro 
area rent data.
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    \2\ For FY 2018, the three years of ACS data in question are 
2013, 2014 and 2015. The 2013 data are adjusted to be denominated in 
2015 dollars using the growth in CPI-based gross rents measured 
between 2013 and 2015. Similarly, the 2014 gross rent data is 
adjusted to 2015 denominated dollars using the growth in CPI-based 
gross rents measured between 2014 and 2015.
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    HUD has updated base rents each year based on new 5-year data since 
FY 2012, for which HUD used 2005-2009 ACS data. HUD is also updating 
base rents for Puerto Rico FMRs using the 2011-2015 Puerto Rico 
Community Survey (PRCS); HUD first updated the Puerto Rico base rents 
in FY 2014 based on 2007-2011 PRCS data collected through the ACS 
program.
    HUD historically based FMRs on gross rents for recent movers (those 
who have moved into their current residence in the last 24 months) 
measured directly. However, due to the way Census constructs the 5-year 
ACS data, HUD developed a new method for calculating recent-mover FMRs 
in FY 2012, which HUD continues to use in FY 2018: HUD assigns all 
areas a base rent, which is the two-bedroom standard quality 5-year 
gross rent estimate from the ACS; then, because HUD's regulations 
mandate that FMRs must be published as recent mover gross rents, HUD 
applies a recent mover factor to the base rents assigned from the 5-
year ACS data.\3\ The calculation of the recent mover factor is 
described below.
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    \3\ HUD's regulations incorporate recent mover data into FMR 
calculations because the gross rents of those who most recently 
moved into their units likely depicts the most current market 
conditions observable through the ACS. Rents paid by renters 
renewing existing leases may not reflect the most current market 
conditions, in part because these renters may have clauses within 
their leases that predetermine the annual increases in rents paid 
(i.e., rent escalator clauses).
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B. Recent Mover Factor

    Following the assignment of the standard quality two-bedroom rent 
described above, HUD applies a recent mover factor to these rents. HUD 
calculates the recent mover factor as the change between the 5-year 
2011-2015 standard quality two-bedroom gross rent and the 1 year 2015 
recent mover gross rent for the recent mover factor area. HUD does not 
allow recent mover factors to lower the standard quality base rent; 
therefore, if the 5-year standard quality rent is larger than the 
comparable 1-year recent mover rent, the recent mover factor is set to 
1.
    The calculation of the recent mover factor for FY 2018 contains 
several modifications that were proposed in the Changes to Methodology 
notice, and are now being adopted. The first change is the addition of 
a new test to determine the statistical reliability of the 1-year ACS 
recent mover data. The margin of error test is now paired with a count 
of observations test, similar to the test used for base rent data. 
Therefore, in order for a recent mover gross rent estimate to be

[[Page 41640]]

considered statistically reliable, the estimate must have a margin of 
error ratio that is less than 50 percent, and the estimate must be 
based on 100 or more observations.
    The second change incorporated into the FY 2018 recent mover factor 
calculation concerns the data used when an FMR area does not have 
statistically reliable two-bedroom recent mover data. In this 
circumstance, if the ``all-bedroom'' \4\ 1-year recent mover ACS data 
for the FMR area is statistically reliable, HUD will use the ``all-
bedroom'' data to calculate the recent mover factor instead of using 
two-bedroom data from the next larger geography. Incorporating ``all-
bedroom'' rents into the recent mover factor calculation when 
statistically reliable two-bedroom data is not available preserves the 
use of local information to the greatest extent possible.
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    \4\ ``All-bedroom'' refers to estimates aggregated together 
regardless of the number of bedrooms in the dwelling unit.
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    However, where statistically reliable ``all-bedroom'' data is not 
available, HUD will continue to base FMR areas' recent mover factors on 
larger geographic areas, following the same procedures as in FY 2017: 
HUD tests data from differently sized geographic areas in the following 
order (from small to large), and bases the recent mover factor on the 
first statistically reliable sample size.
    <bullet> For metropolitan areas that are subareas of larger 
metropolitan areas, the order is the FMR area, metropolitan area, 
aggregated metropolitan parts of the state, and state.
    <bullet> For metropolitan areas that are not divided, the order is 
the FMR area, aggregated metropolitan parts of the state, and state.
    <bullet> In non-metropolitan areas, the order is the FMR area, 
aggregated non-metropolitan parts of the state, and state.
    The process for calculating each area's recent mover factor is 
detailed in the FY 2018 FMR documentation system available at: https://www.huduser.gov/portal/datasets/fmr.html#2018_query. Applying the 
recent mover factor to the standard quality base rent produces an ``as 
of'' 2015 recent mover two-bedroom base gross rent for the FMR area.

