Proposed Fair Market Rents for the Housing Choice Voucher Program, Moderate Rehabilitation Single Room Occupancy Program and Other Programs Fiscal Year 2015, 48178-48243 [2014-19390]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 79, Number 158 (Friday, August 15, 2014)]
[Notices]
[Pages 48178-48243]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-19390]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5807-N-01]


Proposed Fair Market Rents for the Housing Choice Voucher 
Program, Moderate Rehabilitation Single Room Occupancy Program and 
Other Programs Fiscal Year 2015

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

ACTION: Notice of Proposed Fiscal Year (FY) 2015 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. FMRs are also used in the calculation of 
maximum award amounts for Continuum of Care grantees. Today's notice 
provides proposed FY 2015 FMRs for all areas that reflect the estimated 
40th and 50th percentile rent levels trended to April 1, 2015. The FY 
2015 FMRs are based on ``5-year'' data collected by the American 
Community Survey (ACS) from 2008 through 2012. These data are updated 
by one-year 2012 ACS data for areas where statistically valid one-year 
ACS data is available. The Consumer Price Index (CPI) rent and utility 
indexes are used to further update the data from 2012 to the end of 
2013. Finally, ACS data on changes national median gross rents from 
2007 to 2012 are used to inflate the 2013 estimates to the 2015 levels. 
HUD continues to use ACS data in different ways according to the 
statistical reliability of rent estimates for areas of different 
population sizes and counts of rental units. The proposed FY 2015 FMRs 
in this notice do not reflect any updates to the methodology used to 
calculate FMRs.
    The proposed FY 2015 FMR areas are based on Office of Management 
and Budget (OMB) metropolitan area definitions as updated through 
December 1, 2009, and include HUD modifications that were first used in 
the determination of FY 2006 FMR areas. The February 28, 2013 OMB Area 
definition update has not been incorporated in this set of proposed 
FMRs due to the timing of the release and the availability of ACS data. 
HUD will work toward evaluating the impact of these new area 
definitions and discuss these findings in the final FY 2015 FMR 
publication, or, if that is not possible, in a subsequent publication 
in January 2015.
    The January 2015 notice will also discuss and solicit comments on 
several topics related to the calculation of FMRs, including the 
implementation of the February 28, 2013 OMB Metropolitan Area 
Definitions and possible measures the Department is considering that 
would reduce the concentration of Section 8 voucher tenants. For 
example, HUD is evaluating alternatives to the current 50th percentile 
FMR program, which was implemented to mitigate excessive geographic 
concentration of voucher tenants. Comments will be requested to 
determine interest in a program that is based on different measures for 
determining how many and which areas would receive special FMRs to 
encourage deconcentration, as well as on alternative FMR-based tools 
for promoting deconcentration such as Small Area FMRs estimated at the 
ZIP code level.

DATES: Comment Due Date: September 15, 2014.

ADDRESSES: Interested persons are invited to submit comments regarding 
the proposed FMRs to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban

[[Page 48179]]

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

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

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

FOR FURTHER INFORMATION CONTACT: For technical information on the 
methodology used to develop FMRs or a listing of all FMRs, please call 
the HUD USER information line at 800-245-2691 or access the information 
on the HUD USER Web site https://www.huduser.org/portal/datasets/fmr.html. FMRs are listed at the 40th or 50th percentile in Schedule B. 
For informational purposes, 40th percentile recent-mover rents for the 
areas with 50th percentile FMRs will be provided in the HUD FY 2015 FMR 
documentation system at https://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15 and 50th percentile rents for all FMR areas 
will be published at https://www.huduser.org/portal/datasets/50per.html 
after publication of final FY 2015 FMRs.
    Questions related to use of FMRs or voucher payment standards 
should be directed to the respective local HUD program staff. Questions 
on how to conduct FMR surveys may be addressed to Marie L. Lihn or 
Peter B. Kahn of the Economic and Market Analysis Division, Office of 
Economic Affairs, Office of Policy Development and Research at HUD 
headquarters [451 7th Street SW., Room 8208, Washington, DC 20410]; 
telephone number 202-402-2409 (this is not a toll-free number), or they 
may be reached at emad-hq@hud.gov. Persons with hearing or speech 
impairments may access HUD numbers through TTY by calling the toll-free 
Federal Relay Service at 800-877-8339.
    Electronic Data Availability. This Federal Register notice will be 
available electronically from the HUD User page at https://www.huduser.org/datasets/fmr.html. Federal Register notices also are 
available electronically from https://www.gpoaccess.gov/fr/, 
the U.S. Government Printing Office Web site. Complete documentation of 
the methodology and data used to compute each area's proposed FY 2015 
FMRs is available at https://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15. Proposed FY 2015 FMRs are available in a 
variety of electronic formats at https://www.huduser.org/datasets/fmr.html. FMRs may be accessed in PDF format as well as in Microsoft 
Excel. Small Area FMRs based on proposed FY 2015 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, except 
where they are used by public housing agencies (PHAs) participating in 
the Small Area FMR demonstration or by other PHAs using them for 
exception rent payment standards.

