Final Fair Market Rents for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2012, 60968-61031 [2011-25052]

Download as PDF 60968 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–5567–N–02] Final Fair Market Rents for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2012 Office of the Assistant Secretary for Policy Development and Research, HUD. ACTION: Notice of Final Fiscal Year (FY) 2012 Fair Market Rents (FMRs). AGENCY: 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 standards for the Housing Choice Voucher (HCV) program, to determine initial renewal rents for some expiring project-based Section 8 contracts, to determine initial rents for housing assistance payment contracts in the Moderate Rehabilitation Single Room Occupancy program, and to serve as rent ceilings in the HOME program. Today’s notice provides final FY 2012 FMRs for all areas that reflect the estimated 40th and 50th percentile rent levels trended to April 1, 2012. The FY 2012 FMRs are re-benchmarked using five-year, 2005–2009 data collected by the American Community Survey (ACS). These data are updated using one-year ACS data in areas where statistically valid one-year ACS data are available. The Consumer Price Index (CPI) rent and utility indexes are used to further update data from 2009 to the end of 2010. The final FY 2012 FMR areas are based on current Office of Management and Budget (OMB) metropolitan area definitions and include HUD modifications that were first used in the determination of FY 2006 FMR areas, with changes incorporated through December 2009. The bedroom ratios developed using 2000 Census data continue to be used and state minimums, calculated each year from the estimated FMRs, continue to be applied. SUMMARY: Effective Date: The FMRs published in this notice are effective on October 1, 2011. FOR FURTHER INFORMATION CONTACT: For technical information on the methodology used to develop FMRs or a listing of all FMRs, please call the HUD USER information line at 800– 245–2691 or access the information on the HUD Web site http://www.huduser. org/portal/datasets/fmr.html. FMRs are srobinson on DSK4SPTVN1PROD with NOTICES2 DATES: VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 listed at the 40th or 50th percentile in Schedule B. An asterisk before the FMR area name identifies a 50th percentile area. For informational purposes, 40th percentile recent-mover rents for the areas with 50th percentile FMRs will be provided in the HUD FY 2012 FMR documentation system at http:// www.huduser.org/portal/datasets/fmr/ fmrs/docsys.html&data=fmr12 and 50th percentile rents for all FMR areas will be published at http://www.huduser. org/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 or concerning further methodological explanations may be addressed to Marie L. Lihn or Peter B. Kahn, 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 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 geographic areas. In the 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). 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 HCV program must meet reasonable rent standards. HUD’s regulations at 24 CFR 888.113 permit it to establish 50th percentile FMRs for certain areas. Electronic Data Availability: This Federal Register notice is available electronically from the HUD User page at http://www.huduser.org/datasets/ fmr.html. Federal Register notices also are available electronically from http:// www.gpoaccess.gov/fr/index.html, the U.S. Government Printing Office Web site. Complete documentation of the methodology and data used to compute each area’s final FY 2012 FMRs is available at http://www.huduser.org/ PO 00000 Frm 00002 Fmt 4701 Sfmt 4703 portal/datasets/fmr/fmrs/ docsys.html&data=fmr12. FY 2012 FMRs are available in a variety of electronic formats at http:// www.huduser.org/portal/datasets/ fmr.html. FMRs may be accessed in PDF format as well as in Microsoft Excel. Small Area FMRs based on FY 2012 Metropolitan Area Rents are available in Microsoft Excel format at the same Web address. Please note that these Small Area FMRs are for reference only, and will only be used by PHAs participating in the Small Area FMR demonstration. II. Procedures for the Development of FMRs Section 8(c)(1) of the USHA requires the Secretary of HUD to publish FMRs periodically, but not less frequently than annually. Section 8(c)(1) 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 the market area * * * HUD’s regulations at 24 CFR part 888 provide that HUD will develop proposed FMRs, publish them for public comment, provide a public comment period of at least 30 days, consider public comments that contain statistically valid rental housing survey data that justify the requested change, and publish final FMRs. (See 24 CFR 888.115.) For FY 2012 FMRs, HUD has considered all comments submitted in response to its August 19, 2011 (76 FR 52058) proposed FY 2012 FMRs and has posted the comments and its responses at http://www.huduser.org/portal/ datasets/fmr.html. HUD will, however, continue to analyze data provided by these public comments to determine whether changes are justified. HUD will publish any changes in the Federal Register. In addition, HUD’s regulations at 24 CFR 888.113 set out procedures for HUD to assess whether areas are eligible for FMRs at the 50th percentile. Minimally qualified areas 1 are reviewed each year 1 As defined in 24 CFR 888.113(c), a minimally qualified area is an area with at least 100 census tract where 70 percent or fewer of the census tracts with at least 10 two bedroom rental units are census tracts in which at least 30 percent of the two bedroom rental units have gross rents at or below the two bedroom FMR set at the 40th percentile rent. This is evaluated with 2000 Census tract data, E:\FR\FM\30SEN2.SGM 30SEN2 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices unless not qualified to be reviewed. Areas that currently have 50th percentile FMRs are evaluated for progress in voucher tenant deconcentration after three years in the program. Continued eligibility is determined using HUD administrative data that show levels of voucher tenant concentration. The levels of voucher holder concentration must be above 25 percent and show a decrease in concentration since the last evaluation. At least 85 percent of the voucher units in the area must be used to make this determination. Areas are not qualified to be reviewed if they have been made a 50th-percentile area within the last three years or have lost 50th-percentile 60969 status for failure to de-concentrate within the last three years. In FY 2011 there were 18 areas using 50th-percentile FMRs. Of these 18 areas, 11 areas were allowed to continue as 50th percentile FMR areas, as listed below: FY 2012 CONTINUING 50TH-PERCENTILE FMR AREAS Baltimore-Towson, MD MSA .................................................................... Fort Lauderdale, FL HMFA ...................................................................... Hartford-West Hartford-East Hartford, CT HMFA .................................... New Haven-Meriden, CT HMFA .............................................................. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA .......................... West Palm Beach-Boca Raton, FL HMFA ............................................... There are 10 additional 50thpercentile FMR areas, one that is new to the program, Sacramento—Arden- Bergen-Passaic, NJ HMFA 2. Grand Rapids-Wyoming, MI HMFA. Houston-Baytown-Sugar Land, TX HMFA. North Port-Bradenton-Sarasota, FL MSA. Washington-Arlington-Alexandria, DC-VA-MD HMFA. Arcade—Roseville, CA HMFA. The other 9 areas failed to deconcentrate when evaluated for the FY 2009 FMRs, but are reinstated as 50th-percentile FMRs: NEW FY 2012 50TH-PERCENTILE FMR AREAS Austin-Round Rock-San Marcos, TX MSA .............................................. Honolulu, HI MSA ..................................................................................... Orange County, CA HMFA ....................................................................... Riverside-San Bernardino-Ontario, CA HMFA ......................................... Tucson, AZ MSA ...................................................................................... In summary, there are 21 50thpercentile FMR areas in FY 2012. These areas are indicated by an asterisk in Schedule B, where all FMRs are listed by state. srobinson on DSK4SPTVN1PROD with NOTICES2 III. Proposed FY 2012 FMRs On August 19, 2011 (76 FR 52058), HUD published proposed FY 2012 FMRs with a comment period that ended September 19, 2011. Among the comments HUD received were several that questioned the FY 2012 FMRs for their respective market areas. HUD has considered all public comments received and has posted its response to these comments on its Web site at http://www.huduser.org/portal/ datasets/fmr.html. HUD will continue to review data provided by the comments and will publish any revisions to the FY 2012 FMRs resulting from data submissions in a forthcoming Federal Register notice. Fort Worth-Arlington, TX HMFA. Las Vegas-Paradise, NV MSA. Phoenix-Mesa-Glendale, AZ MSA. Sacramento—Arden-Arcade—Roseville, CA HMFA Tucson, AZ MSA. Virginia Beach-Norfolk-Newport News, VA-NC MSA. www.huduser.org/portal/datasets/fmr/ fmrs/docsys.html&data=fmr12. The FY 2012 FMRs are based on current OMB metropolitan area definitions and standards that were first used in the FY 2006 FMRs. OMB changes to the metropolitan area definitions through December 2009 are incorporated. There have been no area definition changes published by OMB since the publication of the FY 2011 FMRs; therefore, the FY 2012 area definitions are the same as those used in FY 2011. IV. FMR Methodology This section provides a brief overview of how the FY 2012 FMRs are computed. For complete information on how FMR areas are determined, and on how each area’s FMRs are derived, see the online documentation at: http:// A. Base Year Rents The U.S. Census Bureau released standard tabulations of 5-year ACS data collected between 2005 through 2009 in December of 2010. This is the first time that updated data are available for all FMR areas and their component geographies since the release of the 2000 Decennial Census data (previous ACS releases only covered areas with 20,000 or more in population). Because of this new data availability, HUD has the ability to estimate new base rents using the 5-year ACS data. FMRs are typically based on gross rents for recent movers (those who have moved into their current residence in while we are awaiting 2010 ACS data to be aggregated using 2010 Census tract definitions. 2 HMFA is an acronym representing HUD Metropolitan FMR Area. 3 For areas with a two-bedroom standard quality gross rent from the ACS that have a margin of error greater than the estimate or no estimate due to inadequate sample in the 2009 5-year ACS, HUD VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4703 the last 15 to 24 months). FMRs prior to FY 2012 were calculated from recentmover gross rent estimates from the 2000 Census or from more current HUDcommissioned or PHA-commissioned rent surveys. However, due to the way the 5-year data are constructed, recentmover survey responses are not well defined. The 5-year data are an aggregation of all survey data collected between January 2005 and December 2009 in a given area. Dollar values such as gross rents are transformed from the time period in which they were collected to an overall 2009 value using the national CPI. Attempting to limit the 5-year data to those who have moved in the last 24 months severely limits the usefulness of the 5-year data because this limitation automatically disqualifies at least 40 percent of the survey observations used in the 5-year estimates. Consequently, all areas are assigned as a base rent the estimated two-bedroom standard-quality 5-year gross rent from the ACS.3 Because HUD’s regulations mandate that FMRs must be published as recent-mover gross rents, HUD has created a recent-mover adjustment factor to apply to the uses the two-bedroom state non-metro rent for nonmetro areas. E:\FR\FM\30SEN2.SGM 30SEN2 60970 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices standard-quality base rents assigned from the 5-year ACS data. Local area rent surveys conducted in 2010 by HUD or PHAs are used as base rents when the survey results are statistically different from the ACSbased rents. The surveys for Williamsport, PA, MSA and Pike County, HMFA were evaluated and are being used in place of the 2009 ACS data. A survey conducted in 2010 for the county group, Bradford-SullivanTioga, PA, was also evaluated, but there was no statistical difference from the 2009 ACS data, updated to 2010. srobinson on DSK4SPTVN1PROD with NOTICES2 B. Recent Mover Adjustment Factor Following the assignment of the standard-quality two-bedroom rent described above, HUD applies a recent mover adjustment factor to these rents. The following describes the process for determining the appropriate recentmover adjustment factor. For non-metropolitan areas, HUD calculated the percentage change between the 5-year standard-quality rent for the non-metropolitan portion of the state and the 1-year recent-mover rent for the same area.4 HUD then computes a z-score to determine if the 5-year standard-quality rent and the 1-year recent-mover rent are statistically different.5 If the two rents have a statistically significant difference, the recent-mover adjustment factor is set at the difference between the state nonmetropolitan 1-year recent-mover rent and the state non-metropolitan 5-year standard-quality rent expressed as a percentage of the state non-metropolitan 5-year standard-quality rent. If the two rents are not statistically different, the recent-mover adjustment factor is set to 1.0. For metropolitan areas, the recentmover adjustment factor is calculated in a similar fashion. HUD selects the smallest geographic area which encompasses the metropolitan area in question that has at least 100 recent mover observations to use in the calculation of the recent-mover adjustment factor. For HUD-defined subareas of OMB defined metropolitan areas, this means that the recent-mover 4 HUD ensures that the recent mover estimate for each non-metropolitan portion of the state has at least 100 ACS sample observations. If any state nonmetropolitan recent mover rent is based on fewer than 100 observations, the recent mover factor would be calculated based on the 1-year recent mover data and 5-year standard quality data for the entire state. 5 ‘The change is considered statistically significant if Z is greater than 1.645 where Z is equal to the change between the estimate for the 1year data and the 5-year estimate, over the square root of the sum of the squared standard error for the 1-year estimate and the squared standard error of the 5-year estimate. VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 adjustment factor may be based on the recent-mover data for the subarea, the entire metropolitan area, the metropolitan portions of the state, or finally the entire state depending on which geographic level has 100 or more recent mover observations.6 Once the area with 100 or more recent mover cases has been determined, HUD calculates a z-score comparing the 1year recent-mover two-bedroom gross rent with the 5-year standard-quality two-bedroom gross rent for the recentmover area. If the two rents are statistically different, HUD sets the recent-mover adjustment factor for the FMR area as the percentage change between the two rents for the recentmover area. If the difference in rents is not statistically different, the recentmover adjustment factor for the FMR area is set to 1. For FMR areas without 100 recentmover rents, a recent-mover adjustment factor is calculated at the smallest area level that does have 100 recent movers. For metropolitan areas, this order is subarea, metropolitan area, state metropolitan area, and state. For nonmetropolitan areas, the smallest area level is the state nonmetropolitan area, followed by the entire state. For an example of how the recent-mover adjustment factor is calculated for these areas, please review this methodology for Abilene, TX MSA and Baldwin County, AL, in the FY 2012 documentation system: http:// www.huduser.org/portal/datasets/fmr/ fmrs/docsys.html&data=fmr12. This process produces an ‘‘as of’’ 2009 recent mover two-bedroom base gross rent for the FMR area.7 6 For metropolitan areas that cross state boundaries, and where there are not 100 2-bedroom recent mover observations, HUD uses the weighted average update factors for the encompassing state metropolitan areas. HUD performs the Z-score test for statistical difference between the 1-year recentmover rent and 5-year standard-quality rent separately for each state metropolitan part prior to computing the weighted average update factor. 