C. Other Rent Survey Data

    HUD calculated base rents for the insular areas using the 2010 
decennial census of American Samoa, Guam, the Northern Mariana Islands, 
and the Virgin Islands beginning with the FY 2016 FMRs.\5\ This 2010 
base year data was updated to 2013 for the FY 2016 FMRs and is updated 
through 2015 for the FY 2018 FMRs using national ACS data.
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    \5\ The ACS is not conducted in the Pacific Islands (Guam, 
Northern Marianas and American Samoa) or the US Virgin Islands. As 
part of the 2010 Decennial Census, the Census Bureau conducted 
``long-form'' sample surveys for these areas. The results gathered 
by this long form survey have been incorporated into the FY 2018 
FMRs.
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    HUD does not use ACS data to establish the base rent or recent 
mover factor for 12 areas where the FY 2018 FMR was adjusted based on 
survey data:
    <bullet> Survey data collected in 2014 is used to adjust the FMRs 
for three non-metropolitan counties in Vermont (Bennington County, 
Windham County and Windsor County).
    <bullet> Survey data from 2015 is used to adjust the FMRs for 
Portland, OR and Oakland, CA.
    <bullet> Survey data from 2016 is used to adjust the FMRs for 
Burlington, VT; Kauai County, HI; Maui County, HI; San Francisco, CA; 
Portland, ME; and Vallejo-Fairfield, CA.
    <bullet> Survey data from 2017 is used to adjust the FMR for Santa 
Rosa, CA.
    For larger metropolitan areas that have valid ACS one-year recent 
mover data, survey data may not be any older than the midpoint of the 
calendar year for the ACS one-year data. Since the ACS one-year data 
used for the FY 2018 FMRs is from 2015, larger areas may not use survey 
data collected before June 1, 2015 for the FY 2018 FMRs. Smaller areas 
without 1-year ACS data, including the above counties in Vermont, may 
continue to use local survey data until the mid-point of the 5-year ACS 
data is more recent than the local survey.\6\
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    \6\ The 2012-2016 5-Year ACS data and the 2016 1-Year ACS data 
will be used to calculate the FY 2019 FMRs. These data will be more 
current than the 2014 data from the Vermont survey areas and the 
2015 survey data in Portland, OR and Oakland, CA. Consequently, the 
2016 ACS information will be used to calculate FMRs in these areas 
in FY 2019.
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D. Updates From 2015 to 2016 and Forecast to FY 2018

    HUD updates the ACS-based ``as of'' 2015 rent through the end of 
2016 using the annual change in gross rents measured through the CPI 
from 2015 to 2016 (CPI update factor). As in previous years, HUD uses 
local CPI data coupled with Consumer Expenditure Survey data for FMR 
areas with at least 75 percent of their population within Class A 
metropolitan areas covered by local CPI data. In FMR areas that don't 
meet this criterion, including Class B and C size metropolitan areas 
and non-metropolitan areas, HUD uses CPI data aggregated at the Census 
region level. Additionally, HUD is using CPI data collected locally in 
Puerto Rico as the basis for CPI adjustments from 2015 to 2016 for all 
Puerto Rico FMR areas.
    Following the application of the appropriate CPI update factor, HUD 
trends the gross rent estimate from 2016 to FY 2018 using a national 
forecast of expected growth in gross rents. This forecast produces ``as 
of'' FY 2018 FMRs.

E. Bedroom Rent Adjustments

    HUD updates the bedroom ratios used in the calculation of FMRs 
annually. The bedroom ratios which HUD used in the calculation of FY 
2018 FMRs have been updated using average data from three five-year ACS 
data series (2009-2013, 2010-2014, and 2011-2015). The bedroom ratio 
methodology used in this update is unchanged from previous calculations 
using 2000 Census data. HUD only uses estimates with a margin of error 
ratio of less than 50 percent. If an area does not have reliable 
estimates in at least two of the previous three ACS releases, bedroom 
ratios for the area's larger parent geography are used.
    HUD uses two-bedroom units for its primary calculation of FMR 
estimates. This is generally the most common size of rental unit and, 
therefore, the most reliable to survey and analyze. After estimating 
two-bedroom FMRs, HUD calculates bedroom ratios for each FMR area which 
relate the prices of smaller and larger units to the cost of two-
bedroom units. To prevent illogical results in particular FMR areas, 
HUD establishes bedroom interval ranges which set upper and lower 
limits for bedroom ratios nationwide, based on an analysis of the range 
of such intervals for all areas with large enough samples to permit 
accurate bedroom ratio determinations.
    In the calculation of FY 2018 FMR estimates, HUD set the bedroom 
interval ranges as follows: Efficiency FMRs are constrained to fall 
between 0.64 and 0.85 of the two-bedroom FMR; one-bedroom FMRs must be 
between 0.75 and 0.87 of the two-bedroom FMR; three-bedroom FMRs (prior 
to the adjustments described below) must be between 1.15 and 1.34 of 
the two-bedroom FMR; and four-bedroom FMRs (again, prior to adjustment) 
must be between 1.26 and 1.64 of the two-bedroom FMR. Given that these 
interval ranges partially overlap across bedroom sizes, HUD further 
adjusts bedroom ratios for a given FMR area, if necessary, to ensure 
that higher bedroom-count units have higher rents than lower bedroom-
count units within that area. The bedroom ratios for Puerto Rico follow 
these constraints.

