Fair Market Rents for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program; Fiscal Year 2005, 9778-9838 [05-3814]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 70, Number 38 (Monday, February 28, 2005)]
[Notices]
[Pages 9778-9838]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-3814]



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Part V





Department of Housing and Urban Development





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Fair Market Rents for the Housing Choice Voucher Program and Moderate 
Rehabilitation Single Room Occupancy Program; Fiscal Year 2005; Notice

Federal Register / Vol. 70, No. 38 / Monday, February 28, 2005 / 
Notices

[[Page 9778]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4937-N-03]


Fair Market Rents for the Housing Choice Voucher Program and 
Moderate Rehabilitation Single Room Occupancy Program; Fiscal Year 2005

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

ACTION: Notice of Revised Final Fiscal Year (FY) 2005 Fair Market Rents 
(FMRs).

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
(USHA) requires the Secretary to publish FMRs periodically, but not 
less than annually, adjusted to be effective on October 1 of each year. 
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, and to determine 
initial rents for housing assistance payment (HAP) contracts in the 
Moderate Rehabilitation Single Room Occupancy program. Today's notice 
revises the final FY2005 FMRs that were published on October 1, 2004, 
for a limited number of areas.

EFFECTIVE DATE: The FMRs published in this notice are effective 
February 28, 2005.

FOR FURTHER INFORMATION CONTACT: For technical information on the 
methodology used to develop fair market rents or a listing of all fair 
market rents, please call the HUD USER information line at 800-245-2691 
or access the information on the HUD Web site, https://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 the 39 areas with 50th percentile FMRs will be 
provided on the same website 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. 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 TDD numbers, telephone numbers are not toll 
free.)

SUPPLEMENTARY INFORMATION

I. Background

    Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing 
assistance to aid lower income families in renting safe and decent 
housing. Housing assistance payments are limited by FMRs established by 
HUD for different areas. In the Housing Choice Voucher 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 interim rule published on October 2, 
2000 (65 FR 58870), established 50th percentile FMRs for certain areas.
    Electronic Data Availability: This Federal Register notice is 
available electronically from the HUD news page: https://
www.hudclips.org. Federal Register notices also are available 
electronically from the U.S. Government Printing Office Web site: 
https://www.gpoaccess.gov/fr/.

II. Procedures for the Development of FMRs

    Section 8(c) of the USHA requires the Secretary of HUD to publish 
FMRs periodically, but not less frequently than annually. Section 8(c) 
states in part as follows:

Proposed fair market rentals for an area shall be published in the 
Federal Register with reasonable time for public comment and shall 
become effective upon the date of publication in final form in the 
Federal Register. Each fair market rental in effect under this 
subsection shall be adjusted to be effective on October 1 of each 
year to reflect changes, based on the most recent available data 
trended so the rentals will be current for the year to which they 
apply, of rents for existing or newly constructed rental dwelling 
units, as the case may be, of various sizes and types in this 
section.

    HUD's regulations at 24 CFR 888 provide that HUD will develop 
proposed FMRs, publish them for public comment, provide a public 
comment period of at least 30 days, analyze the comments, and publish 
final FMRs. (See 24 CFR 888.115.) Final FY2005 FMRs were published on 
October 1, 2004 (69 FR 59003), consistent with section 8(c)(1) of the 
USHA.

III. Final FY2005 FMRs, Published on October 1, 2004

    HUD's final FY2005 FMRs were set at the 40th and 50th percentile 
and trended forward to April 2005 in accordance with HUD regulations. 
In setting the final FY2005 FMRs, HUD took into consideration a large 
number of comments objecting to the magnitude of changes caused by use 
of new data and new Office of Management and Budget (OMB) metropolitan 
area definitions and by insufficient time to evaluate and respond to 
the proposed changes. While HUD is required by statute to use the most 
recent available data in setting FMRs, HUD is not obligated to use the 
new OMB definitions. In the final FMR publication, the 2004 FMR area 
definitions were used to eliminate FMR differences resulting from 
geography changes. The FY2005 FMR schedules contained in the October 1, 
2004, FMR notice are based on the 2000 Census and, when available, more 
current data, but were calculated for the same geographical areas used 
in preparing the FY2004 FMRs.
    By September 7, 2004, HUD had received 370 public comments on the 
proposed FY2005 FMRs. Most of these comments opposed implementation of 
the proposed FMRs. The primary reason given was that the proposed 
FY2005 FMRs were significantly different from the FY2004 FMRs, and that 
additional time was needed to examine the proposed FMRs. Many 
commenters asked HUD to delay issuing FY2005 FMRs. HUD was obligated by 
statute to issue revised FMRs based on the most current available data 
by October 1, 2004, and did so, but allowed additional public comments 
to be submitted until November 2004.

