Proposed Changes to the Methodology Used for Estimating Fair Market Rents, 24377-24381 [2017-10907]

Download as PDF 24377 Federal Register / Vol. 82, No. 101 / Friday, May 26, 2017 / Notices Waukesha ... Village of Sussex (16–05– 6562P). The Honorable Gregory L. Goetz, President, Village Board, N61W24222 Oak Court, Sussex, WI 53089. [FR Doc. 2017–10179 Filed 5–25–17; 8:45 am] BILLING CODE 9110–12–P DEPARTMENT OF HOMELAND SECURITY Immigration and Customs Enforcement Bureau Agency Information Collection Activities: Extension, Without Change, of an Existing Information Collection; Comment Request U.S. Immigration and Customs Enforcement, Department of Homeland Security. AGENCY: 60-Day notice of information collection for review; Form No. I–333, Obligor Change of Address; OMB Control No. 1653–0042. ACTION: The Department of Homeland Security, U.S. Immigration and Customs Enforcement (USICE), is submitting the following information collection request for review and clearance in accordance with the Paperwork Reduction Act of 1995. The information collection is published in the Federal Register to obtain comments from the public and affected agencies. Comments are encouraged and will be accepted for sixty days until July 25, 2017. Written comments and suggestions regarding items contained in this notice and especially with regard to the estimated public burden and associated response time should be directed to the Department of Homeland Security (DHS), Scott Elmore, Forms Management Office, U.S. Immigration and Customs Enforcement, 801 I Street NW., Mailstop 5800, Washington, DC 20536–5800. Written comments and suggestions from the public and affected agencies concerning the proposed collection of information should address one or more of the following four points: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; VerDate Sep<11>2014 19:14 May 25, 2017 Jkt 241001 Village Hall, N64W23760 Main Street, Sussex, WI 53089. http://www.msc.fema.gov/ lomc. (3) Enhance the quality, utility, and clarity of the information to be collected; and (4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses. Overview of This Information Collection Dated: May 23, 2017. Scott Elmore, PRA Clearance Officer, Office of the Chief Information Officer, U.S. Immigration and Customs Enforcement, Department of Homeland Security. [FR Doc. 2017–10852 Filed 5–25–17; 8:45 am] PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 550490 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR–6021–N–01] Proposed Changes to the Methodology Used for Estimating Fair Market Rents Office of the Assistant Secretary for Policy Development and Research, HUD. ACTION: Notice of Proposed Material Changes for Estimation of Fair Market Rents (FMRs). AGENCY: Section 8(c)(1) of the United States Housing Act of 1937 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 for rental units in both the HOME Investment Partnerships program and the Emergency Solutions Grants program. HUD also uses FMRs in the calculation of maximum award amounts for Continuum of Care grantees and in the calculation of flat rents for Public Housing units. In furtherance of that effort, HUD proposes several methodological changes in this notice and seeks public comment on the proposed changes. DATES: Comment Due Date: June 26, 2017. SUMMARY: (1) Type of Information Collection: Extension, without change, of a currently approved information collection. (2) Title of the Form/Collection: Obligor Change of Address. (3) Agency form number, if any, and the applicable component of the Department of Homeland Security sponsoring the collection: Form I–133; U.S. Immigration and Customs Enforcement. (4) Affected public who will be asked or required to respond, as well as a brief abstract: Primary: Individual or Households, Business or other nonprofit. The data collected on this form is used by ICE to ensure accuracy in correspondence between ICE and the obligor. The form serves the purpose of standardizing obligor notification of any changes in their address, and will facilitate communication with the obligor. (5) An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond: 12,000 responses at 15 minutes (.25 hours) per response. (6) An estimate of the total public burden (in hours) associated with the collection: 3,000 annual burden hours. BILLING CODE 9111–28–P June 23, 2017 .... HUD invites interested persons to submit comments regarding the proposed changes to the calculation of the FMRs to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street SW., Room 10276, Washington, DC 20410–0001. Communications must refer to the above docket number and title and should contain the information specified in the ‘‘Request for Comments’’ 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 ADDRESSES: E:\FR\FM\26MYN1.SGM 26MYN1 24378 Federal Register / Vol. 82, No. 101 / Friday, May 26, 2017 / Notices 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 http://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 http://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 http://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Questions on this notice 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, 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@ VerDate Sep<11>2014 19:14 May 25, 2017 Jkt 241001 hud.gov. Persons with hearing or speech impairments may access HUD numbers through TTY by calling the Federal Relay Service at 800–877–8339 (tollfree). 