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 the Department to establish 50th percentile FMRs 
for certain areas.

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:

    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 suitable for occupancy by persons assisted under this section.

    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, analyze the comments, and publish 
final FMRs. (See 24 CFR 888.115.)
    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 48180]]

unless not qualified to be reviewed. 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 
deconcentrate within the last three years.
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    \1\ As defined in 24 CFR 888.113(c), a minimally qualified area 
is an area with at least 100 census tracts 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 continues to be evaluated with 2000 
Decennial Census information. Although the 5-year ACS tract level 
data is available, HUD plans to implement new 50th percentile areas 
in conjunction with the implementation of new OMB area definitions.
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    In FY 2014 there were 19 areas using 50th-percentile FMRs. Of these 
19 areas, 13 areas completed three years of program participation and 
were evaluated. Only four of the 13 areas will continue as 50th-
percentile FMR areas; the nine that do not show measurable 
deconcentration over the three-year period will not continue as 50th-
percentile FMR areas and will not be evaluated for three years. The 
table below lists the nine areas that are not eligible for 50th 
percentile FMRs until 2018.

                      FMR Areas That Failed To Deconcentrate and Year of Next Reevaluation
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Austin-Round Rock-San Marcos, TX MSA.......            2018  Fort Worth-Arlington, TX HUD Metro             2018
                                                              FMR Area.
Houston-Baytown-Sugar Land, TX HUD Metro               2018  Las Vegas-Paradise, NV MSA.........            2018
 FMR Area.
North Port-Bradenton-Sarasota, FL MSA......            2018  Orange County, CA HUD Metro FMR                2018
                                                              Area.
Phoenix-Mesa-Glendale, AZ MSA..............            2018  Sacramento--Arden-Arcade--                     2018
                                                              Roseville, CA HUD Metro FMR Area.
Tucson, AZ MSA.............................            2018
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    An additional six areas that failed to deconcentrate as of 2012 
will once again become 50th percentile areas. In summary, there will be 
16 50th-percentile FMR areas in FY 2015. These areas are indicated by 
an asterisk in Schedule B, where all FMRs are listed by state. The 
following table lists the FMR areas along with the year of their next 
evaluation.

                         FY 2015 50th-Percentile FMR Areas and Year of Next Reevaluation
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Albuquerque, NM MSA........................            2018  Baltimore-Towson, MD HUD Metro FMR             2016
                                                              Area.
Chicago-Joliet-Naperville, IL HUD Metro FMR            2018  Denver-Aurora-Broomfield, CO MSA...            2018
 Area.
Fort Lauderdale, FL HUD Metro FMR Area.....            2016  Hartford-West Hartford-East                    2018
                                                              Hartford, CT HUD Metro FMR Area.
Honolulu, HI MSA...........................            2018  Kansas City, MO-KS HUD Metro FMR               2018
                                                              Area.
Milwaukee-Waukesha-West Allis, WI MSA......            2018  New Haven-Meriden, CT HUD Metro FMR            2016
                                                              Area.
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD            2016  Richmond, VA HUD Metro FMR Area....            2016
 MSA.
Riverside-San Bernardino-Ontario, CA MSA...            2018  Tacoma, WA HUD Metro FMR Area......            2018
Virginia Beach-Norfolk-Newport News, VA-NC             2018  West Palm Beach-Boca Raton, FL HUD             2016
 MSA.                                                         Metro FMR Area.
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III. FMR Methodology

    This section provides a brief overview of how the FY 2015 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 
https://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15.
    The proposed FY 2015 FMRs are based on OMB metropolitan area 
definitions and standards that were first used in the FY 2006 FMRs. 
OMB's changes to the area definitions through December 2009 are 
incorporated as are non-metropolitan county geography changes published 
by the Census Bureau through December 2012. The updated metropolitan 
area definitions published by OMB on February 28, 2013 have not been 
incorporated because the Census Bureau did not incorporate these 
definitions into the 2012 ACS tabulations; therefore, the FY 2015 area 
definitions are the same as those used in FY 2014. HUD anticipates that 
the new OMB area definitions will be incorporated into the FY 2016 
proposed FMRs.