IV. Revised Final FY2005 FMRs

    The revised final FY2005 FMRs continue to be based on the same 
geographic areas as were used in the FY2004 FMRs. The only changes 
between the final FY2005 FMRs published on October 1, 2004, and the 
FMRs in this publication resulted from additional information submitted 
with public comments or resulting from HUD Random Digit Dialing (RDD) 
surveys. A total of 283 public comments submitted in the second public 
comment period that closed in November 2004 were reviewed. Most of the 
comments received lacked the data needed to support FMR changes. The 
comments received are discussed in more detail later in this notice.

[[Page 9779]]

V. FMR Methodology

A. Data Sources

    The data sources used are explained in detail in the October 1, 
2004, Federal Register FMR publication. Data from the 2000 Census were 
used to revise FMRs for most areas, which served to correct estimation 
errors that have accumulated since the 1990 Census data were used to 
revise FMRs. A number of the larger metropolitan areas also had 
American Housing Survey or RDD surveys conducted after the 2000 Census 
that were used in calculating FMRs. At HUD's request, the Census Bureau 
prepared a special extract of Census data that is a very close 
approximation of the unsuppressed data used in calculating FMRs that 
can be used to almost exactly replicate HUD's FMR calculations. This 
data set is located on HUD's HUDUSER Web site at: https://
www.huduser.org/datasets/fmr/CensusRentData/.

B. Large Bedroom Rents

    A number of concerns about FMR reductions for large bedroom FMRs 
were noted in public comments. The changes made were the result of 
changes in rent relationship patterns shown by the 2000 Census. 
Relative to two-bedroom FMRs, a large number of efficiency and one-
bedroom rents increased while many three-bedroom and large unit FMRs 
decreased. A majority of three-plus bedroom FMRs increased in FY2005, 
but there were an unusual number of decreases that were related to the 
Census rebenchmarking process that occurs every 10 years.
    FMR estimates are calculated for two-bedroom units. This is the 
most common size of rental units, and therefore the most reliable to 
survey and analyze. After each decennial Census, rent relationships 
between two-bedroom units and other unit sizes are calculated and used 
to set FMRs for other units. This is done because it is much easier to 
update two-bedroom estimates and to use pre-established cost 
relationships with other bedroom sizes than it is to develop 
independent FMR estimates for each bedroom size.
    For the past several years, bedroom ratios have been based on 1990 
Census data. The FY2005 FMRs were the first to make use of 2000 Census 
data to more correctly reflect market rent differentials between units 
with differing numbers of bedrooms. The 2000 Census data were analyzed 
in essentially the same way as the 1990 Census data to determine the 
bedroom ratio outliers. The one major difference in this analysis was 
that HUD had unrestricted access to the 2000 Census data, which 
permitted it to more precisely calculate bedroom ratios. The analysis 
showed significant changes in bedroom ratios over the decade and 
permitted more accurate estimates of bedroom rent interval differences. 
Median efficiency rents increased 9 percent relative to the two-bedroom 
ratios. One-bedroom rents also increased relative to two-bedroom rents. 
Median four-bedroom rents, however, fell 9 percent over the decade 
relative to two-bedroom rents and median three-bedroom rent ratios also 
decreased. These changes were at least partly associated with the 
relatively large number of new, higher rent one- and two-bedroom units 
built during the 1990's.
    The rents for three-bedroom and larger units continue to reflect 
HUD's policy to set higher rents for these units than would result from 
using normal market rents. This adjustment is intended to increase the 
likelihood that the largest families, who have the most difficulty in 
leasing units, will be successful in finding eligible program units. 
The adjustment adds bonuses of 8.7 percent to the unadjusted three-
bedroom FMR estimates and adds 7.7 percent to the unadjusted four-
bedroom FMR estimates. The FMRs for unit sizes larger than four 
bedrooms are calculated by adding 15 percent to the four-bedroom FMR 
for each extra bedroom. For example, the FMR for a five-bedroom unit is 
1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 
1.30 times the four-bedroom FMR. FMRs for single-room occupancy units 
are 0.75 times the zero-bedroom (efficiency) FMR.
    A further adjustment 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 two-bedroom FMR, one-bedroom units must be 
between 0.76 and 0.89 of the two-bedroom unit, three-bedroom units must 
be between 1.10 and 1.34 of the two-bedroom unit and four-bedroom units 
must be between 1.14 and 1.63 of the two-bedroom unit. Bedroom rents 
for a given FMR area were then adjusted if the differentials between 
bedroom-size FMRs were inconsistent with normally observed patterns 
(e.g., efficiency rents were not allowed to be higher than one-bedroom 
rents and four-bedroom rents were set at a minimum of 3 percent higher 
than three-bedroom rents).
    For low-population, non-metropolitan counties with small Census 
recent-mover rent samples, Census-defined county group data were used 
in determining rents for each bedroom size. This adjustment was made to 
protect against unrealistically high or low FMRs due to insufficient 
sample sizes. The areas covered by this new estimation method have less 
than 33 two-bedroom Census sample observations.