7 The Pacific Islands (Guam, Northern Marianas and American Samoa) as well as the U.S. Virgin Islands are not covered by ACS data. As part of the 2010 Decennial Census, these areas were covered by a long-form survey. The results gathered by this long form survey will not be available until 2012. Therefore, HUD uses the national change in gross rents, measured between 2008 and 2009 to update last year’s FMR for these areas. Puerto Rico is covered by the Puerto Rico Community Survey within the American Community Survey; however, the gross rent data produced by the 2005–2009 ACS are not sufficient to adequately house voucher holders in Puerto Rico. This is due to the limited ability to eliminate units that do not pass the voucher program’s housing quality standards. Consequently, HUD is updating last year’s FMRs for Puerto Rico using the change in rents measured from all of Puerto Rico measured between the 2008 and 2009. For details behind these calculations, please see HUD’s FY 2012 FMR documentation PO 00000 Frm 00004 Fmt 4701 Sfmt 4703 C. Updates From 2009 to 2010 The ACS data are updated through 2009 using the one-half of the change in annual CPI measured between 2008 and 2009. This data are further updated through the end of 2010 using the annual change in CPI from 2009 to 2010. As in previous years, HUD uses Local CPI data for FMR areas with at least 75 percent of their population within Class A metropolitan areas covered by local CPI data. HUD uses Census region CPI data for FMR areas in Class B and C size metropolitan areas and nonmetropolitan areas without local CPI update factors. D. Trend From 2010 to 2012 The national 1990 to 2000 average annual rent increase trend of 3 percent is applied to end-of-2010 rents for 15 months, to derive the proposed FY 2012 FMRs with a date of April 2012. On March 9, 2011 (76 FR 12985), HUD published a notice requesting public comment regarding the manner in which it calculates the trend factor used in determining FMR estimates to meet the statutory requirement that FMRs be ‘‘trended so the rentals will be current for the year to which they apply.’’ HUD’s notice provided several proposed alternatives to the current trend factor and requested comments on the alternatives as well as suggestions of other ideas. These comments are discussed in further detail in the proposed FY 2012 FMR notice (76 FR 52058), but, in short, the commenters did not arrive at a consensus over how to change the trending methodology. Therefore, HUD will continue to consider the suggestions provided in the comments and make plans to implement a new methodology with the publication of FY 2013 Proposed FMRs. E. Bedroom Rent Adjustments HUD calculates the primary FMR estimates for two-bedroom units. This is generally the most common size of rental units and, therefore, the most reliable to survey and analyze. Formerly, after each Decennial Census, HUD calculated rent relationships between two-bedroom units and other unit sizes and used them to set FMRs for other units. HUD did this 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. HUD did the last update of bedroom-rent relationships using 2000 Census data. A publicly releasable version of the data used for the derivations of rent ratios is system available at: http://www.huduser.org/portal/ datasets/fmr/fmrs/docsys.html&data=fmr12. E:\FR\FM\30SEN2.SGM 30SEN2 srobinson on DSK4SPTVN1PROD with NOTICES2 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices available at http://www.huduser.org/ portal/datasets/fmr/CensusRentData/ index.html. HUD made adjustments using 2000 Census data to establish rent ratios for areas with local bedroom-size intervals above or below what are considered 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 that rent for more than typical one-bedroom units). HUD established bedroom interval ranges based on an analysis of the range of such intervals for all areas with large enough samples to permit accurate bedroom ratio determinations. These ranges are: efficiency FMRs are constrained to fall between 0.65 and 0.83 of the two-bedroom FMR; onebedroom FMRs must be between 0.76 and 0.90 of the two-bedroom FMR; three-bedroom FMRs must be between 1.10 and 1.34 of the two-bedroom FMR; and four-bedroom FMRs must be between 1.14 and 1.63 of the twobedroom FMR. HUD adjusts bedroom rents for a given FMR area if the differentials between bedroom-size FMRs were inconsistent with normally observed patterns (i.e., efficiency rents are not allowed to be higher than onebedroom rents and four-bedroom rents are not allowed to be lower than threebedroom rents). HUD further adjusts the rents for three-bedroom and larger units to reflect HUD’s policy to set higher rents for these units than would result from using unadjusted 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 fourbedroom 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 fourbedroom FMR, and the FMR for a sixbedroom unit is 1.30 times the fourbedroom FMR. FMRs for single-room occupancy units are 0.75 times the zerobedroom (efficiency) FMR. For low-population, nonmetropolitan counties with small 2000 Census samples of recent-mover rents, HUD uses Census-defined county group data to determine rents for each bedroom VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 size. HUD made this adjustment to protect against unrealistically high or low FMRs due to insufficient sample sizes. The areas covered by this estimation method had less than the HUD standard of 200 two-bedroom, Census-tabulated observations. The 2010 Decennial Census did not collect the information necessary to update unit bedroom rent relationships. HUD intends to use the 2006–2010 5year ACS data to update these relationships for the FY 2013 FMRs. HUD is choosing to wait until next year to ensure something closer to a consistent 10 year time period, but more importantly, because the 2010 ACS data will be published based on the 2010 Decennial Census geographic definitions. V. Manufactured Home Space Surveys The FMR used to establish payment standard amounts for the rental of manufactured home spaces in the HCV 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. All approved exceptions to these rents that were in effect in FY 2011 were updated to FY 2012 using the same data used to estimate the HCV program FMRs. If the result of this computation was higher than 40 percent of the new 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. VI. Public Comments As previously stated, HUD is unable to respond to all comments received on the proposed FY 2012 FMRs in this notice because of the timing of the comment end date; however, these responses will be available by the publication date of this notice on HUD’s Web site at http://www.huduser.org/ portal/datasets/fmr.html. HUD was able, however, to make a minor methodological change, in response to a comment received, that eliminates a negative recent mover adjustment for the only area with one, Cape Coral-Fort Myers, FL MSA. HUD will continue to review data provided by the comments and publish any revisions to the FY 2012 FMRs resulting from data submissions in a forthcoming Federal Register notice. PO 00000 Frm 00005 Fmt 4701 Sfmt 4703 60971 VII. Formalize a Publication Date for Income