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 (toll-free) or access the information on the HUD USER Web site https://www.huduser.gov/portal/ datasets/fmr.html. Electronic Data Availability. This Federal Register notice will be available electronically from the HUD User page at https://www.huduser.gov/portal/ datasets/fmr.html. Federal Register notices also are available electronically from https://www.federalregister.gov/, the U.S. Government Printing Office Web site. Complete documentation of the impact of these methodology changes and calculation of hypothetical FY 2017 FMRs 1 with these changes are available at https://www.huduser.gov/portal/ datasets/fmr.html. Small Area FMRs for all metropolitan FMR areas incorporating these material changes in methodology have also been calculated and are available at: https:// www.huduser.gov/portal/datasets/fmr/ smallarea/index.html. Changes to FMR calculations prescribed in the Small Area FMR rule (81 FR 80567) are not incorporated into the calculation of hypothetical FY 2017 FMRs. SUPPLEMENTARY INFORMATION: I. Background Section 8 of the United States Housing Act of 1937 (USHA) (42 U.S.C. 1437f) authorizes housing assistance to aid lower-income families in renting safe and decent housing. Housing assistance payments are limited by Fair Market Rents (FMRs) established by HUD for different geographic areas. In the Housing Choice Voucher (HCV) program, the FMR is the basis for determining the ‘‘payment standard amount’’ used to calculate the maximum monthly subsidy for an assisted family. See 24 CFR 982.503. HUD also uses the FMRs to determine initial renewal rents for some expiring project-based Section 8 contracts, initial rents for housing assistance payment contracts in the Moderate Rehabilitation Single Room Occupancy program, rent ceilings for rental units in both the HOME Investment Partnerships program and the Emergency Solution Grants 1 HUD will provide a set of FY 2017 FMRs calculated with all the methodological changes proposed in this notice for the public to review. The FMRs with all the proposed changes will be referred to as FY 2017 hypothetical FMRs. PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 program, calculation of maximum award amounts for Continuum of Care grantees, and calculation of flat rents in Public Housing units. In general, the FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utility costs) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities and is set at the 40th percentile of the distribution of gross rents for recent movers. HUD’s FMR calculations represent HUD’s best effort to estimate the 40th percentile gross rents paid by recent movers into standard quality units in each FMR area. In recent years, commenters have expressed a number of concerns about FMRs. Some have pointed out that FMRs are a primary operating parameter in the HCV program and that extreme year-to-year fluctuations in FMRs can cause difficulties in program operations. Additionally, concerns have been raised that the FMRs are either not timely enough or not based on enough local information. HUD is proposing several changes to the manner in which HUD calculates FMRs in order to improve the FMR estimates and to address the concerns of commenters noted at the beginning of this paragraph. II. Procedures for Developing 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)(B) as amended by the Housing Opportunities Through Modernization Act of 2016 (HOTMA) (Pub. L. 114–201, approved July 29, 2016), requires that HUD publish for comment in the Federal Register a notice of proposed material changes in the methodology for estimating FMRs and a notice containing HUD’s final decisions regarding such proposed substantial methodological changes and responses to public comments. On August 26, 2016, HUD announced the publication of the FY 2017 FMRs, requested comments on the FY 2017 FMRs, and requested public comment on what should be considered ‘‘material changes’’ in FMR estimation methods for the purpose of triggering public notice and comment under HOTMA (81 FR 58952). Following a review of public comment on what should be considered ‘‘material changes’’, HUD determined that initially any change in FMR calculation methods should be subject to public comment. HUD, thus, responded to the comments in a notice published March 30, 2017, stating that HUD would not take a position on what FMR changes would be considered material and that HUD would initially E:\FR\FM\26MYN1.SGM 26MYN1 Federal Register / Vol. 82, No. 101 / Friday, May 26, 2017 / Notices request comment on all FMR method changes (82 FR 15711). While HUD recognizes that year-to-year fluctuations in FMRs may cause operational difficulties in program operations, HUD seeks to improve the FMR calculation methods, using as much local information as possible while trying to preserve stability in the estimates. In an effort to address these concerns and recognizing that addressing one issue may impact another issue, HUD proposes several methodological changes and requests public comments on those changes through this notice, in compliance with HOTMA. III. FMR Methodology Changes This section provides a brief overview of how HUD computed the FY 2017 FMRs and three proposed changes to this methodology. To calculate the FY 2017 FMRs, HUD assigned each area a two-bedroom standard quality base rent from the 2010–2014 5-year American Community Survey (ACS) tabulations. Each base rent was updated with a recent mover adjustment factor calculated from the 1year 2014 ACS data. The 2014 ACS recent mover data is adjusted to be ‘‘as of’’ FY 2017 using local or regional Consumer Price Index (CPI)-measured changes in gross rents measured between 2014 and 2015 and a nationally forecasted trend factor measuring the expected growth in gross rents from 2015 to FY 2017. For complete information on how HUD determines FMR areas, and on how HUD derives each area’s FY 2017 FMR, see the online documentation at https:// www.huduser.gov/portal/datasets/ fmr.html#2017_query. The following is a summary of the two general changes to the calculation methods HUD is proposing to incorporate into the calculation of FY 2018 FMRs and a third change specific to the calculation of Small Area FMRs. (1) The first method change is in the manner in which HUD selects American Community Survey (ACS) estimates for use in the calculation of FMRs. Currently, HUD uses an ACS estimate if the error of the estimate is less than half the size of the estimate itself. HUD is proposing to require that each ACS estimate used in the calculation of FMRs be based on at least one hundred (100) survey responses. In other words, this notice proposes to couple the error ratio criterion with an additional review of the number of survey observations supporting the ACS estimate. If the survey data does not meet both criteria, HUD will use an average of the three most recent years of data. VerDate Sep<11>2014 19:14 May 25, 2017 Jkt 241001 (2) The second method change focuses on the way that HUD calculates the ‘‘recent mover factor.’’ Currently, HUD calculates the ‘‘recent mover factor’’ based on a geographic area that is sometimes larger than an FMR area when the two-bedroom recent mover rents are not statistically reliable. HUD is proposing the use of ‘‘all-bedroom’’ recent mover rents as the basis for the recent mover factor when the twobedroom recent mover rents are not statistically reliable (i.e., 100 or more observations and a margin of error that is smaller than half of the estimate itself) before moving to a larger encompassing geography for the recent mover factor. (3) Finally, HUD is proposing to use the gross rent estimates calculated by ZIP Code Tabulation Areas (ZCTAs), where statistically reliable, to estimate Small Area FMRs (SAFMRs) directly rather than the ‘‘ratio’’ method HUD used in FY 2017 and earlier SAFMR estimates. 1. FY 2018 FMR Proposed Changes A. Base Year Rent Changes Since FY 2012, HUD has used the 5year ACS data to determine base rents for most FMR areas. HUD used 2010– 2014 ACS data, released in December 2015, in the FY 2017 FMR calculations. HUD evaluates the statistical validity of the ACS data before using the information in the calculation of FMRs. HUD proposes to update these statistical reliability criteria. Previously, HUD used ACS estimates for two-bedroom unit rents within the FMR area where the margin of error of the estimate was less than half the size of the estimate itself (i.e., a margin of error of less than 50 percent). HUD now proposes to couple this ‘‘margin of error’’ test with an additional test based on the number of survey observations supporting the estimate. The Census Bureau does not provide HUD with an exact count of the number of observations supporting the ACS estimate; rather, the Census Bureau provides HUD with categories of the number of survey responses underlying the estimate, including whether the estimate is based on more than 100 observations. Using these categories, HUD proposes that ACS rent estimates must be based on at least 100 observations in order to be used as base rents. For areas in which the 5-year ACS data for two-bedroom, standard quality gross rents do not pass the statistical reliability tests (i.e., have a margin of error greater than 50 percent or fewer than 100 observations), HUD will use an average of the base rents over the three PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 24379 most recent years (provided that there is data available for at least two of these years),2 or if such data is not available, using the two-bedroom rent data within the next largest geographic area, which for a non-metropolitan area would be the state non-metro area rent data. B. Recent Mover Factor Changes HUD is proposing changes to the calculation of the recent mover factor that include a change to the statistical reliability assessment of ACS recent mover data (consistent with the change for base rents) and a change in the data used when the number of ‘‘twobedroom’’ observations within the FMR area is insufficient. The following describes the current process for calculating the recent mover factor, and the proposed revisions. HUD historically based FMRs on gross rent data for recent movers (those who have moved into their current residence in the last 24 months). However, due to the way in which the Census Bureau constructs the 5-year ACS data, HUD developed a new methodology for using recent mover data to calculate FMRs in FY 2012. As of FY 2012, HUD assigns all areas a base rent, which is the twobedroom, standard quality 5-year ACS gross rent estimate, and then applies a recent mover factor in order to calculate recent mover gross rents and publish them in accordance with 24 CFR 888.113. HUD calculates the recent mover factor as the ratio of the 1-year recent mover gross rent to the 5-year standard quality gross rent for the recent mover factor area. HUD does not allow recent mover factors to reduce 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. Applying the recent mover factor to the standard quality base rent produces a recent mover two-bedroom gross rent for the FMR area that is ‘‘as of’’ the most recent ACS year. In general, HUD has used 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 2 Using FY 2017 as an example, the three years of ACS data in question are 2012, 2013 and 2014. The 2012 data are adjusted to be denominated in 2014 dollars using the growth in CPI-based gross rents measured between 2012 and 2014. Similarly, the 2013 gross rent data is adjusted to 2014 denominated dollars using the growth in CPI-based gross rents measured between 2013 and 2014. 3 HUD currently assesses recent mover estimates to be statistically reliable if the margin of error of E:\FR\FM\26MYN1.SGM Continued 26MYN1 24380 Federal Register / Vol. 82, No. 101 / Friday, May 26, 2017 / Notices some areas’ recent mover factors using data collected solely within the FMR area. However, HUD currently bases other areas’ recent mover factors on larger geographic areas if this is necessary to obtain statistically reliable estimates. When data from a larger geographic unit is required, data from progressively larger areas is considered until a statistically reliable result is obtained. The order of consideration depends on the type of area for which the recent mover factor is being calculated. For metropolitan FMR areas that are subareas of larger metropolitan areas, the order is the FMR area, the metropolitan area, the aggregated metropolitan parts of the state, and the entire state. Metropolitan areas that are not divided follow a similar progression from FMR area data, to data from the aggregated metropolitan parts of the state, to state-level data. In nonmetropolitan areas, HUD bases the recent mover factor on data from within the FMR area, or from the aggregated non-metropolitan parts of the state, or if that is not available, from the whole state. HUD proposes to modify the test of statistical reliability for ACS recent mover data in the same manner as the proposed change