C. FMR Updates to 2000 Census

    After 2000 Census FMR estimates were established for each FMR area 
and bedroom size, they were updated from the estimated Census date of 
April 1, 2000, to April 1, 2005 (the midpoint of FY2005). Update 
factors for the 2000 through end of 2003 period were based either on 
the area-specific CPI survey data that were available for the largest 
metropolitan areas or on HUD regional RDD survey data.
    For areas with local CPI surveys, CPI annual data on rents and 
utilities were used to update the Census rent estimates. Three-quarters 
of the 2000 CPI change factor was used to bring the FMR estimates 
forward from April to December of 2000. Annual CPI survey data could 
then be used for calendar years 2001, 2002, and 2003. Trending to cover 
the period from January 1, 2004 to April 1, 2005, was then needed. An 
annual trending factor of 3 percent, based on the average annual 
increase in the median Census gross rent between 1990 and 2000, was 
used to update estimates from the end of 2003 (i.e., the last date for 
which CPI data were available) until the midpoint of the fiscal year in 
which the estimates were used. The 15-month trending factor was 3.75 
percent (3 percent times 15/12).
    For areas without local CPI surveys, the same process was used 
except that regional RDD survey data were substituted for CPI data. 
Regional RDD surveys were done for 20 areas--the metropolitan and 
nonmetropolitan part of each of the 10 HUD regions. Areas covered by 
CPI metropolitan surveys were excluded from the RDD metropolitan 
regional surveys.

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D. Additional RDD Surveys and Other Data

    RDDs covering 23 additional areas were conducted by HUD in the 
September-November 2004 period and completed in time for use in this 
publication. Supplemental surveys were conducted for the portions of 
the three metropolitan areas where RDDs were conducted in August 2004 
and implemented in the October 1, 2004, FMR publication to cover 
portions of these metropolitan areas not covered in the initial 
surveys. The first column of the following table identifies the RDD 
survey area. The second column shows the final FY2005 FMR as published 
on October 1, 2004. The third column shows the October 2004 or November 
2004 RDD results, trended to the middle of FY2005. A change in FMR 
estimates is shown only if the RDD result shows a statistically 
significant difference from the FMR estimate published on October 1, 
2004. The fourth column shows whether or not the RDD results were 
statistically different enough to justify replacing the Census or other 
survey estimates with the RDD results. The survey results were as 
follows:

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                                                  FY2005 FMR
                Area definition                 without  Sept.-   FY2005 FMR               RDD result
                                                   Nov. RDD        with RDD
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Albany-Schenectady-Troy, NY...................             679             679  No Change.
Albuquerque, NM...............................             699             699  No Change.
Atlanta, GA...................................             928             834  Decrease.
Bergen-Passaic, NJ............................            1132            1132  No Change.
Boston, MA....................................            1266            1266  No Change.
Cincinnati, OH-KY-IN..........................             706             652  Decrease.
Columbus, OH..................................             675             640  Decrease.
Dayton-Springfield, OH........................             595             595  No Change.
Denver, CO....................................             973             888  Decrease.
Detroit, MI...................................             805             805  No Change.
Honolulu, HI..................................             955            1087  Increase.
Houston, TX...................................             801             733  Decrease.
Kauai County, HI..............................             831            1061  Increase.
Louisville, KY-IN.............................             597             553  Decrease.
Maui County, HI...............................             899            1149  Increase.
McAllen-Edinburg-Mission, TX..................             480             593  Increase.
Nashville, TN.................................             697             654  Decrease.
Newark, NJ....................................            1020            1020  No Change.
New York, NY..................................            1018            1075  Increase.
Omaha, NE.....................................             650             650  No Change.
Philadelphia, PA..............................             962             914  Decrease.
Salt Lake City, UT............................             747             682  Decrease.
Springfield, MA...............................             732             772  Increase.
Tulsa, OK.....................................             640             640  No Change.
Tuscon, AZ....................................             712             673  Decrease.
Washington, DC................................            1187            1187  No Change.
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    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 FY2005 FMR publication consistent with that 
requirement.
    The new and old OMB geographic definitions of the Boston, Detroit, 
and Washington D.C. metropolitan areas contained measurable 
differences, although the bulk of the old definitions were still 
contained in the new definitions. The surveys conducted in August 2004 
were based on the new definitions. When the decision to revert to the 
old definitions was made, revised FMR estimates were made by 
multiplying the new definition FMR estimate by the 2000 Census 40th 
percentile new-to-old definition rent ratio (e.g., if the median rent 
for the old definition was 3 percent higher than the rent using the new 
definition, the survey result was adjusted by increasing it by 3 
percent). Rent relationships among different parts of metropolitan 
areas tend to be very stable in the short-term and medium-term, so this 
approach should normally be reliable. In response to concerns, however, 
HUD conducted full surveys of the old definition area parts not 
included in the initial surveys. The results of the original and 
supplemental samples were then merged using 2000 Census sampling 
weights. Counties or county parts were added or deleted to provide an 
aggregate sample based on the old OMB definition. Because two surveys 
were used to cover different parts of the old metropolitan area 
definition, the combined survey coverage had larger samples and more 
statistically reliable estimates than normally sought. None of the 
resulting estimates resulted in a change in the FMR estimates because 
they were not sufficiently different. To the extent there were 
differences, the revised estimates for Boston, Detroit, and Washington 
were somewhat lower than the FMR estimates published on October 1, 
2004, but not by enough to trigger changes.
    HUD also reviewed surveys and data supplied by housing authorities 
as part of the public comment process. The results are shown on the 
following table:

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                                      Two-bedroom FY2005 FMRs
                                 --------------------------------
         Area definition             10/1/2004     Revised final                Revised FMR change
                                    final FMRs         FMRs
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Cheyenne, WY....................             536             592  RDD Increase.
Cleveland County, NC............             523             578  RDD Increase.
Columbia, MD....................             988            1242  Census-Based Increase.

[[Page 9781]]

 
Dover, DE.......................             616             663  RDD Increase.
Drew County, AR.................             413             506  Survey Based Increase.
Fargo, ND.......................             523             551  RDD Increase.
Hawaii County, HI...............             691             818  RDD Increase.
Maui County, HI.................             899            1149  RDD Increase.*
McDowell County, NC.............             490             541  RDD Increase.
Polk County, NC.................             504             557  RDD Increase.
Rutherford County, NC...........             492             544  RDD Increase.
San Jose, CA....................            1313          1313**  3+ Bedroom Survey Increase.
Stevens Co., MN.................             488           488**  1 & 4 Bedroom FMR Increases.
Sussex County, DE...............             572             617  RDD Increase.
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* The survey conducted by local authorities showed an increase, but the HUD RDD survey had a larger sample, was
  more statistically reliable, and showed a larger increase.
** The FMR changes for these areas related to specific bedroom sizes and do not affect the two-bedroom FMR.