[[Page 41641]]

    HUD also further adjusts the rents for three-bedroom and larger 
units to reflect HUD's policy to set higher rents for these units.\7\ 
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 8.7 
percent to the unadjusted three-bedroom FMR estimates and adds 7.7 
percent to the unadjusted four-bedroom FMR estimates.
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    \7\ As mentioned above, HUD applies the interval ranges for the 
three-bedroom and four-bedroom FMR ratios prior to making these 
adjustments. In other words, the adjusted three- and four-bedroom 
FMRs can exceed the interval ranges, but the unadjusted FMRs cannot.
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    HUD derives FMRs for units with more than four bedrooms by adding 
15 percent to the four-bedroom FMR for each extra bedroom. For example, 
the FMR for a five-bedroom unit is 1.15 times the four-bedroom FMR, and 
the FMR for a six-bedroom unit is 1.30 times the four-bedroom FMR. 
Similarly, HUD derives FMRs for single-room occupancy units by 
subtracting 25 percent from the zero-bedroom FMR (i.e., they are set at 
0.75 times the zero-bedroom (efficiency) FMR).\8\
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    \8\ As established in the interim rules implementing the 
provisions of the Quality Housing and Work Responsibility Act of 
1998 (Title V of the FY 1999 HUD Appropriations Act; Pub. L. 105-
276). In 24 CFR 982.604.
---------------------------------------------------------------------------

F. Limit on FMR Decreases

    Within the Small Area FMR final rule published on November 16, 
2016, HUD amended 24 CFR 888.113 to include a limit on the amount that 
FMRs may annually decrease. The current year's FMRs resulting from the 
application of the bedroom ratios, as discussed in section (E) above, 
may be no less than 90 percent of the prior year's FMRs for units with 
the same number of bedrooms. Accordingly, if the current year's FMRs 
are less than 90 percent of the prior year's FMRs as calculated by the 
above methodology, HUD sets the current year's FMRs equal to 90 percent 
of the prior year's FMRs. For areas using Small Area FMRs in the 
administration of their voucher programs (i.e., Dallas and the 
demonstration PHAs who opted to continue using Small Area FMRs), the FY 
2018 Small Area FMRs may be no less than 90 percent of the FY 2017 
Small Area FMRs. For all other metropolitan areas, for which Small Area 
FMRs are calculated so that they may be used for other allowable 
purposes if desired (e.g., exception payment standards, public housing 
flat rents), the FY 2018 Small Area FMRs may be no less than 90 percent 
of the FY 2017 metropolitan area-wide FMRs.

IV. Manufactured Home Space Surveys

    HOTMA changed the manner in which vouchers are used to subsidize 
manufactured home units. Please see HUD's Notice from January 18, 2017 
(82 FR 5458) for more detailed information concerning the use of 
vouchers for manufactured home units. Due to the nature of these 
changes, HUD will no longer be publishing exception rents for 
Manufactured Home Space pad rents.

V. Small Area FMRs

    PHAs in the Dallas, TX HUD Metro FMR Area (HMFA) \9\ continue to 
use Small Area FMRs per the terms of a court-entered settlement. These 
Small Area FMRs are listed in the Schedule B addendum. Other 
metropolitan PHAs interested in using Small Area FMRs in the operation 
of their Housing Choice Voucher program should contact their local HUD 
field office to request approval from HUD to do so.
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    \9\ The Dallas, TX HMFA is also known as the Dallas-Plano-
Irving, Texas Metro Division. This area is comprised of the 
following Texas counties: Collin, Dallas, Denton, Ellis, Hunt, 
Kaufman, and Rockwall.
---------------------------------------------------------------------------