A. Base Year Rents

    The U.S. Census Bureau released standard tabulations of 5-year ACS 
data collected between 2008 through 2012 in December of 2013. For FY 
2015 FMRs, HUD used the 2008-2012 5-year ACS data to update the base 
rents. HUD has updated base rents each year based on new 5-year data 
since FY 2012, for which HUD used 2005-2009 ACS data. HUD is also 
updating base rents for Puerto Rico FMRs using the 2008-2012 Puerto 
Rico Community Survey (PRCS); HUD first updated the Puerto Rico base 
rents in FY 2014 based on 2007-2011 PRCS data collected through the ACS 
program.
    HUD historically based FMRs on gross rents for recent movers (those 
who have moved into their current residence in the last 24 months). 
However, due to the way Census constructs the 5-year ACS data, HUD 
developed a new methodology for calculating recent-mover FMRs in FY 
2012. As in FY 2012, HUD assigns all areas a base rent which is the 
estimated two-bedroom standard quality 5-year gross rent from the 
ACS.\2\ Because HUD's regulations mandate that FMRs must be published 
as recent mover gross rents, HUD continues to apply a recent mover 
factor to the standard quality base rents assigned from the 5-year ACS 
data. Calculation of the recent mover factor is described below.
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    \2\ 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 2008-2012 5-year ACS, 
HUD uses the two-bedroom state non-metro area rent.
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B. Recent Mover Factor

    Following the assignment of the standard quality two-bedroom rent 
described above, HUD applies a recent mover factor to these rents. The 
calculation of the recent mover factor for FY 2015 is similar to the

[[Page 48181]]

methodology HUD used in FY 2014, with the only difference being the use 
of updated ACS data. The following describes the process for 
determining the appropriate recent mover factor.
    In general, HUD uses the 1-year ACS-based two-bedroom recent mover 
gross rent estimate from the smallest geographic area encompassing the 
FMR area for which the estimate is statistically reliable to calculate 
the recent mover factor.\3\ HUD calculates some areas' recent mover 
factors using data collected just for the FMR area. However, HUD bases 
other areas' recent mover factors on larger geographic areas if this is 
necessary to obtain statistically reliable estimates. For metropolitan 
areas that are sub-areas of larger metropolitan areas, the order is FMR 
area, metropolitan area, aggregated metropolitan parts of the state, 
and state. Metropolitan areas that are not divided follow a similar 
path from FMR area, to aggregated metropolitan parts of the state, to 
state. In nonmetropolitan areas HUD bases the recent mover factor on 
the FMR area, the aggregated non-metropolitan parts of the state, or if 
that is not available, on the basis of the whole state. HUD calculates 
the recent mover factor as the percentage change between the 5-year 
2008-2012 standard quality two-bedroom gross rent and the 1-year 2012 
recent mover two-bedroom gross rent for the recent mover factor area. 
HUD does not allow recent mover factors to lower the standard quality 
base rent; therefore, if the 5-year standard quality rent is larger 
than the comparable 1-year recent mover rent, the recent mover factor 
is set to 1. The process for calculating each area's recent mover 
factor is detailed in the FY 2015 Proposed FMR documentation system 
available at: https://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15. Applying the recent mover factor to the 
standard quality base rent produces an ``as of'' 2012 recent mover two-
bedroom base gross rent for the FMR area.\4\
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    \3\ For the purpose of the recent mover factor calculation, 
statistically reliable is where the recent mover gross rent has a 
margin of error that is less than the estimate itself.
    \4\ The ACS is not conducted in the Pacific Islands (Guam, 
Northern Marianas and American Samoa) or the US Virgin Islands. As 
part of the 2010 Decennial Census, the Census Bureau conducted 
``long-form'' sample surveys for these areas. The results gathered 
by this long form survey were expected to be available late in 2012; 
however, these data have not yet become available. Therefore, HUD 
uses the national change in gross rents, measured between 2011 and 
2012 to update last year's FMRs for these areas.
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C. Other Rent Survey Data

    HUD does not use the ACS as the base rent or recent mover factor 
for 13 areas where the FY 2015 FMR was adjusted based on survey data 
collected in late 2012, or 2013 by the PHA (for Hood River, OR, 
Oakland, CA, Santa Barbara, CA, and Stamford, CT) or by HUD (for 
Burlington, VT, Cheyenne, WY, Danbury, CT, Flagstaff, AZ, Mountrail 
County, ND, Odessa, TX, Rochester, MN, Ward County, ND, and Williams 
County, ND). HUD has no funds to conduct surveys of FMR areas, and so 
all future surveys must be paid for by the PHAs.