    The results of locally funded RDD surveys for Cheyenne, WY, Fargo, 
ND, and Hawaii County, HI, justified FMR increases. Columbia, MD 
submitted extensive data, but these data were not statistically 
reflective of the overall rental inventory. An increase in Columbia's 
FMRs was justified, however, based on an analysis of area-specific 
Census data that was not available when FY2005 FMRs were initially 
determined. HUD accepted the RDD results for Hawaii County, HI, but had 
concerns about the survey results presented for Maui County. HUD's own 
survey of Maui had a much larger sample and produced a higher FMR 
result that is contained in this publication. At the request of Polk 
County, NC, a 2001 multi-county RDD was re-evaluated using 2000 Census 
bedroom relationships, which resulted in FMR increases for most bedroom 
sizes. Santa Clara County, CA, submitted data on three- and four-
bedroom rents that supported increases for their FMRs, and Stevens 
County, MN, submitted data on one- and four-bedroom rentals that 
supported increases.

VI. Public Comments

    An additional 283 comments were received during the September 7th 
through mid-November 2004 period. Nearly all comments can be summarized 
into six categories:
    1. Over one-fourth of these comments, most originated before 
October 1, 2004, expressed concern about the use of the new OMB 
geographic definitions. These were addressed in the October 1, 2004, 
FMR publication, which published FMRs using the FY2004 FMR definitions.
    2. A number of requests were made to permit continued use of the 
FY2004 FMRs when they were higher than the FY2005 FMRs. HUD did not 
honor this request, because it is inconsistent with the statutory 
requirement to use the most current available data in calculating FMRs. 
In addition, the proposed policy would unfairly hurt the majority of 
FMR areas with FY2005 increases, since it would eventually change the 
pro-rating of funding to disproportionately favor areas that data show 
should receive lower FMRs.
    3. Numerous complaints were received about three-plus bedroom FMR 
reductions. As noted in the FMR Methodology section of this notice, the 
majority of large unit FMRs had increases as a result of using 2000 
Census data and any decreases are based on local market data from the 
2000 Census that HUD has made publicly available.
    4. A number of requests were made to conduct RDD surveys in areas 
with FY2005 FMR decreases. HUD has conducted surveys in the largest of 
these areas, but funding for this purpose is limited.
    5. Complaints were received that HUD's current exception rent 
policy makes it very difficult to obtain exception rent approvals for 
submarkets that 2000 Census and other data show have much higher rents 
than the FMR area-wide rents, and that this is adversely affecting 
program viability and de-concentration objectives. HUD will consider 
these comments, but the exception rent policy is not within the scope 
of this notice.
    6. Complaints were made about FMR reductions and inconsistencies 
due to eliminating state non-metropolitan FMR minimums. Prior to 
FY2005, HUD set minimum state nonmetro FMRs based on state-wide 
nonmetro 40th percentile rents. One complaint was that the unusually 
low FMRs in some counties reflect housing quality issues that are not 
addressed by the current policy. The other and sometimes related 
complaint was from areas where there were sufficient census data to 
calculate FMRs, and where lower cost, adjacent counties were assigned 
higher county group FMRs. HUD will review this policy but no change is 
being made at this time.
    Form letters were received from Atlanta, Georgia, requesting that 
additional excise or liquor taxes be used to increase funding for 
programs for the poor. Tax and funding issues are not determined in a 
FMR Federal Register notice, and no response is provided. Another form 
letter campaign from Connecticut complained about low FMRs for 2-
bedroom, 3-bedroom and 4-bedroom units throughout the state. No data in 
support of higher FMRs for these bedroom sizes was provided and no 
changes were made.
    Some requests were received that were at odds with the requirement 
that HUD must use the most current data available in setting FMRs. 
Commenters from Vermont asked HUD to use the 2000 RDDs conducted in 
place of the 2000 Census data. Since both sets of data are from 2000, 
the Census data must be used because it is based on a greater number of 
observations, making it more statistically reliable.
    Numerous comments were received from Puerto Rico, where RDD surveys 
were delayed at the request of the local housing agency to give it 
additional time to review the survey instrument and consider 
alternatives. The request for higher FMRs was a common theme. Some 
comments requested RDD surveys for all of Puerto Rico, but others 
argued that RDD survey results would not be valid because of incomplete 
telephone coverage and unusual housing quality issues. A suggestion was 
received that Puerto Rico's FMRs be set using construction costs, but 
this approach appears inconsistent with statutory and regulatory 
provisions. One comment