Limits The FY 2012 Income Limits will be published on December 1, 2011. While the FY 2012 Income Limits do not benefit from any additional ACS data over what was included in the FY 2011 publication, they are updated with the FY 2012 FMRs for the purposes of evaluating areas of relatively high-or low-income to housing cost relationships and further updated with CPI to the end of 2010, trended to the mid-point of FY 2012 in a manner similar to what was done with the FY 2011 Median Family Income estimates and Income Limits. The FY 2013 Median Family Income estimates and Income Limits, published December 1, 2012, would be the first set of median family income estimates and income limits updated with ACS data collected from 2006–2010. VIII. HUD Rental Housing Survey Guides For the supporting data, HUD recommends the use of professionally conducted random digit dialing (RDD) telephone surveys to test the accuracy of FMRs for areas where there is a sufficient number of Section 8 units to justify the survey cost of approximately $35,000. Areas with 2,000 or more program units usually meet this cost criterion, and areas with fewer units may meet it if actual rents for twobedroom units are significantly different from the FMRs proposed by HUD. In addition, HUD has developed a version of the RDD survey methodology for smaller, nonmetropolitan PHAs. This methodology is designed to be simple enough to be done by the PHA itself, rather than by professional survey organizations, at a cost of $5,000 or less. PHAs in nonmetropolitan 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 will 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 counties where FMRs are based on the combined rents in the cluster of FMR areas will not have their FMRs revised unless the grouped survey results show a revised FMR above the combined rent level. PHAs that plan to use the RDD survey technique should obtain a copy of the appropriate survey guide. Larger PHAs should request HUD’s survey guide E:\FR\FM\30SEN2.SGM 30SEN2 60972 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices srobinson on DSK4SPTVN1PROD with NOTICES2 entitled ‘‘Random Digit Dialing Surveys; A Guide to Assist Larger Public Housing Agencies in Preparing Fair Market Rent Comments.’’ Smaller PHAs should obtain the guide entitled ‘‘Rental Housing Surveys: A Guide to Assist Smaller Public Housing Agencies in Preparing Fair Market Rent Comments.’’ These guides, in Microsoft Word format, are available from HUD USER at HUD’s Web site at the following address: http://www.huduser.org/datasets/ fmr.html. Other survey methodologies are acceptable in providing data to support comments, if the survey methodology can provide statistically reliable, unbiased estimates of the gross rent. Survey samples should preferably be randomly drawn from a complete list of rental units for the FMR area. If this is not feasible, the selected sample must be drawn to be statistically representative of the entire rental housing stock of the FMR area. 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 decennial census or 5-year ACS should be used as a means of verifying if a sample is representative of the FMR area’s rental housing stock. Most surveys of FMR areas cover only one- and two-bedroom units. If the survey is statistically acceptable, HUD will estimate FMRs for other bedroom sizes using ratios based on the decennial census. 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 will consider increasing manufactured home space FMRs where public comment demonstrates that 40 percent of the two-bedroom FMR is not adequate. In order to be accepted as a basis for revising the manufactured home space FMRs, comments must include a pad rental survey of the mobile home parks in the area, identify the utilities included in each park’s rental fee, and provide a copy of the applicable public housing authority’s utility schedule. IX. Environmental Impact This Notice involves the establishment of fair market rent schedules, which do not constitute a development decision affecting the physical condition of specific project areas or building sites. Accordingly, VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 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 amended as shown in the Appendix to this notice: Dated: September 22, 2011. Erika C. Poethig, Deputy Assistant Secretary for Policy Development. Fair Market Rents for the Housing Choice Voucher Program Schedules B and D—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 core-based statistical areas (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 2012 final FMRs incorporates the current OMB definitions of metropolitan areas based on the CBSA standards as implemented with 2000 Census data, but makes adjustments to the definitions to separate subparts of these areas where FMRs or median incomes would otherwise change significantly if the new area definitions were used without modification. In CBSAs where subareas are established, it is HUD’s view for programmatic purposes that the geographic extent of the housing markets are not yet the same as the geographic extent of the CBSAs, but may become so in the future as the social and economic integration of the CBSA component areas increases. Modifications to metropolitan CBSA definitions are made according to a formula as described below. Metropolitan area CBSAs (referred to as MSAs) may be modified to allow for subarea FMRs within MSAs based on the boundaries of old FMR areas (OFAs) within the boundaries of new MSAs. (OFAs are the FMR areas defined for the FY 2005 FMRs. Collectively they include 1999-definition MSAs/Primary Metropolitan Statistical Areas (PMSAs), metro counties deleted from 1999definition MSAs/PMSAs by HUD for PO 00000 Frm 00006 Fmt 4701 Sfmt 4703 FMR purposes, and counties and county parts outside of 1999-definition MSAs/ PMSAs referred to as nonmetropolitan counties.) Subareas of MSAs are assigned their own FMRs when the subarea 2000 Census Base Rent differs by at least 5 percent from (i.e., is at most 95 percent or at least 105 percent of) the MSA 2000 Census Base Rent, or when the 2000 Census Median Family Income for the subarea differs by at least 5 percent from the MSA 2000 Census Median Family Income. MSA subareas, and the remaining portions of MSAs after subareas have been determined, are referred to as HMFAs to distinguish these areas from OMB’s official definition of MSAs. The specific counties and New England towns and cities within each state in MSAs and HMFAs are listed in Schedule B. 2. Bedroom Size Adjustments Schedule B shows the FMRs for zerobedroom through four-bedroom units. The Schedule B addendum shows Small Area FMRs for PHAs operating using Small Area FMRs within the Dallas, TX HMFA. 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 (SRO) units are 0.75 times the zerobedroom 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 non-metropolitan county listings. d. The New England towns and cities included in a nonmetropolitan county are listed immediately following the county name. BILLING CODE 4617–10–P E:\FR\FM\30SEN2.SGM 30SEN2 VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4725 E:\FR\FM\30SEN2.SGM 30SEN2 60973 EN30SE11.000</GPH> srobinson on DSK4SPTVN1PROD with NOTICES2 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices VerDate Mar<15>2010 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices 17:37 Sep 29, 2011 Jkt 223001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4725 E:\FR\FM\30SEN2.SGM 30SEN2 EN30SE11.001</GPH> srobinson on DSK4SPTVN1PROD with NOTICES2 60974 VerDate Mar<15>2010 17:37 Sep 29, 2011 Jkt 223001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4725 E:\FR\FM\30SEN2.SGM 30SEN2 60975 EN30SE11.002</GPH> srobinson on DSK4SPTVN1PROD with NOTICES2 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices VerDate Mar<15>2010 Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / Notices 17:37 Sep 29, 2011 Jkt 223001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4725 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Agencies