D. Updates From 2012 to 2013

    HUD updates the ACS-based ``as of'' 2012 rent through the end of 
2013 using the annual change in CPI from 2012 to 2013. As in previous 
years, HUD uses local CPI data coupled with Consumer Expenditure Survey 
(CEX) 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. 
Additionally, HUD is using CPI data collected locally in Puerto Rico as 
the basis for CPI adjustments from 2012 to 2013 for all Puerto Rico FMR 
areas. Following the application of the appropriate CPI update factor, 
HUD converts the ``as of'' 2013 CPI adjusted rents to ``as of'' 
December 2013 rents by multiplying each rent by the national December 
2013 CPI divided by the national annual 2013 CPI value.

E. Trend From 2013 to 2015

    As in FY 2014, HUD continues to calculate the trend factor as the 
annualized change in median gross rents as measured across the most 
recent 5 years of available 1-year ACS data. The national median gross 
rent in 2007 was $789 and $884 in 2012. The overall change between 2007 
and 2012 is 12.04 percent and the annualized change is 2.30 percent. 
Over a 15-month time period, the effective trend factor is 2.883 
percent. HUD applies this trend factor to the ``as of'' December 2013 
rents to produce FMRs that correspond to the middle of the 2015 fiscal 
year.

F. Puerto Rico Utility Adjustments

    The gross rent data from the 2008 to 2012 Puerto Rico Community 
Survey (PRCS) does not include the utility rate increases from 
Commonwealth-owned utility companies from last year that were submitted 
as part of the comments from Puerto Rico housing agencies. HUD included 
additional utility values in the final FY 2014 FMRs to account for 
these changes in Puerto Rico and continues these adjustments in the 
proposed FY 2015 FMRs for all areas in Puerto Rico.
    The table below shows the fixed amount that is added to the Puerto 
Rico FMRs by bedroom count.

                                   Additions to Puerto Rico Proposed FMRS To Account for Recent Utility Rate Increases
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                                                                        0-Bedroom        1-Bedroom        2-Bedroom        3-Bedroom        4-Bedroom
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Utility Adjustment.................................................             $20              $25              $35              $40              $50
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G. Bedroom Rent Adjustments

    HUD calculates the primary FMR estimates for two-bedroom units. 
This is generally the most common sized rental unit 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 bedroom counts 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 unit bedroom 
counts than it is to develop independent FMR estimates for each unit 
bedroom count. When calculating FY 2013 FMRs, HUD updated the bedroom 
ratio adjustment factors using 2006-2010 5-year ACS data using similar 
methodology to what was implemented when calculating bedroom ratios 
using 2000 Census data. The bedroom ratios HUD used in the calculation 
of FY 2015 FMRs remain the 2006-2010 based ratios applied to the two-
bedroom FMR computed from the 2012 ACS data.
    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

[[Page 48182]]

constrained to fall between 0.59 and 0.81 of the two-bedroom FMR; one-
bedroom FMRs must be between 0.74 and 0.84 of the two-bedroom FMR; 
three-bedroom FMRs must be between 1.15 and 1.36 of the two-bedroom 
FMR; and four-bedroom FMRs must be between 1.24 and 1.64 of the two-
bedroom FMR. (The maximums for the three-bedroom and four-bedroom FMRs 
are irrespective of the adjustments discussed in the next paragraph.) 
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). The bedroom ratios for Puerto Rico follow these 
constraints.
    HUD further adjusts the rents for three-bedroom and larger units to 
reflect HUD's policy to set higher rents for these units. This 
adjustment is intended to increase the likelihood that the largest 
families, who have the most difficulty in leasing units, will be 
successful in finding eligible program units. The adjustment adds 8.7 
percent to the unadjusted three-bedroom FMR estimates and adds 7.7 
percent to the unadjusted four-bedroom FMR estimates. 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 or 
statistically insignificant 2006-2010 5-year ACS standard quality 
rents, HUD used state non-metropolitan data to determine bedroom ratios 
for each unit bedroom count. HUD made this adjustment to protect 
against unrealistically high or low FMRs due to insufficient sample 
sizes.

IV. 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 
2014 were updated to FY 2015 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.