    As proposed in the Changes to Methodology notice, HUD is also 
making changes in the manner in which FY 2018 Small Area FMRs are 
calculated. In order to use more local data, HUD is calculating Small 
Area FMRs directly from the standard quality gross rents provided to 
HUD by the Census Bureau for ZIP Code Tabulation Areas (ZCTAs), when 
such data is statistically reliable, instead of using the current rent 
ratio calculation. The ZCTA two-bedroom equivalent 40th percentile 
gross rent is analogous to the standard quality base rents set for 
metropolitan areas and non-metropolitan counties. For each ZCTA with 
statistically reliable gross rent estimates, using the expanded test of 
statistical reliability noted previously in this notice (i.e., 
estimates with margins of error ratios below 50 percent and based on at 
least 100 observations), HUD will calculate a two-bedroom equivalent 
40th percentile gross rent using the first statistically reliable gross 
rent distribution data from the following data sets (in this order): 
two-bedroom gross rents, one-bedroom gross rents, and three-bedroom 
gross rents. If either the one-bedroom or three-bedroom gross rent data 
is used because the two-bedroom gross rent data is not statistically 
reliable, the one-bedroom or three-bedroom 40th percentile gross rent 
will be converted to a two-bedroom equivalent rent using the bedroom 
ratios for the ZCTA's parent metropolitan area. In order to add 
increased stability to these Small Area FMR estimates, HUD will average 
the latest three years of gross rent estimates.\10\
---------------------------------------------------------------------------

    \10\ For example, for FY 2018 FMRs using this methodology, HUD 
would average the gross rents from 2013, 2014 and 2015 5-Year ACS 
estimates. The 2013 and 2014 gross rent estimates would be adjusted 
to 2015 dollars using the metropolitan area's gross rent CPI 
adjustment factors.
---------------------------------------------------------------------------

    For ZCTAs without usable gross rent data by bedroom size, HUD will 
continue to calculate Small Area FMRs using the rent ratio method 
similar to that HUD has used in past Small Area FMR calculations. To 
calculate Small Area FMRs using a rent ratio, HUD divides the median 
gross rent across all bedrooms for the small area (a ZIP code) by the 
similar median gross rent for the metropolitan area of the ZIP code. In 
small areas where the median gross rent is not statistically reliable, 
HUD substitutes the median gross rent for the county containing the ZIP 
code in the numerator of the rent ratio calculation. HUD multiplies 
this rent ratio by the current two-bedroom rent for the metropolitan 
area containing the small area to generate the current year two-bedroom 
rent for the small area.
    Similar to other changes described in this notice, HUD is changing 
the linkage between the small area and its containing metropolitan area 
as proposed in the May 26, 2017 Federal Register notice. For FY 2018 
HUD is linking each ZCTA to its published FMR area; that is, each ZCTA 
is linked to its parent HMFA, if it exists, rather than link the ZCTA 
to its parent OMB-defined metropolitan area (Core-Based Statistical 
Area, or CBSA) as was previously done. If no parent HUD FMR area 
exists, the ZCTA will continue to be linked to its parent CBSA. This 
change is implemented to take advantage of the more localized recent 
mover factors for subareas of OMB-defined metropolitan areas when 
available.
    As in FY 2017, HUD continues to use a rolling average of ACS data 
in calculating the Small Area FMR rent ratios. HUD believes coupling 
the most current data with previous year's data minimizes excessive 
year-to-year variability in Small Area FMR rent ratios due to sampling 
variance. Therefore, for FY 2018 Small Area FMRs, HUD has updated the 
rent ratios to use an average of the rent ratios calculated from the 
2009-2013, 2010-2014, and 2011-2015 5-year ACS estimates.

VI. Request for Public Comments and FMR Reevaluations

    HUD will continue to accept public comments on the methods HUD uses 
to calculate FY 2018 FMRs, including

[[Page 41642]]