[Federal Register Volume 76, Number 190 (Friday, September 30, 2011)]
[Notices]
[Pages 60968-61031]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25052]



[[Page 60967]]

Vol. 76

Friday,

No. 190

September 30, 2011

Part II





Department of Housing and Urban Development





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Final Fair Market Rents for the Housing Choice Voucher Program and 
Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2012; 
Notice

Federal Register / Vol. 76, No. 190 / Friday, September 30, 2011 / 
Notices

[[Page 60968]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5567-N-02]


Final Fair Market Rents for the Housing Choice Voucher Program 
and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 
2012

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

ACTION: Notice of Final Fiscal Year (FY) 2012 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 standards for the 
Housing Choice Voucher (HCV) program, to determine initial renewal 
rents for some expiring project-based Section 8 contracts, to determine 
initial rents for housing assistance payment contracts in the Moderate 
Rehabilitation Single Room Occupancy program, and to serve as rent 
ceilings in the HOME program. Today's notice provides final FY 2012 
FMRs for all areas that reflect the estimated 40th and 50th percentile 
rent levels trended to April 1, 2012. The FY 2012 FMRs are re-
benchmarked using five-year, 2005-2009 data collected by the American 
Community Survey (ACS). These data are updated using one-year ACS data 
in areas where statistically valid one-year ACS data are available. The 
Consumer Price Index (CPI) rent and utility indexes are used to further 
update data from 2009 to the end of 2010.
    The final FY 2012 FMR areas are based on current Office of 
Management and Budget (OMB) metropolitan area definitions and include 
HUD modifications that were first used in the determination of FY 2006 
FMR areas, with changes incorporated through December 2009. The bedroom 
ratios developed using 2000 Census data continue to be used and state 
minimums, calculated each year from the estimated FMRs, continue to be 
applied.

DATES: Effective Date: The FMRs published in this notice are effective 
on October 1, 2011.

FOR FURTHER INFORMATION CONTACT: For technical information on the 
methodology used to develop FMRs or a listing of all FMRs, please call 
the HUD USER information line at 800-245-2691 or access the information 
on the HUD Web site http://www.huduser.org/portal/datasets/fmr.html. 
FMRs are listed at the 40th or 50th percentile in Schedule B. An 
asterisk before the FMR area name identifies a 50th percentile area. 
For informational purposes, 40th percentile recent-mover rents for the 
areas with 50th percentile FMRs will be provided in the HUD FY 2012 FMR 
documentation system at http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr12 and 50th percentile rents for all FMR areas 
will be published at http://www.huduser.org/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 or concerning further methodological 
explanations may be addressed to Marie L. Lihn or Peter B. Kahn, 
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 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 geographic areas. In the 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). 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 
HCV program must meet reasonable rent standards. HUD's regulations at 
24 CFR 888.113 permit it to establish 50th percentile FMRs for certain 
areas.
    Electronic Data Availability: This Federal Register notice is 
available electronically from the HUD User page at http://www.huduser.org/datasets/fmr.html. Federal Register notices also are 
available electronically from http://www.gpoaccess.gov/fr/index.html, 
the U.S. Government Printing Office Web site. Complete documentation of 
the methodology and data used to compute each area's final FY 2012 FMRs 
is available at http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr12. FY 2012 FMRs are available in a variety of 
electronic formats at http://www.huduser.org/portal/datasets/fmr.html. 
FMRs may be accessed in PDF format as well as in Microsoft Excel. Small 
Area FMRs based on FY 2012 Metropolitan Area Rents are available in 
Microsoft Excel format at the same Web address. Please note that these 
Small Area FMRs are for reference only, and will only be used by PHAs 
participating in the Small Area FMR demonstration.

II. Procedures for the Development of FMRs

    Section 8(c)(1) of the USHA requires the Secretary of HUD to 
publish FMRs periodically, but not less frequently than annually. 
Section 8(c)(1) 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 the market 
area * * *

    HUD's regulations at 24 CFR part 888 provide that HUD will develop 
proposed FMRs, publish them for public comment, provide a public 
comment period of at least 30 days, consider public comments that 
contain statistically valid rental housing survey data that justify the 
requested change, and publish final FMRs. (See 24 CFR 888.115.) For FY 
2012 FMRs, HUD has considered all comments submitted in response to its 
August 19, 2011 (76 FR 52058) proposed FY 2012 FMRs and has posted the 
comments and its responses at http://www.huduser.org/portal/datasets/fmr.html. HUD will, however, continue to analyze data provided by these 
public comments to determine whether changes are justified. HUD will 
publish any changes in the Federal Register.
    In addition, HUD's regulations at 24 CFR 888.113 set out procedures 
for HUD to assess whether areas are eligible for FMRs at the 50th 
percentile. Minimally qualified areas \1\ are reviewed each year

[[Page 60969]]

unless not qualified to be reviewed. Areas that currently have 50th 
percentile FMRs are evaluated for progress in voucher tenant 
deconcentration after three years in the program. Continued eligibility 
is determined using HUD administrative data that show levels of voucher 
tenant concentration. The levels of voucher holder concentration must 
be above 25 percent and show a decrease in concentration since the last 
evaluation. At least 85 percent of the voucher units in the area must 
be used to make this determination. Areas are not qualified to be 
reviewed if they have been made a 50th-percentile area within the last 
three years or have lost 50th-percentile status for failure to de-
concentrate within the last three years.
---------------------------------------------------------------------------

    \1\ As defined in 24 CFR 888.113(c), a minimally qualified area 
is an area with at least 100 census tract where 70 percent or fewer 
of the census tracts with at least 10 two bedroom rental units are 
census tracts in which at least 30 percent of the two bedroom rental 
units have gross rents at or below the two bedroom FMR set at the 
40th percentile rent. This is evaluated with 2000 Census tract data, 
while we are awaiting 2010 ACS data to be aggregated using 2010 
Census tract definitions.
---------------------------------------------------------------------------

    In FY 2011 there were 18 areas using 50th-percentile FMRs. Of these 
18 areas, 11 areas were allowed to continue as 50th percentile FMR 
areas, as listed below:
---------------------------------------------------------------------------

    \2\ HMFA is an acronym representing HUD Metropolitan FMR Area.