V. Small Area Fair Market Rents

    Public housing authorities in the Dallas, TX HMFA, along with the 
Housing Authority of the County of Cook (IL), the City of Long Beach 
(CA) Housing Authority, the Chattanooga, TN Housing Authority, the Town 
of Mamaroneck (NY) Housing Authority, and the Laredo, TX Housing 
Authority continue to be the only PHAs managing their voucher programs 
using Small Area Fair Market Rents (SAFMRs). These FMRs are listed in 
the Schedule B addendum.
    SAFMRs are calculated using a rent ratio determined by dividing the 
median gross rent across all bedrooms for the small area (a ZIP code) 
by the similar median gross rent for the metropolitan area of the ZIP 
code. This rent ratio is multiplied by the current two-bedroom rent for 
the entire metropolitan area containing the small area to generate the 
current year two-bedroom rent for the small area. In small areas where 
the median gross rent is not statistically reliable, HUD substitutes 
the median gross rent for the county containing the ZIP code in the 
numerator of the rent ratio calculation. For proposed FY 2015 SAFMRs, 
HUD continues to use the rent ratios developed in conjunction with the 
calculation of FY 2013 FMRs based on 2006-2010 5-year ACS data.\5\ In 
the following section, HUD explains its use of the 2006-2010 5-year ACS 
data and specifically requests public comment on the methodology used 
to calculate the Small Area FMR rent ratios.
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    \5\ HUD has provided numerous detailed accounts of the 
calculation methodology used for Small Area Fair Market Rents. 
Please see our Federal Register notice of April 20, 2011 (76 FR 
22125) for more information regarding the calculation methodology. 
Also, HUD's Proposed FY 2015 FMR documentation system available at 
(https://www.huduser.org/portal/datasets/fmr/fmrs/docsys.html&data=fmr15) contains detailed calculations for each ZIP 
code area in participating jurisdictions.
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VI. Request for Public Comments

    HUD seeks public comments on the methodology used to calculate FY 
2015 Proposed FMRs including Small Area FMRS, and the FMR levels for 
specific areas. Due to its current funding levels, HUD no longer has 
sufficient resources to conduct local surveys of rents to address 
comments filed regarding the FMR levels for specific areas. Commenters 
submitting comments on FMR levels must include sufficient information 
(including local data and a full description of the rental housing 
survey methodology used or a description of the methodology intended to 
be used to collect the necessary data) to justify any proposed changes. 
Questions on how to conduct FMR surveys may be addressed to Marie L. 
Lihn or Peter B. Kahn of the Economic and Market Analysis Division, 
Office of Economic Affairs, Office of Policy Development and Research 
at HUD headquarters [451 7th Street SW., Room 8208, Washington, DC 
20410]; telephone number 202-402-2409, or they may be reached at emad-hq@hud.gov.
    For small metropolitan areas without one-year ACS data and 
nonmetropolitan counties, HUD has developed a methodology using mail 
surveys that is discussed on the bottom of the FMR Web page: https://www.huduser.org/portal/datasets/fmr.html. This methodology allows for 
the collection of as few as 100 one-bedroom, two-bedroom and three-
bedroom recent mover (tenants that moved in last 24 months) units.
    While HUD has not developed a specific methodology for mail surveys 
in areas with 1-year ACS data, HUD would apply the standard established 
for Random-Digit Dialing (RDD) telephone rent surveys. The statistical 
difference of these survey results will be compared with the current 
FMR which means that the survey confidence interval must be outside the 
FMR. The survey should collect results based on 200 one-bedroom and 
two-bedroom eligible recent mover units to provide a small enough 
confidence interval for significant results in large market mail 
surveys. Areas with statistically reliable 1-year ACS data are not 
considered to be good candidates for local surveys due to the size and 
completeness of the ACS process.
    Other survey methodologies are acceptable in providing data to 
support comments if the survey methodology can provide statistically 
reliable, unbiased estimates of the gross rent of the entire FMR area. 
In general, recommendations for FMR changes and supporting data must 
reflect the rent levels that exist within the entire FMR area and 
should be statistically reliable.
    PHAs in nonmetropolitan areas may, in certain circumstances, 
conduct surveys of groups of counties. HUD must approve all county-
grouped