discussed under base rents. In addition, when an FMR area does not have statistically reliable twobedroom data, HUD proposes that before using data from a larger geographic area to calculate the recent mover factor, HUD would first check to see if the data aggregated across ‘‘all-bedroom’’ count units is statistically reliable for the FMR area. If so, HUD will use the ‘‘allbedroom’’ data to calculate the recent mover factor instead of moving to the next larger geography. Incorporating ‘‘all-bedroom’’ rents into the recent mover factor calculation when statistically reliable two-bedroom data is not available preserves the use of local information to the greatest extent possible. However, where statistically reliable ‘‘all-bedroom’’ data is not available, HUD will continue to use data from the larger geographical area(s), as described above. bedrooms for the Small Area ZCTAs by the similar median gross rent for the parent metropolitan area of the ZIP code. In order to maintain stability in the rent ratio, HUD averages the three most current rent ratios and multiplies this averaged rent ratio by the most recent two-bedroom FMR for the parent metropolitan area. HUD is proposing updates to the calculation of Small Area FMRs that are consistent with the other proposed methodology changes in this Notice. 2. Small Area Fair Market Rents Methodology Changes Currently, HUD calculates Small Area FMRs 4 using a rent ratio determined by dividing the median gross rent across all A. Alternative to the Rent Ratio Method In order to use more local data, HUD is proposing to calculate Small Area FMRs directly from the standard quality gross rents provided to HUD by the Census Bureau for ZCTAs, when such data is statistically reliable, instead of using the current rent ratio calculation. For each ZCTA with statistically reliable gross rent estimates, using the expanded test of statistical reliability proposed elsewhere in this notice (i.e., estimates with margins of error ratios below 50 percent and based on at least 100 observations), HUD will calculate a twobedroom equivalent 40th percentile gross rent using either one-, two-, or three-bedroom gross rent data. The order preference for using the gross rent distribution data would be: Twobedroom gross rents, one-bedroom gross rents, and three-bedroom gross rents. If either the one-bedroom or threebedroom gross rent data is used because the two-bedroom gross rent data is not statistically reliable, the one-bedroom or three-bedroom 40th percentile gross rent will be converted to a two-bedroom equivalent rent using the bedroom ratios for the ZCTA’s parent metropolitan area. In order to add increased stability to these Small Area FMR estimates, HUD will average the latest three years of gross rent estimates.5 For ZCTAs without usable gross rent data, HUD will continue to calculate Small Area FMRs using the rent ratio method currently employed. For ZCTAs relying on the rent ratio method (i.e., in small areas where the standard quality median gross rent is not statistically reliable), HUD will continue its current practice of substituting the median gross rent for the county containing the ZCTA in the numerator of the rent ratio calculation. The denominator remains the median gross rent for the ZCTA’s parent the estimate is smaller than half the size of the estimate itself (i.e., less than 50%). 4 More information regarding the history of Small Area FMRs, including information concerning the Small Area FMR Demonstration is available at: https://www.huduser.gov/portal/datasets/fmr/ smallarea/index.html. 5 For example, for (hypothetical) FY 2017 FMRs using this methodology, HUD would average the gross rents from 2012, 2013 and 2014 5-Year ACS estimates. The 2012 and 2013 gross rent estimates would be adjusted to 2014 dollars using the metropolitan area’s gross rent CPI adjustment factors. VerDate Sep<11>2014 19:14 May 25, 2017 Jkt 241001 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 metropolitan area (discussed below in section B). HUD will continue to multiply this rent ratio by the current two-bedroom rent for the entire metropolitan area containing the small area to generate the current year twobedroom rent for the small area. HUD will continue to use a rolling-average of ACS data in calculating the Small Area FMR rent ratios. HUD believes coupling the most current data with previous years’ data minimizes excessive year-toyear variability in Small Area FMR rent ratios due to sampling variance. Therefore, HUD will update the rent ratios each year. B. ZCTA to Metropolitan Area Link HUD is also proposing to change the linkage between a ZCTA and its parent metropolitan area. Currently, HUD links each ZCTA to its parent OMB-defined Core Based Statistical Area (CBSA). Going forward, HUD proposes to link each ZCTA to its published FMR area; that is, each ZCTA will be linked to its parent HUD Metropolitan Fair Market Rent Area (HMFA), if it exists. If no parent HUD FMR exists, the ZCTA will continue to be linked to its parent CBSA. This change is being proposed to take advantage of the more localized recent mover factors for subareas of OMB-defined metropolitan areas when available. New, hypothetical FY 2017 Small Area FMRs incorporating all proposed calculation changes are available at https://www.huduser.gov/portal/ datasets/fmr/smallarea/index.html. IV. Request for Public Comments on Changes HUD continually strives to calculate FMRs that can serve as an effective program parameter while meeting the statutory requirement to use ‘‘the most recent available data.’’ Therefore, HUD is requesting specific comments on these methodological changes, noting that HUD’s objectives are to: (1) Limit volatility in annual FMR changes by adding an observation count requirement of at least 100, and by averaging prior year rent data when the new requirements for statistical reliability are not met; (2) improve the use of local data in calculating the recent mover factor by allowing the use of ‘‘all-bedroom’’ observations in the calculation of the recent mover factor before using data from a larger area; and (3) involve the use of more local data in the calculation of Small Area FMRs when possible, including by using ZCTA gross rents and making changes to the rent ratio calculation. These methodology changes are not monodirectional; for example, the E:\FR\FM\26MYN1.SGM 26MYN1 Federal Register / Vol. 82, No. 101 / Friday, May 26, 2017 / Notices application of a stricter statistical significance test may lower rents in an area, while the use of the more local ‘‘all-bedroom’’ recent mover factor may increase rents in the same area. In addition, HUD solicits comments on the possible effects of changes in FMR methodology on the achievement of fair housing and other civil rights goals and objectives, including increasing mobility of low-income persons to areas of high opportunity and lower poverty, and whether other methodological changes might better ensure appropriate fair housing outcomes. HUD respectfully requests that comments filed in response to this notice remain focused on the proposed calculation changes. Hypothetical FY 2017 FMRs and Small Area FMRs, using these new methodology changes, are published at https://www.huduser.gov/ portal/datasets/fmr.html and https:// www.huduser.gov/portal/datasets/fmr/ smallarea/index.html, respectively. V. Environmental Impact This notice proposes changes in the way FMRs are calculated and does 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). Dated: May 4, 2017. Matthew E. Ammon, General Deputy Assistant Secretary for Policy Development and Research. [FR Doc. 2017–10907 Filed 5–25–17; 8:45 am] BILLING CODE 4210–67–P DEPARTMENT OF THE INTERIOR I. Public Comment Procedures Fish and Wildlife Service [Docket No. FWS–HQ–IA–2017–0031; FXIA16710900000–178–FF09A30000] Endangered Species; Marine Mammals; Receipt of Applications for Permit Fish and Wildlife Service, Interior. ACTION: Notice of receipt of applications for permit. AGENCY: We, the U.S. Fish and Wildlife Service, invite the public to comment on applications to conduct certain activities with endangered species. With some exceptions, the Endangered Species Act ESA prohibits activities with listed species unless SUMMARY: VerDate Sep<11>2014 19:14 May 25, 2017 Jkt 241001 Federal authorization is acquired that allows such activities. DATES: We must receive comments or requests for documents on or before June 26, 2017. ADDRESSES: Submitting Comments: You may submit comments by one of the following methods: • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments on Docket No. FWS–HQ–IA–2017–0031. • U.S. mail or hand-delivery: Public Comments Processing, Attn: Docket No. FWS–HQ–IA–2017–0031; U.S. Fish and Wildlife Service Headquarters, MS: BPHC; 5275 Leesburg Pike, Falls Church, VA 22041–3803. When submitting comments, please indicate the name of the applicant and the PRT# you are commenting on. We will post all comments on http:// www.regulations.gov. This generally means that we will post any personal information you provide us (see the Public Comments section for more information). Viewing Comments: Comments and materials we receive will be available for public inspection on http:// www.regulations.gov, or by appointment, between 8 a.m. and 4 p.m., Monday through Friday, except Federal holidays, at the U.S. Fish and Wildlife Service, Division of Management Authority, 5275 Leesburg Pike, Falls Church, VA 22041–3803; telephone 703–358–2095. FOR FURTHER INFORMATION CONTACT: Joyce Russell, Government Information Specialist, Division of Management Authority, U.S. Fish and Wildlife Service Headquarters, MS: IA; 5275 Leesburg Pike, Falls Church, VA 22041– 3803; telephone 703–358–2023; facsimile 703–358–2280. SUPPLEMENTARY INFORMATION: A. How do I request copies of applications or comment on submitted applications? Send your request for copies of applications or comments and materials concerning any of the applications to the contact listed under ADDRESSES. Please include the Federal Register notice publication date, the PRTnumber, and the name of the applicant in your request or submission. We will not consider requests or comments sent to an email or address not listed under ADDRESSES. If you provide an email address in your request for copies of applications, we will attempt to respond to your request electronically. Please make your requests or comments as specific as possible. Please PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 24381 confine your comments to issues for which we seek comments in this notice, and explain the basis for your comments. Include sufficient information with your comments to allow us to authenticate any scientific or commercial data you include. The comments and recommendations that will be most useful and likely to influence agency decisions are: (1) Those supported by quantitative information or studies; and (2) Those that include citations to, and analyses of, the applicable laws and regulations. We will not consider or include in our administrative record comments we receive after the close of the comment period (see DATES) or comments delivered to an address other than those listed above (see ADDRESSES). B. May I review comments submitted by others? Comments, including names and street addresses of respondents, will be available for public review at the street address listed under ADDRESSES. The public may review documents and other information applicants have sent in support of the application unless our allowing viewing would violate the Privacy Act or Freedom of Information Act. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. II. Background To help us carry out our conservation responsibilities for affected species, and in consideration of section 10(a)(1)(A) of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.), along with Executive Order 13576, ‘‘Delivering an Efficient, Effective, and Accountable Government,’’ and the President’s Memorandum for the Heads of Executive Departments and Agencies of January 21, 2009—Transparency and Open Government (74 FR 4685; Jan. 26, 2009), which call on all Federal agencies to promote openness and transparency in Government by disclosing information to the public, we invite public comment on these permit applications before final action is taken. E:\FR\FM\26MYN1.SGM 26MYN1