Small Area FMRs and the FMR levels for specific areas. Due to its 
current funding levels, HUD no longer has sufficient resources to 
conduct local surveys of rents to address comments filed regarding the 
FMR levels for specific areas. PHAs may continue to fund such surveys 
independently, as specified below, using administrative fees if they so 
choose.) HUD continually strives to calculate FMRs that meet the 
statutory requirement of using ``the most recent available data'' while 
also serving as an effective program parameter.
    PHAs or other interested parties interested in requesting HUD 
reevaluation of its FY 2018 FMRs, as provided for under section 
8(c)(1)(B) of USHA, must follow the following procedures:
    1. By the end of the comment period, such reevaluation requests 
must be submitted publicly through www.regulations.gov or directly to 
HUD as described above. PHAs representing at least half of the voucher 
tenants in multijurisdictional areas must agree that the re-evaluation 
is necessary.
    2. In order for a reevaluation to occur, the requestor(s) must 
supply HUD with data more recent than the 2015 American Community 
Survey data used in the calculation of the FY 2018 FMRs. HUD requires 
data on gross rents paid in the FMR area for standard quality rental 
housing units. The data delivered must be sufficient for HUD to 
calculate a 40th and 50th percentile two-bedroom rent. Should this type 
of data not be available, requestors may gather this information using 
the survey guidance available at https://www.huduser.gov/portal/datasets/fmr/NoteRevisedAreaSurveyProcedures.pdf and https://www.huduser.gov/portal/datasets/fmr/PrinciplesforPHA-ConductedAreaRentSurveys.pdf.
    3. On or about October 3, HUD will post a list, at https://www.huduser.gov/portal/datasets/fmr.html, of the areas requesting 
reevaluations and where FY 2017 FMRs remain in effect.
    4. Data for reevaluations must be supplied to HUD no later than 
Friday January 5, 2018. On Monday January 8, 2018, HUD will post at 
https://www.huduser.gov/portal/datasets/fmr.html a listing of the areas 
failing to deliver data and making the FY 2018 FMRs effective in these 
areas.
    5. HUD will use the data delivered by January 5, 2018 to reevaluate 
the FMRs and following the reevaluation, will post revised FMRs with an 
accompanying Federal Register notice stating the revised FMRs are 
available, which will include HUD responses to comments filed during 
the comment period.
    6. Any data supporting a change in FMRs supplied after January 5, 
2018 will be incorporated into FY 2019 FMRs.
    7. PHAs operating in areas where the calculated FMR is lower than 
the published FMR (i.e., those areas where HUD has limited the decrease 
in the annual change in the FMR to 10 percent) may request payment 
standards below the basic range (24 CFR 982.503(d)) and reference the 
``unfloored'' rents (i.e., the unfinalized FMRs calculated by HUD prior 
to application of the 10-percent-decrease limit) depicted in the FY 
2018 FMR Documentation System (available at: https://www.huduser.gov/portal/datasets/fmr.html#2018_query).
    Questions on how to conduct FMR surveys may be addressed to Marie 
L. Lihn or Peter B. Kahn of the Economic and Market Analysis Division, 
Office of Economic Affairs, Office of Policy Development and Research 
at HUD headquarters, 451 7th Street SW., Room 8208, Washington, DC 
20410; telephone number 202-402-2409 (this is not a toll-free number), 
or they may be reached at <a href="/cdn-cgi/l/email-protection#b4d1d9d5d099dcc5f4dcc1d09ad3dbc2"><span class="__cf_email__" data-cfemail="acc9c1cdc881c4ddecc4d9c882cbc3da">[email protected]</span></a>.
    For small metropolitan areas without one-year ACS data and non-
metropolitan counties, HUD has developed a method using mail surveys 
that is discussed on the FMR Web page: https://www.huduser.gov/portal/datasets/fmr.html#fmrsurvey. This method allows for the collection of 
as few as 100 one-bedroom, two-bedroom and three-bedroom recent mover 
(tenants that moved in last 24 months) units.
    While HUD has not developed a specific method for mail surveys in 
areas with 1-year ACS data, HUD would apply the standard established 
for Random-Digit Dialing (RDD) telephone rent surveys. HUD will 
evaluate these survey results to determine whether they would establish 
a new FMR statistically different from the current FMR, which means 
that the survey confidence interval must not include the FMR. The 
survey should collect results based on 200 one-bedroom and two-bedroom 
eligible recent mover units to provide a small enough confidence 
interval for significant results in large market mail surveys. Areas 
with statistically reliable 1-year ACS data are not considered to be 
good candidates for local surveys due to the size and completeness of 
the ACS process.
    Other survey methods are acceptable in providing data to support 
reevaluation requests if the survey method can provide statistically 
reliable, unbiased estimates of the gross rent of the entire FMR area. 
In general, recommendations for FMR changes and supporting data must 
reflect the rent levels that exist within the entire FMR area and 
should be statistically reliable.
    PHAs in non-metropolitan areas may, in certain circumstances, 
conduct surveys of groups of counties. HUD must approve all county-
grouped surveys in advance. PHAs are cautioned that the resulting FMRs 
may not be identical for the counties surveyed; each individual FMR 
area will have a separate FMR based on the relationship of rents in 
that area to the combined rents in the cluster of FMR areas. In 
addition, PHAs are advised that in counties where FMRs are based on the 
combined rents in the cluster of FMR areas, HUD will not revise their 
FMRs unless the grouped survey results show a revised FMR statistically 
different from the combined rent level.
    Survey samples should preferably be randomly drawn from a complete 
list of rental units for the FMR area. If this is not feasible, the 
selected sample must be drawn to be statistically representative of the 
entire rental housing stock of the FMR area. Surveys must include units 
at all rent levels and be representative by structure type (including 
single-family, duplex, and other small rental properties), age of 
housing unit, and geographic location. The current 5-year ACS data 
should be used as a means of verifying if a sample is representative of 
the FMR area's rental housing stock.
    A PHA or contractor that cannot obtain the recommended number of 
sample responses after reasonable efforts should consult with HUD 
before abandoning its survey; in such situations, HUD may find it 
appropriate to relax normal sample size requirements.
    HUD has developed guidance on how to provide data-supported 
comments on Small Area FMRs using HUD's special tabulations of the 
distribution of gross rents by bedroom unit size for ZIP Code 
Tabulation Areas. This guidance is available at https://www.huduser.gov/portal/datasets/fmr.html in the FY 2018 FMR section and 
should be used by interested parties in commenting on whether or not 
the level of Small Area FMRs are too high or too low (i.e., Small Area 
FMRs that are larger than the gross rent necessary to make 40 percent 
of the units accessible for an individual zip code or that are smaller 
than the gross rent necessary to make 40 percent of the units 
accessible for a given zip code). HUD will post revised Small Area FMRs 
after confirming commenters' calculations.
    As stated earlier in this notice, HUD is required to use the most 
recent data