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surveys in advance. PHAs are cautioned that the resulting FMRs may not 
be identical for the counties surveyed; each individual FMR area will 
have a separate FMR based on the relationship of rents in that area to 
the combined rents in the cluster of FMR areas. In addition, PHAs are 
advised that 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 statistically different from 
the combined rent level.
    Survey samples should preferably be randomly drawn from a complete 
list of rental units for the FMR area. If this is not feasible, the 
selected sample must be drawn to be statistically representative of the 
entire rental housing stock of the FMR area. Surveys must include units 
at all rent levels and be representative by structure type (including 
single-family, duplex, and other small rental properties), age of 
housing unit, and geographic location. The 2008-2012 5-year ACS data 
should be used as a means of verifying if a sample is representative of 
the FMR area's rental housing stock.
    A PHA or contractor that cannot obtain the recommended number of 
sample responses after reasonable efforts should consult with HUD 
before abandoning its survey; in such situations, HUD may find it 
appropriate to relax normal sample size requirements.
    HUD 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.
    As stated earlier in this notice, HUD is required to use the most 
recent data available when calculating FMRs. Therefore, in order to re-
evaluate an area's FMR, HUD requires more current rental market data 
than the 2012 ACS. HUD encourages a PHA or other interested party that 
believes the FMR in their area is incorrect to file a comment even if 
they do not have the resources to provide market-wide rental data. In 
these instances, HUD will use the comments, should survey funding be 
restored, when determining the areas HUD will select for HUD-funded 
local area rent surveys.
    For Small Area FMRs, HUD has been criticized for continuing to use 
2010 5-year ACS data as the basis for the Small Area FMR rent ratios, 
instead of updating these each year. HUD kept the rent ratios based on 
2006-2010 5-year ACS data in order to provide stability in the Small 
Area FMRs and proposed only updating these ratios with the 2011-2015 
ACS 5-year data, when all the underlying survey data would have been 
replaced. However, HUD's current experience with 5-year data for small 
areas reveals that this may create a greater disruption to Small Area 
FMRs than if HUD adjusted the ratios annually by applying a smoothing 
technique such as averaging of several years of 5-year ACS data. By 
implementing a rolling-average Small Area FMR rent ratio calculation, 
the Department believes more current data could be used without 
introducing excessive year-to-year variability in Small Area FMR rent 
ratios due to sampling variance. HUD anticipates implementing this 
change to the Small Area FMR rent ratio calculation with the 
publication of FY 2016 Proposed FMRs unless further analysis or public 
comment indicate a strong reason not to.

VII. 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 proposed to be amended as shown in the 
Appendix to this notice:

    Dated: August 11, 2014.
Katherine M. O'Regan,
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--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 the 
Office of Management and Budget (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 2015 proposed FMRs incorporates the OMB 
definitions of metropolitan areas based on the CBSA standards as 
implemented with 2000 Census data updated through December 1, 2009, 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 ``formerly 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 HUD Metropolitan FMR Areas (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. Unit Bedroom Count Adjustments
    Schedule B shows the FMRs for zero-bedroom through four-bedroom 
units. The Schedule B addendum shows Small Area FMRs for all PHAs 
operating using

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Small Area FMRs (please see section V of this notice for a list of 
participating PHAs). The FMRs for unit sizes larger than four bedrooms 
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.

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  Schedule D--FY 2015 Exception Fair Market Rents for Manufactured Home
         Spaces in the Section 8 Housing Choice Voucher Program
------------------------------------------------------------------------
             State                      Area name           Space rent
------------------------------------------------------------------------
California.....................  Los Angeles-Long Beach,            $694
                                  CA HUD Metro FMR Area.
                                 Orange County, CA HUD               842
                                  Metro FMR Area.
                                 *Riverside-San                      549
                                  Bernardino-Ontario, CA
                                  MSA.
                                 San Diego-Carlsbad-San              839
                                  Marcos, CA MSA.
                                 Santa Rosa-Petaluma, CA             773
                                  MSA.
                                 Vallejo-Fairfield, CA               622
                                  MSA.
Colorado.......................  Boulder, CO MSA........             512
Maryland.......................  St. Mary's County......             518
Oregon.........................  Bend, OR MSA...........             361
                                 Salem, OR MSA..........             523
Pennsylvania...................  Adams County...........             579
Washington.....................  Olympia, WA MSA........             628
                                 Seattle-Bellevue, WA                693
                                  HUD Metro FMR Area.
West Virginia..................  Logan County...........             469
                                 McDowell County........             469
                                 Mercer County..........             469
                                 Mingo County...........             469
                                 Wyoming County.........             469
------------------------------------------------------------------------
* 50th percentile FMR areas.

[FR Doc. 2014-19390 Filed 8-14-14; 8:45 am]
BILLING CODE 4210-67-P