Agencies

[Federal Register Volume 82, Number 101 (Friday, May 26, 2017)]
[Notices]
[Pages 24377-24381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10907]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6021-N-01]


Proposed Changes to the Methodology Used for Estimating Fair 
Market Rents

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

ACTION: Notice of Proposed Material Changes for Estimation of Fair 
Market Rents (FMRs).

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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937 
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 for rental units in both the HOME Investment Partnerships 
program and the Emergency Solutions Grants program. HUD also uses FMRs 
in the calculation of maximum award amounts for Continuum of Care 
grantees and in the calculation of flat rents for Public Housing units. 
In furtherance of that effort, HUD proposes several methodological 
changes in this notice and seeks public comment on the proposed 
changes.

DATES: Comment Due Date: June 26, 2017.

ADDRESSES: HUD invites interested persons to submit comments regarding 
the proposed changes to the calculation of the FMRs to the Regulations 
Division, Office of General Counsel, Department of Housing and Urban 
Development, 451 Seventh Street SW., Room 10276, Washington, DC 20410-
0001. Communications must refer to the above docket number and title 
and should contain the information specified in the ``Request for 
Comments'' 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

[[Page 24378]]

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 
http://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 
http://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 http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Questions on this notice 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, 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 Federal Relay Service at 800-877-8339 (toll-free). 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 (toll-free) or access the information on the HUD USER Web site 
https://www.huduser.gov/portal/datasets/fmr.html.
    Electronic Data Availability. This Federal Register notice will be 
available electronically from the HUD User page at https://www.huduser.gov/portal/datasets/fmr.html. Federal Register notices also 
are available electronically from https://www.federalregister.gov/, the 
U.S. Government Printing Office Web site.
    Complete documentation of the impact of these methodology changes 
and calculation of hypothetical FY 2017 FMRs \1\ with these changes are 
available at https://www.huduser.gov/portal/datasets/fmr.html. Small 
Area FMRs for all metropolitan FMR areas incorporating these material 
changes in methodology have also been calculated and are available at: 
https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html. 
Changes to FMR calculations prescribed in the Small Area FMR rule (81 
FR 80567) are not incorporated into the calculation of hypothetical FY 
2017 FMRs.
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    \1\ HUD will provide a set of FY 2017 FMRs calculated with all 
the methodological changes proposed in this notice for the public to 
review. The FMRs with all the proposed changes will be referred to 
as FY 2017 hypothetical FMRs.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 8 of the United States Housing Act of 1937 (USHA) (42 
U.S.C. 1437f) authorizes housing assistance to aid lower-income 
families in renting safe and decent housing. Housing assistance 
payments are limited by Fair Market Rents (FMRs) established by HUD for 
different geographic areas. In the Housing Choice Voucher (HCV) 
program, the FMR is the basis for determining the ``payment standard 
amount'' used to calculate the maximum monthly subsidy for an assisted 
family. See 24 CFR 982.503. HUD also uses the FMRs to determine initial 
renewal rents for some expiring project-based Section 8 contracts, 
initial rents for housing assistance payment contracts in the Moderate 
Rehabilitation Single Room Occupancy program, rent ceilings for rental 
units in both the HOME Investment Partnerships program and the 
Emergency Solution Grants program, calculation of maximum award amounts 
for Continuum of Care grantees, and calculation of flat rents in Public 
Housing units. In general, the FMR for an area is the amount that would 
be needed to pay the gross rent (shelter rent plus utility costs) of 
privately owned, decent, and safe rental housing of a modest (non-
luxury) nature with suitable amenities and is set at the 40th 
percentile of the distribution of gross rents for recent movers. HUD's 
FMR calculations represent HUD's best effort to estimate the 40th 
percentile gross rents paid by recent movers into standard quality 
units in each FMR area.
    In recent years, commenters have expressed a number of concerns 
about FMRs. Some have pointed out that FMRs are a primary operating 