[[Page 41643]]

available when calculating FMRs. Therefore, in order to re-evaluate an 
area's FMR, HUD requires more current rental market data than the 2015 
ACS. HUD encourages a PHA or other interested party that believes the 
FMR in their area is incorrect to file a comment even if they do not 
have the resources to provide market-wide rental data. In these 
instances, HUD will use the comments, should survey funding be 
restored, when determining the areas HUD will select for HUD-funded 
local area rent surveys.

VII. Public Comments on the May 26, 2017 Proposed FMR Change Notice

    As noted above, HUD received 22 comments on the Changes to 
Methodology notice. Most of the comments that addressed the proposed 
methodology changes responded favorably to the changes. Commenters 
choosing to address these methodological changes were ``cautiously 
optimistic'' about these changes. However, one commenter specifically 
opposed the use of ``all bedroom'' rents for the recent mover factor 
while another commenter specifically supports the use of ``all 
bedroom'' recent mover rents.
    Based on the limited comments received on the proposed methodology 
changes, which are generally favorable to HUD's proposed changes, HUD 
has decided to implement each of the proposed methodological changes in 
the calculation of the FY 2018 FMRs.
    The following summaries of comments and responses also include 
responses to other comments regarding the calculation of FMRs that were 
not responsive to the specific methodology changes.

A. Timeliness and Data Sources

    Comments: A significant number of commenters offered comments on 
the timeliness of the data HUD uses in the calculation of FMRs and 
urged HUD to consider conducting local surveys or otherwise compile its 
own source of national survey data.
    HUD Response: Generally, HUD uses the American Community Survey 
(ACS) as the primary source of data to calculate FMRs. The ACS is the 
only known source of data from which HUD may calculate a 40th 
percentile gross rent paid by recent movers in each FMR area. For the 
FY 2018 FMRs, the most current ACS data was collected in 2015. The 2015 
survey responses are aggregated and analyzed by the Census Bureau 
during 2016 and are released in September and December 2016. There is 
no more current data on the level of gross rents paid available during 
2017 when HUD is calculating the FMRs for the upcoming fiscal year.
    HUD augments the data on gross rents paid collected through the ACS 
by the change in gross rents measured through the Consumer Price Index 
(CPI) which captures the change in gross rents between 2015 and 2016. 
In order to measure the change in gross rents, HUD constructs a gross 
rent index using 2 CPI components--Rent of Primary Residence, and 
Housing--Fuels and Utilities. These gross rent change factors are 
calculated for local metropolitan areas and where metropolitan data 
does not exist, HUD uses data available at the Census regional level. 
The local data utilized in this process covers approximately 46 percent 
of the national population.
    Finally, for FY 2018, HUD continues to use HUD's nationwide 
forecast of expected growth in gross rents. HUD continues to explore 
forecasting expected changes in gross rents for metropolitan areas; 
however, HUD has yet to generate forecasts that consistently provide 
better estimates across all localities. While HUD continues to improve 
the quality of its local forecasts, HUD will explore if other sources 
of data provide more timely update factors than those calculated from 
the CPI.
    HUD has carefully considered the comments concerning HUD conducting 
local rent surveys. The Federal Government currently makes a 
significant investment in collecting socio-economic data through the 
Census Bureau's American Community Survey. Since the ACS is the 
replacement for the decennial census long form survey, households 
receiving the survey are compelled to complete it; consequently, the 
ACS has far superior response rates and quality controls embedded in 
the data processing than HUD could achieve in any survey program it 
could construct. Therefore, HUD believes that is a waste of Federal 
resources to duplicate the efforts of the ACS.
    Comment: HUD's FMRs should be calculated based on average rents per 
square foot with adjustments for local rental market conditions.
    HUD Response: Average rent per square foot may be a commonly 
available statistic in some markets and may provide some additional 
information regarding rental market conditions in those markets; 
however, without the underlying data used to calculate the average rent 
per square foot statistic, HUD is unable to calculate a 40th or 50th 
percentile rent. Furthermore, attempting to incorporate rent per square 
foot metrics into the FMR calculations would introduce additional 
complications in determining gross rents.
    Comment: Multiple commenters suggested that HUD use data from 
Comprehensive Housing Market Analysis reports conducted by HUD's field 
economists in the FMR calculations.
    HUD Response: The data used in HUD's Comprehensive Housing Market 
Analysis reports generally captures asking rents for newly constructed 
Class A rental units in large housing complexes. These data are not 
appropriate for setting Fair Market Rents for several reasons. First, 
asking rents typically do not equate to recent mover gross rent paid. 
Additionally, Class A apartment rental rates are generally not 
representative of the gross rents available across the entire rental 
stock of an FMR area. However, as stated earlier, HUD will investigate 
if there are more current and local sources of data that could replace 
the CPI based update factors currently used in the FMR calculations.