[[Page 9782]]

argued that Puerto Rico's housing markets are unlike those of the 
United States, because most renters live in single-family homes. This, 
however, is also true for most rental markets in the United States. 
Until surveys are completed, Puerto Rico will be permitted to continue 
to use its FY2004 FMRs.
    The Council of Large Public Housing Authorities (CLPHA) commented 
that the HUD method of calculating FMRs is overcomplicated and 
requested that large PHAs be allowed to set their own FMRs, which would 
require a statutory change. It also requested that more reliable data 
sources, such as the American Community Survey (ACS), be used to set 
FMRs. HUD agrees that the ACS is of enormous potential value in 
improving FMR estimates, because it will eventually provide decennial-
census-quality data on an annual basis. HUD plans to start using ACS 
data in producing FY2006 FMRs, but full ACS sample data will not be 
available until near the start of FY2007.
    CLPHA also complained about HUD's use of new OMB definitions in 
conducting RDD surveys, and that use of these definitions had damaging 
results for many PHAs. The comments received correctly note that HUD 
completed 24 RDD surveys prior to the final FY2005 FMR publication, 
that 11 of the surveys resulted in FMR decreases, and that the new 
Office of Management and Budget metropolitan area definitions had been 
used in defining survey areas. No concerns were raised about RDD-based 
FMR increases, although the same estimation procedures were used. The 
comments failed to note that surveys for five of the 11 areas covered 
100 percent of the respective final FY2005 FMR areas (Baltimore, 
Detroit, Orange County, San Francisco, and Seattle), that another four 
surveys covered 97-99 percent of the renters in the final FY2005 FMR 
areas (Chicago, Fort Worth, Kansas City, and San Jose), and that 
eliminating the few cases not within the old FMR area definition did 
not measurably change the published FMR estimate. Only three of the 
initial 24 survey areas had significant metropolitan area definition 
differences (Boston, Detroit, and Washington). As previously noted, 
additional surveys were conducted for the three metropolitan areas 
where there was a more than 3 percent difference between the old and 
new metropolitan area definitions. In each instance, the supplemental 
surveys resulted in larger than usual samples and provided estimates 
that were slightly lower than those published on October 1, 2004, but 
still within the statistical confidence intervals of the published 
estimates.
    CLPHA also expressed concerns with sample bias associated with 
telephone surveys due to increased use of cell phones. Call screening 
is also of concern to HUD. Changes in phone utilization may bias 
outcomes, but what research is available suggests that the bias is 
still very small for most surveys. It is also unclear if the bias has 
the effect of increasing or decreasing FMRs. HUD is sensitive to this 
concern. In large metropolitan areas where extensive data are available 
on large apartment complex rents, HUD compares the results of the RDD 
and apartment complex surveys. Research indicates that typical 
apartment complex rents differ both in amounts and rent changes from 
the overall rental market, but they nonetheless provide a means of 
confirming whether there were any recent, significant changes in rent 
levels. The difficulty HUD faces is that, until ACS data become fully 
available, RDD surveys offer the only currently available, cost-
feasible, and validated means of obtaining statistically reliable rent 
estimates for most areas.

VII. 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.
    One comment was received, for Adams County, CO, but the survey 
included was not valid since it only covered a small portion of the 
manufactured home spaces in the metropolitan area of Denver, CO. All 
approved exceptions to these rents that were in effect in FY2004 were 
updated to 2005 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.