              FY 2012 Continuing 50th-Percentile FMR Areas
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Baltimore-Towson, MD MSA...............  Bergen-Passaic, NJ HMFA \2\.
Fort Lauderdale, FL HMFA...............  Grand Rapids-Wyoming, MI HMFA.
Hartford-West Hartford-East Hartford,    Houston-Baytown-Sugar Land, TX
 CT HMFA.                                 HMFA.
New Haven-Meriden, CT HMFA.............  North Port-Bradenton-Sarasota,
                                          FL MSA.
Philadelphia-Camden-Wilmington, PA-NJ-   Washington-Arlington-
 DE-MD MSA.                               Alexandria, DC-VA-MD HMFA.
West Palm Beach-Boca Raton, FL HMFA....  ...............................
------------------------------------------------------------------------

    There are 10 additional 50th-percentile FMR areas, one that is new 
to the program, Sacramento--Arden-Arcade--Roseville, CA HMFA. The other 
9 areas failed to deconcentrate when evaluated for the FY 2009 FMRs, 
but are reinstated as 50th-percentile FMRs:

                  New FY 2012 50th-Percentile FMR Areas
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Austin-Round Rock-San Marcos, TX MSA...  Fort Worth-Arlington, TX HMFA.
Honolulu, HI MSA.......................  Las Vegas-Paradise, NV MSA.
Orange County, CA HMFA.................  Phoenix-Mesa-Glendale, AZ MSA.
Riverside-San Bernardino-Ontario, CA     Sacramento--Arden-Arcade--
 HMFA.                                    Roseville, CA HMFA Tucson, AZ
                                          MSA.
Tucson, AZ MSA.........................  Virginia Beach-Norfolk-Newport
                                          News, VA-NC MSA.
------------------------------------------------------------------------

    In summary, there are 21 50th-percentile FMR areas in FY 2012. 
These areas are indicated by an asterisk in Schedule B, where all FMRs 
are listed by state.

III. Proposed FY 2012 FMRs

    On August 19, 2011 (76 FR 52058), HUD published proposed FY 2012 
FMRs with a comment period that ended September 19, 2011. Among the 
comments HUD received were several that questioned the FY 2012 FMRs for 
their respective market areas. HUD has considered all public comments 
received and has posted its response to these comments on its Web site 
at http://www.huduser.org/portal/datasets/fmr.html. HUD will continue 
to review data provided by the comments and will publish any revisions 
to the FY 2012 FMRs resulting from data submissions in a forthcoming 
Federal Register notice.

IV. FMR Methodology

    This section provides a brief overview of how the FY 2012 FMRs are 
computed. For complete information on how FMR areas are determined, and 
on how each area's FMRs are derived, see the online documentation at: 
http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr12.
    The FY 2012 FMRs are based on current OMB metropolitan area 
definitions and standards that were first used in the FY 2006 FMRs. OMB 
changes to the metropolitan area definitions through December 2009 are 
incorporated. There have been no area definition changes published by 
OMB since the publication of the FY 2011 FMRs; therefore, the FY 2012 
area definitions are the same as those used in FY 2011.

A. Base Year Rents

    The U.S. Census Bureau released standard tabulations of 5-year ACS 
data collected between 2005 through 2009 in December of 2010. This is 
the first time that updated data are available for all FMR areas and 
their component geographies since the release of the 2000 Decennial 
Census data (previous ACS releases only covered areas with 20,000 or 
more in population). Because of this new data availability, HUD has the 
ability to estimate new base rents using the 5-year ACS data.
    FMRs are typically based on gross rents for recent movers (those 
who have moved into their current residence in the last 15 to 24 
months). FMRs prior to FY 2012 were calculated from recent-mover gross 
rent estimates from the 2000 Census or from more current HUD-
commissioned or PHA-commissioned rent surveys. However, due to the way 
the 5-year data are constructed, recent-mover survey responses are not 
well defined. The 5-year data are an aggregation of all survey data 
collected between January 2005 and December 2009 in a given area. 
Dollar values such as gross rents are transformed from the time period 
in which they were collected to an overall 2009 value using the 
national CPI. Attempting to limit the 5-year data to those who have 
moved in the last 24 months severely limits the usefulness of the 5-
year data because this limitation automatically disqualifies at least 
40 percent of the survey observations used in the 5-year estimates. 
Consequently, all areas are assigned as a base rent the estimated two-
bedroom standard-quality 5-year gross rent from the ACS.\3\ Because 
HUD's regulations mandate that FMRs must be published as recent-mover 
gross rents, HUD has created a recent-mover adjustment factor to apply 
to the

[[Page 60970]]

standard-quality base rents assigned from the 5-year ACS data.
---------------------------------------------------------------------------

    \3\ For areas with a two-bedroom standard quality gross rent 
from the ACS that have a margin of error greater than the estimate 
or no estimate due to inadequate sample in the 2009 5-year ACS, HUD 
uses the two-bedroom state non-metro rent for non-metro areas.
---------------------------------------------------------------------------

    Local area rent surveys conducted in 2010 by HUD or PHAs are used 
as base rents when the survey results are statistically different from 
the ACS-based rents. The surveys for Williamsport, PA, MSA and Pike 
County, HMFA were evaluated and are being used in place of the 2009 ACS 
data. A survey conducted in 2010 for the county group, Bradford-
Sullivan-Tioga, PA, was also evaluated, but there was no statistical 
difference from the 2009 ACS data, updated to 2010.

B. Recent Mover Adjustment Factor

    Following the assignment of the standard-quality two-bedroom rent 
described above, HUD applies a recent mover adjustment factor to these 
rents. The following describes the process for determining the 
appropriate recent-mover adjustment factor.
    For non-metropolitan areas, HUD calculated the percentage change 
between the 5-year standard-quality rent for the non-metropolitan 
portion of the state and the 1-year recent-mover rent for the same 
area.\4\ HUD then computes a z-score to determine if the 5-year 
standard-quality rent and the 1-year recent-mover rent are 
statistically different.\5\ If the two rents have a statistically 
significant difference, the recent-mover adjustment factor is set at 
the difference between the state non-metropolitan 1-year recent-mover 
rent and the state non-metropolitan 5-year standard-quality rent 
expressed as a percentage of the state non-metropolitan 5-year 
standard-quality rent. If the two rents are not statistically 
different, the recent-mover adjustment factor is set to 1.0.
---------------------------------------------------------------------------

    \4\ HUD ensures that the recent mover estimate for each non-
metropolitan portion of the state has at least 100 ACS sample 
observations. If any state non-metropolitan recent mover rent is 
based on fewer than 100 observations, the recent mover factor would 
be calculated based on the 1-year recent mover data and 5-year 
standard quality data for the entire state.
    \5\ `The change is considered statistically significant if Z is 
greater than 1.645 where Z is equal to the change between the 
estimate for the 1-year data and the 5-year estimate, over the 
square root of the sum of the squared standard error for the 1-year 
estimate and the squared standard error of the 5-year estimate.
---------------------------------------------------------------------------

    For metropolitan areas, the recent-mover adjustment factor is 
calculated in a similar fashion. HUD selects the smallest geographic 
area which encompasses the metropolitan area in question that has at 
least 100 recent mover observations to use in the calculation of the 
recent-mover adjustment factor. For HUD-defined subareas of OMB defined 
metropolitan areas, this means that the recent-mover adjustment factor 
may be based on the recent-mover data for the subarea, the entire 
metropolitan area, the metropolitan portions of the state, or finally 
the entire state depending on which geographic level has 100 or more 
recent mover observations.\6\ Once the area with 100 or more recent 
mover cases has been determined, HUD calculates a z-score comparing the 
1-year recent-mover two-bedroom gross rent with the 5-year standard-
quality two-bedroom gross rent for the recent-mover area. If the two 
rents are statistically different, HUD sets the recent-mover adjustment 
factor for the FMR area as the percentage change between the two rents 
for the recent-mover area. If the difference in rents is not 
statistically different, the recent-mover adjustment factor for the FMR 
area is set to 1.
---------------------------------------------------------------------------