B. Comments on Proposed Changes

    Comment: The changes to the calculation of Small Area FMRs directly 
from the ZCTA data are welcomed; however, HUD should aggregate ZCTAs to 
get to a statistically reliable estimate rather than move to the county 
level ratios.
    HUD Response: HUD's use of the county level ratios as a proxy for 
the ZCTA level FMRs when there is not statistically reliable data is in 
line with HUD's policy for moving to the next higher encompassing 
geography for calculating FMRs. Aggregating ZCTAs presents a myriad of 
challenges that cannot be addressed quickly. HUD will study what 
options may be available for proxies to ZCTA level rents when the ZCTA 
data are not statistically reliable. If HUD finds a suitable method, 
HUD will propose this in a future notice of proposed FMR changes.
    Comment: Several commenters suggested that following a successful 
FMR ``appeal'', HUD should immediately move to change a PHA's HAP 
amount.
    HUD Response: HUD incorporates all of the reevaluated FMRs in the 
first calculation of Renewal Funding Inflation Factors following the 
effective date of the reevaluated FMRs.
    Comment: HUD should review the bedroom ratio calculations, with a 
specific review of the 3-bedroom and 4-bedroom bonuses incorporated 
into the bedroom ratio calculations.
    HUD Response: HUD updates the bedroom ratio calculations each year, 
incorporating the most current ACS data

[[Page 41644]]

into the process. The ratios are bounded and limited so that standard 
relationships are maintained (i.e. 0-bedroom ratios are not larger than 
1-bedroom ratios, etc.). HUD maintains that its policy of providing 
bonuses for 3- and 4-bedroom units allows voucher families to be more 
competitive for these scarce larger rental dwelling units. PHAs not 
having difficulty placing families in large units may use payment 
standard flexibility to set 3- and 4-bedroom payment standards lower 
relative to the FMRs than other payment standards, or use the 
unadjusted 3- and 4-bedroom FMRs as the basis for exception payment 
standard requests of less than 90 percent of these FMRs.
    Comment: Several commenters suggested that HUD should do a better 
job of forward trending FMR estimates.
    HUD Response: As stated earlier, HUD continues to refine its 
forecasting of expected changes in gross rents at the metropolitan area 
level. In addition, HUD will explore the use of alternative measures of 
rental market growth that may be available.