parameter in the HCV program and that extreme year-to-year fluctuations 
in FMRs can cause difficulties in program operations. Additionally, 
concerns have been raised that the FMRs are either not timely enough or 
not based on enough local information. HUD is proposing several changes 
to the manner in which HUD calculates FMRs in order to improve the FMR 
estimates and to address the concerns of commenters noted at the 
beginning of this paragraph.

II. Procedures for Developing 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)(B) as amended by the Housing Opportunities Through 
Modernization Act of 2016 (HOTMA) (Pub. L. 114-201, approved July 29, 
2016), requires that HUD publish for comment in the Federal Register a 
notice of proposed material changes in the methodology for estimating 
FMRs and a notice containing HUD's final decisions regarding such 
proposed substantial methodological changes and responses to public 
comments.
    On August 26, 2016, HUD announced the publication of the FY 2017 
FMRs, requested comments on the FY 2017 FMRs, and requested public 
comment on what should be considered ``material changes'' in FMR 
estimation methods for the purpose of triggering public notice and 
comment under HOTMA (81 FR 58952). Following a review of public comment 
on what should be considered ``material changes'', HUD determined that 
initially any change in FMR calculation methods should be subject to 
public comment. HUD, thus, responded to the comments in a notice 
published March 30, 2017, stating that HUD would not take a position on 
what FMR changes would be considered material and that HUD would 
initially

[[Page 24379]]

request comment on all FMR method changes (82 FR 15711). While HUD 
recognizes that year-to-year fluctuations in FMRs may cause operational 
difficulties in program operations, HUD seeks to improve the FMR 
calculation methods, using as much local information as possible while 
trying to preserve stability in the estimates. In an effort to address 
these concerns and recognizing that addressing one issue may impact 
another issue, HUD proposes several methodological changes and requests 
public comments on those changes through this notice, in compliance 
with HOTMA.

III. FMR Methodology Changes

    This section provides a brief overview of how HUD computed the FY 
2017 FMRs and three proposed changes to this methodology.
    To calculate the FY 2017 FMRs, HUD assigned each area a two-bedroom 
standard quality base rent from the 2010-2014 5-year American Community 
Survey (ACS) tabulations. Each base rent was updated with a recent 
mover adjustment factor calculated from the 1-year 2014 ACS data. The 
2014 ACS recent mover data is adjusted to be ``as of'' FY 2017 using 
local or regional Consumer Price Index (CPI)-measured changes in gross 
rents measured between 2014 and 2015 and a nationally forecasted trend 
factor measuring the expected growth in gross rents from 2015 to FY 
2017. For complete information on how HUD determines FMR areas, and on 
how HUD derives each area's FY 2017 FMR, see the online documentation 
at https://www.huduser.gov/portal/datasets/fmr.html#2017_query.
    The following is a summary of the two general changes to the 
calculation methods HUD is proposing to incorporate into the 
calculation of FY 2018 FMRs and a third change specific to the 
calculation of Small Area FMRs.
    (1) The first method change is in the manner in which HUD selects 
American Community Survey (ACS) estimates for use in the calculation of 
FMRs. Currently, HUD uses an ACS estimate if the error of the estimate 
is less than half the size of the estimate itself. HUD is proposing to 
require that each ACS estimate used in the calculation of FMRs be based 
on at least one hundred (100) survey responses. In other words, this 
notice proposes to couple the error ratio criterion with an additional 
review of the number of survey observations supporting the ACS 
estimate. If the survey data does not meet both criteria, HUD will use 
an average of the three most recent years of data.
    (2) The second method change focuses on the way that HUD calculates 
the ``recent mover factor.'' Currently, HUD calculates the ``recent 
mover factor'' based on a geographic area that is sometimes larger than 
an FMR area when the two-bedroom recent mover rents are not 
statistically reliable. HUD is proposing the use of ``all-bedroom'' 
recent mover rents as the basis for the recent mover factor when the 
two-bedroom recent mover rents are not statistically reliable (i.e., 
100 or more observations and a margin of error that is smaller than 
half of the estimate itself) before moving to a larger encompassing 
geography for the recent mover factor.
    (3) Finally, HUD is proposing to use the gross rent estimates 
calculated by ZIP Code Tabulation Areas (ZCTAs), where statistically 
reliable, to estimate Small Area FMRs (SAFMRs) directly rather than the 
``ratio'' method HUD used in FY 2017 and earlier SAFMR estimates.