    \6\ For metropolitan areas that cross state boundaries, and 
where there are not 100 2-bedroom recent mover observations, HUD 
uses the weighted average update factors for the encompassing state 
metropolitan areas. HUD performs the Z-score test for statistical 
difference between the 1-year recent-mover rent and 5-year standard-
quality rent separately for each state metropolitan part prior to 
computing the weighted average update factor.
---------------------------------------------------------------------------

    For FMR areas without 100 recent-mover rents, a recent-mover 
adjustment factor is calculated at the smallest area level that does 
have 100 recent movers. For metropolitan areas, this order is subarea, 
metropolitan area, state metropolitan area, and state. For 
nonmetropolitan areas, the smallest area level is the state 
nonmetropolitan area, followed by the entire state. For an example of 
how the recent-mover adjustment factor is calculated for these areas, 
please review this methodology for Abilene, TX MSA and Baldwin County, 
AL, in the FY 2012 documentation system: http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr12.
    This process produces an ``as of'' 2009 recent mover two-bedroom 
base gross rent for the FMR area.\7\
---------------------------------------------------------------------------

    \7\ The Pacific Islands (Guam, Northern Marianas and American 
Samoa) as well as the U.S. Virgin Islands are not covered by ACS 
data. As part of the 2010 Decennial Census, these areas were covered 
by a long-form survey. The results gathered by this long form survey 
will not be available until 2012. Therefore, HUD uses the national 
change in gross rents, measured between 2008 and 2009 to update last 
year's FMR for these areas. Puerto Rico is covered by the Puerto 
Rico Community Survey within the American Community Survey; however, 
the gross rent data produced by the 2005-2009 ACS are not sufficient 
to adequately house voucher holders in Puerto Rico. This is due to 
the limited ability to eliminate units that do not pass the voucher 
program's housing quality standards. Consequently, HUD is updating 
last year's FMRs for Puerto Rico using the change in rents measured 
from all of Puerto Rico measured between the 2008 and 2009. For 
details behind these calculations, please see HUD's FY 2012 FMR 
documentation system available at: http://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr12.
---------------------------------------------------------------------------

C. Updates From 2009 to 2010

    The ACS data are updated through 2009 using the one-half of the 
change in annual CPI measured between 2008 and 2009. This data are 
further updated through the end of 2010 using the annual change in CPI 
from 2009 to 2010. As in previous years, HUD uses Local CPI data for 
FMR areas with at least 75 percent of their population within Class A 
metropolitan areas covered by local CPI data. HUD uses Census region 
CPI data for FMR areas in Class B and C size metropolitan areas and 
nonmetropolitan areas without local CPI update factors.

D. Trend From 2010 to 2012

    The national 1990 to 2000 average annual rent increase trend of 3 
percent is applied to end-of-2010 rents for 15 months, to derive the 
proposed FY 2012 FMRs with a date of April 2012.
    On March 9, 2011 (76 FR 12985), HUD published a notice requesting 
public comment regarding the manner in which it calculates the trend 
factor used in determining FMR estimates to meet the statutory 
requirement that FMRs be ``trended so the rentals will be current for 
the year to which they apply.'' HUD's notice provided several proposed 
alternatives to the current trend factor and requested comments on the 
alternatives as well as suggestions of other ideas. These comments are 
discussed in further detail in the proposed FY 2012 FMR notice (76 FR 
52058), but, in short, the commenters did not arrive at a consensus 
over how to change the trending methodology. Therefore, HUD will 
continue to consider the suggestions provided in the comments and make 
plans to implement a new methodology with the publication of FY 2013 
Proposed FMRs.

E. Bedroom Rent Adjustments

    HUD calculates the primary FMR estimates for two-bedroom units. 
This is generally the most common size of rental units and, therefore, 
the most reliable to survey and analyze. Formerly, after each Decennial 
Census, HUD calculated rent relationships between two-bedroom units and 
other unit sizes and used them to set FMRs for other units. HUD did 
this 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. HUD did 
the last update of bedroom-rent relationships using 2000 Census data. A 
publicly releasable version of the data used for the derivations of 
rent ratios is

[[Page 60971]]

available at http://www.huduser.org/portal/datasets/fmr/CensusRentData/index.html.
    HUD made adjustments using 2000 Census data to establish rent 
ratios for areas with local bedroom-size intervals above or below what 
are considered 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 that rent 
for more than typical one-bedroom units). HUD established bedroom 
interval ranges based on an analysis of the range of such intervals for 
all areas with large enough samples to permit accurate bedroom ratio 
determinations. These ranges are: efficiency FMRs are constrained to 
fall between 0.65 and 0.83 of the two-bedroom FMR; one-bedroom FMRs 
must be between 0.76 and 0.90 of the two-bedroom FMR; three-bedroom 
FMRs must be between 1.10 and 1.34 of the two-bedroom FMR; and four-
bedroom FMRs must be between 1.14 and 1.63 of the two-bedroom FMR. HUD 
adjusts bedroom rents for a given FMR area if the differentials between 
bedroom-size FMRs were inconsistent with normally observed patterns 
(i.e., efficiency rents are not allowed to be higher than one-bedroom 
rents and four-bedroom rents are not allowed to be lower than three-
bedroom rents).
    HUD further adjusts the rents for three-bedroom and larger units to 
reflect HUD's policy to set higher rents for these units than would 
result from using unadjusted 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.
    For low-population, nonmetropolitan counties with small 2000 Census 
samples of recent-mover rents, HUD uses Census-defined county group 
data to determine rents for each bedroom size. HUD made this adjustment 
to protect against unrealistically high or low FMRs due to insufficient 
sample sizes. The areas covered by this estimation method had less than 
the HUD standard of 200 two-bedroom, Census-tabulated observations.
    The 2010 Decennial Census did not collect the information necessary 
to update unit bedroom rent relationships. HUD intends to use the 2006-
2010 5-year ACS data to update these relationships for the FY 2013 
FMRs. HUD is choosing to wait until next year to ensure something 
closer to a consistent 10 year time period, but more importantly, 
because the 2010 ACS data will be published based on the 2010 Decennial 
Census geographic definitions.

V. Manufactured Home Space Surveys

    The FMR used to establish payment standard amounts for the rental 
of manufactured home spaces in the HCV 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.
    All approved exceptions to these rents that were in effect in FY 
2011 were updated to FY 2012 using the same data used to estimate the 
HCV program FMRs. If the result of this computation was higher than 40 
percent of the new 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.