C. Other Issues

    Comment: The geographic area definitions used in certain areas of 
Puerto Rico are not contiguous and should be reviewed. Once the area 
definitions are reviewed, the comment requests HUD to undertake local 
rent surveys for the new areas and publish FMRs based on these new 
areas and survey data. Furthermore, the commenter expressed concern 
about the high cost of utilities not being incorporated into the FMRs.
    HUD Response: HUD will review the area definitions in Puerto Rico 
and will determine if sufficient data exists within the Puerto Rico 
Community Survey (PRCS) to allow HUD to adjust the discontiguous areas. 
If changes are possible, HUD will propose them in a future FMR 
methodology change Federal Register notice. HUD is reliant on the PRCS 
data as HUD does not have the funding necessary to conduct its own 
local rent surveys. In past years, HUD incorporated an additional 
utility cost adjustment into the calculation of FMRs; however, the 
Consumer Price Index (CPI) data collected within Puerto Rico never 
measured an increase in expenditures in fuels and utilities associated 
with housing. HUD is using CPI data collected in Puerto Rico through 
the end of 2016, which includes the December 2016 electricity costs 
cited by the commenter.
    Comment: Single Room Occupancy Rents in New Hampshire are too low.
    HUD Response: HUD regulations at 24 CFR 888.113(f)(2) set the 
Single Room Occupancy FMR at 75 percent of the 0-bedroom FMR. HUD 
updates the bedroom ratios used to calculate the 0-, 1-, 3-, and 4-
bedroom FMRs annually using the most current data available.
    Comment: The FMRs and Small Area FMRs are too high. Data was 
submitted to waive the use of these FMRs, but no response from HUD has 
been received.
    HUD Response: This is likely a Public Housing Flat Rent exception 
rent request which is not handled by the HUD office that calculates 
FMRs. Public Housing Flat Rent exception rent requests are processed by 
HUD's Office of Public and Indian Housing. HUD recommends the commenter 
reach out to their local PIH representative for a status update.

VIII. Environmental Impact

    This Notice involves the establishment of FMR schedules, which do 
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).
    Accordingly, the Fair Market Rent Schedules, which will not be 
codified in 24 CFR part 888, are available at https://www.huduser.gov/portal/datasets/fmr.html.

    Dated: August 22, 2017.
Todd M. Richardson,
Deputy Assistant, Secretary, Office of Policy Development, Office of 
Policy Development and Research.

Fair Market Rents for the Housing Choice Voucher Program

Schedule B--General Explanatory Notes

1. Geographic Coverage
    a. Metropolitan Areas--Most 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. HUD is using the metropolitan CBSAs, which 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 FY 2018 FMRs incorporates the OMB 
definitions of metropolitan areas based on the CBSA standards as 
implemented with 2000 Census data and updated by the 2010 Census in 
February 28, 2013. The adjustments made to the 2000 definitions to 
separate subparts of these areas where FMRs or median incomes would 
otherwise change significantly are continued. To follow HUD's policy of 
providing FMRs at the smallest possible area of geography, no counties 
were added to existing metropolitan areas due to recent updates in 
metropolitan area definitions. All counties added to metropolitan areas 
by the CBSA will still be treated as separate counties for FMR 
calculations; that is, the rents from a county that is a sub-area will 
not be used in the remaining metropolitan sub-area rent determination. 
All metropolitan areas that have been subdivided by HUD will use ACS 
data which conforms to HUD's area definition if statistically reliable 
information exists. If statistically reliable data for the HUD defined 
area is not available, HUD uses information from larger encompassing 
geographies, as described elsewhere in this notice.
    The specific counties and New England towns and cities within each 
state in MSAs and HMFAs were not changed by the February 28, 2013 OMB 
metropolitan area definitions. These areas are listed in Schedule B, 
available online at https://www.huduser.gov/portal/datasets/fmr.html.
2. Unit Bedroom Count Adjustments
    Schedule B, available at https://www.huduser.gov/portal/datasets/fmr.html, shows the FMRs for zero-bedroom through four-bedroom units. 
The Schedule B addendum shows Small Area FMRs for all PHAs operating 
using Small Area FMRs (please see section V of this notice for a list 
of participating PHAs). The FMRs for unit sizes larger than four 
bedrooms may be calculated by adding 15 percent to the four-bedroom FMR 
for each extra bedroom. For example, the FMR for a five-bedroom unit is 
1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 
1.30 times the four-bedroom FMR. FMRs for single-room-occupancy (SRO) 
units are 0.75 times the zero-bedroom FMR.
3. Arrangement of FMR Areas and Identification of Constituent Parts
    a. The FMR areas in the online Schedule B are listed alphabetically 
by metropolitan FMR area and by non-metropolitan county within each 
state and are available at https://www.huduser.gov/portal/datasets/fmr.html.
    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

[[Page 41645]]

are in more than one state can be identified by consulting the listings 
for each applicable state.
    c. Two non-metropolitan counties are listed alphabetically on each 
line of the non-metropolitan county listings.
    d. The New England towns and cities included in a non-metropolitan 
county are listed immediately following the county name.

[FR Doc. 2017-18431 Filed 8-31-17; 8:45 am]
 BILLING CODE 4210-67-P


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