VIII. 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-$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 https://
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 so as to be statistically 
representative of the entire rental housing stock of the FMR area. In 
particular, surveys must include units of all rent levels and be 
representative by structure type (including single-family, duplex and 
other small rental properties), age of housing unit, and geographic 
location. The decennial Census should be used as a starting point and 
means of verification for determining whether the sample is 
representative of the FMR area's rental housing stock. All survey 
results must be fully documented.

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    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: February 8, 2005.
Dennis C. Shea,
Assistant Secretary for Policy Development and Research.

Fair Market Rents for the Housing Choice Voucher Program

Schedules B and D--General Explanatory Notes

1. Geographic Coverage
    a. Metropolitan Areas--FMRs are market-wide rent estimates that are 
intended to provide housing opportunities throughout the geographic 
area in which rental-housing units are in direct competition.
    HUD uses the OMB Metropolitan Statistical Area (MSA) and Primary 
Metropolitan Statistical Area (PMSA) definitions, but the current 
definitions from the June 6, 2003 publication have not yet been 
incorporated. Use of these new geographical definitions will be 
considered for use in future FMR publications. Schedule B FMRs are 
issued for the same metropolitan area definitions used by HUD in FY 
2004 with the exceptions discussed in paragraph (b). The OMB-defined 
metropolitan areas closely correspond to housing market area 
definitions.
    b. Exceptions to OMB Definitions--The exceptions are counties 
deleted from several large metropolitan areas whose old OMB 
metropolitan area definitions were determined by HUD to be larger than 
the housing market areas. The FMRs for the following counties (shown by 
the metropolitan area) are calculated separately and are shown in 
Schedule B within their respective states under the ``Metropolitan FMR 
Areas'' listing:

Metropolitan Area Counties Assigned County-Based FMRs

Chicago, IL--DeKalb County, Grundy County, and Kendall County, IL
Cincinnati-Hamilton, OH-KY-IN--Brown County, OH; Gallatin County, Grant 
County, and Pendleton County, KY; and Ohio County, IN
Dallas, TX--Henderson County, TX
Flagstaff, AZ-UT--Kane County, UT
New Orleans, LA--St. James Parish, LA
Washington, DC-MD-VA-WV--Berkeley County and Jefferson County, WV; and 
Clarke County, Culpeper County, King George County, and Warren County, 
VA
    c. Nonmetropolitan Area FMRs--FMRs also are established for 
nonmetropolitan counties and for county equivalents in the United 
States, for nonmetropolitan parts of counties in the New England states 
and for FMR areas in Puerto Rico, the Virgin Islands and the Pacific 
Islands.
    d. Virginia Independent Cities--FMRs for the areas in Virginia 
shown in the table below were established by combining the Census data 
for the nonmetropolitan counties with the data for the independent 
cities that are located within the county borders. Because of space 
limitations, the FMR listing in Schedule B includes only the name of 
the nonmetropolitan County. The full definitions of these areas, 
including the independent cities, are as follows:

Virginia Nonmetropolitan County FMR Area and Independent Cities Included
                               With County
------------------------------------------------------------------------
                  County                               Cities
------------------------------------------------------------------------
Allegheny.................................  Clifton Falls, Covington.
Augusta...................................  Staunton and Waynesboro.
Carroll...................................  Galax.
Frederick.................................  Winchester.
Greensville...............................  Emporia.
Henry.....................................  Martinsville.
Montgomery................................  Radford.
Rockbridge................................  Buena Vista and Lexington.
Rockingham................................  Harrisonburg.
Southhampton..............................  Franklin.
Wise......................................  Norton.
------------------------------------------------------------------------

2. Bedroom Size Adjustments

    Schedule B shows the FMRs for 0-bedroom through 4-bedroom units. 
The FMRs for unit sizes larger than 4 bedrooms are calculated by adding 
15 percent to the 4-bedroom FMR for each extra bedroom. For example, 
the FMR for a 5-bedroom unit is 1.15 times the 4-bedroom FMR, and the 
FMR for a 6-bedroom unit is 1.30 times the 4-bedroom FMR. FMRs for 
single-room-occupancy (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.
    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.

BILLING CODE 4210-62-P

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[FR Doc. 05-3814 Filed 2-25-05; 8:45 am]
BILLING CODE 4210-62-C