VI. Public Comments

    As previously stated, HUD is unable to respond to all comments 
received on the proposed FY 2012 FMRs in this notice because of the 
timing of the comment end date; however, these responses will be 
available by the publication date of this notice on HUD's Web site at 
http://www.huduser.org/portal/datasets/fmr.html. HUD was able, however, 
to make a minor methodological change, in response to a comment 
received, that eliminates a negative recent mover adjustment for the 
only area with one, Cape Coral-Fort Myers, FL MSA. HUD will continue to 
review data provided by the comments and publish any revisions to the 
FY 2012 FMRs resulting from data submissions in a forthcoming Federal 
Register notice.

VII. Formalize a Publication Date for Income Limits

    The FY 2012 Income Limits will be published on December 1, 2011. 
While the FY 2012 Income Limits do not benefit from any additional ACS 
data over what was included in the FY 2011 publication, they are 
updated with the FY 2012 FMRs for the purposes of evaluating areas of 
relatively high-or low-income to housing cost relationships and further 
updated with CPI to the end of 2010, trended to the mid-point of FY 
2012 in a manner similar to what was done with the FY 2011 Median 
Family Income estimates and Income Limits. The FY 2013 Median Family 
Income estimates and Income Limits, published December 1, 2012, would 
be the first set of median family income estimates and income limits 
updated with ACS data collected from 2006-2010.

VIII. HUD Rental Housing Survey Guides

    For the supporting data, HUD recommends the use of professionally 
conducted random digit dialing (RDD) telephone surveys to test the 
accuracy of FMRs for areas where there is a sufficient number of 
Section 8 units to justify the survey cost of approximately $35,000. 
Areas with 2,000 or more program units usually meet this cost 
criterion, and areas with fewer units may meet it if actual rents for 
two-bedroom units are significantly different from the FMRs proposed by 
HUD. In addition, HUD has developed a version of the RDD survey 
methodology for smaller, nonmetropolitan PHAs. This methodology is 
designed to be simple enough to be done by the PHA itself, rather than 
by professional survey organizations, at a cost of $5,000 or less.
    PHAs in nonmetropolitan 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 
will 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 counties where FMRs are based on the 
combined rents in the cluster of FMR areas will not have their FMRs 
revised unless the grouped survey results show a revised FMR above the 
combined rent level.
    PHAs that plan to use the RDD survey technique should obtain a copy 
of the appropriate survey guide. Larger PHAs should request HUD's 
survey guide

[[Page 60972]]

entitled ``Random Digit Dialing Surveys; A Guide to Assist Larger 
Public Housing Agencies in Preparing Fair Market Rent Comments.'' 
Smaller PHAs should obtain the guide entitled ``Rental Housing Surveys: 
A Guide to Assist Smaller Public Housing Agencies in Preparing Fair 
Market Rent Comments.'' These guides, in Microsoft Word format, are 
available from HUD USER at HUD's Web site at the following address: 
http://www.huduser.org/datasets/fmr.html.
    Other survey methodologies are acceptable in providing data to 
support comments, if the survey methodology can provide statistically 
reliable, unbiased estimates of the gross rent. Survey samples should 
preferably be randomly drawn from a complete list of rental units for 
the FMR area. If this is not feasible, the selected sample must be 
drawn to be statistically representative of the entire rental housing 
stock of the FMR area. 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 decennial census or 5-year ACS should be used 
as a means of verifying if a sample is representative of the FMR area's 
rental housing stock.
    Most surveys of FMR areas cover only one- and two-bedroom units. If 
the survey is statistically acceptable, HUD will estimate FMRs for 
other bedroom sizes using ratios based on the decennial census. 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 will consider increasing manufactured home space FMRs where 
public comment demonstrates that 40 percent of the two-bedroom FMR is 
not adequate. In order to be accepted as a basis for revising the 
manufactured home space FMRs, comments must include a pad rental survey 
of the mobile home parks in the area, identify the utilities included 
in each park's rental fee, and provide a copy of the applicable public 
housing authority's utility schedule.

IX. Environmental Impact

    This Notice involves the establishment of fair market rent 
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 amended as shown in the Appendix to 
this notice:

    Dated: September 22, 2011.
Erika C. Poethig,
Deputy Assistant Secretary for Policy Development.

Fair Market Rents for the Housing Choice Voucher Program

Schedules B and D--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 core-based statistical areas 
(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 2012 final FMRs incorporates the 
current OMB definitions of metropolitan areas based on the CBSA 
standards as implemented with 2000 Census data, but makes adjustments 
to the definitions to separate subparts of these areas where FMRs or 
median incomes would otherwise change significantly if the new area 
definitions were used without modification. In CBSAs where subareas are 
established, it is HUD's view for programmatic purposes that the 
geographic extent of the housing markets are not yet the same as the 
geographic extent of the CBSAs, but may become so in the future as the 
social and economic integration of the CBSA component areas increases. 
Modifications to metropolitan CBSA definitions are made according to a 
formula as described below.
    Metropolitan area CBSAs (referred to as MSAs) may be modified to 
allow for subarea FMRs within MSAs based on the boundaries of old FMR 
areas (OFAs) within the boundaries of new MSAs. (OFAs are the FMR areas 
defined for the FY 2005 FMRs. Collectively they include 1999-definition 
MSAs/Primary Metropolitan Statistical Areas (PMSAs), metro counties 
deleted from 1999-definition MSAs/PMSAs by HUD for FMR purposes, and 
counties and county parts outside of 1999-definition MSAs/PMSAs 
referred to as nonmetropolitan counties.) Subareas of MSAs are assigned 
their own FMRs when the subarea 2000 Census Base Rent differs by at 
least 5 percent from (i.e., is at most 95 percent or at least 105 
percent of) the MSA 2000 Census Base Rent, or when the 2000 Census 
Median Family Income for the subarea differs by at least 5 percent from 
the MSA 2000 Census Median Family Income. MSA subareas, and the 
remaining portions of MSAs after subareas have been determined, are 
referred to as HMFAs to distinguish these areas from OMB's official 
definition of MSAs.
    The specific counties and New England towns and cities within each 
state in MSAs and HMFAs are listed in Schedule B.
2. Bedroom Size Adjustments
    Schedule B shows the FMRs for zero-bedroom through four-bedroom 
units. The Schedule B addendum shows Small Area FMRs for PHAs operating 
using Small Area FMRs within the Dallas, TX HMFA. 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 (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 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 non-metropolitan county listings.
    d. The New England towns and cities included in a nonmetropolitan 
county are listed immediately following the county name.
BILLING CODE 4617-10-P

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[FR Doc. 2011-25052 Filed 9-29-11; 8:45 am]
BILLING CODE 4617-10-C