1. FY 2018 FMR Proposed Changes

A. Base Year Rent Changes
    Since FY 2012, HUD has used the 5-year ACS data to determine base 
rents for most FMR areas. HUD used 2010-2014 ACS data, released in 
December 2015, in the FY 2017 FMR calculations. HUD evaluates the 
statistical validity of the ACS data before using the information in 
the calculation of FMRs. HUD proposes to update these statistical 
reliability criteria. Previously, HUD used ACS estimates for two-
bedroom unit rents within the FMR area where the margin of error of the 
estimate was less than half the size of the estimate itself (i.e., a 
margin of error of less than 50 percent). HUD now proposes to couple 
this ``margin of error'' test with an additional test based on the 
number of survey observations supporting the estimate. The Census 
Bureau does not provide HUD with an exact count of the number of 
observations supporting the ACS estimate; rather, the Census Bureau 
provides HUD with categories of the number of survey responses 
underlying the estimate, including whether the estimate is based on 
more than 100 observations. Using these categories, HUD proposes that 
ACS rent estimates must be based on at least 100 observations in order 
to be used as base rents.
    For areas in which the 5-year ACS data for two-bedroom, standard 
quality gross rents do not pass the statistical reliability tests 
(i.e., have a margin of error greater than 50 percent or fewer than 100 
observations), HUD will use an average of the base rents over the three 
most recent years (provided that there is data available for at least 
two of these years),\2\ or if such data is not available, using the 
two-bedroom rent data within the next largest geographic area, which 
for a non-metropolitan area would be the state non-metro area rent 
data.
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    \2\ Using FY 2017 as an example, the three years of ACS data in 
question are 2012, 2013 and 2014. The 2012 data are adjusted to be 
denominated in 2014 dollars using the growth in CPI-based gross 
rents measured between 2012 and 2014. Similarly, the 2013 gross rent 
data is adjusted to 2014 denominated dollars using the growth in 
CPI-based gross rents measured between 2013 and 2014.
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B. Recent Mover Factor Changes
    HUD is proposing changes to the calculation of the recent mover 
factor that include a change to the statistical reliability assessment 
of ACS recent mover data (consistent with the change for base rents) 
and a change in the data used when the number of ``two-bedroom'' 
observations within the FMR area is insufficient. The following 
describes the current process for calculating the recent mover factor, 
and the proposed revisions.
    HUD historically based FMRs on gross rent data for recent movers 
(those who have moved into their current residence in the last 24 
months). However, due to the way in which the Census Bureau constructs 
the 5-year ACS data, HUD developed a new methodology for using recent 
mover data to calculate FMRs in FY 2012. As of FY 2012, HUD assigns all 
areas a base rent, which is the two-bedroom, standard quality 5-year 
ACS gross rent estimate, and then applies a recent mover factor in 
order to calculate recent mover gross rents and publish them in 
accordance with 24 CFR 888.113. HUD calculates the recent mover factor 
as the ratio of the 1-year recent mover gross rent to the 5-year 
standard quality gross rent for the recent mover factor area. HUD does 
not allow recent mover factors to reduce 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. Applying the recent mover factor to the standard quality base rent 
produces a recent mover two-bedroom gross rent for the FMR area that is 
``as of'' the most recent ACS year.
    In general, HUD has used 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

[[Page 24380]]

some areas' recent mover factors using data collected solely within the 
FMR area. However, HUD currently bases other areas' recent mover 
factors on larger geographic areas if this is necessary to obtain 
statistically reliable estimates.
---------------------------------------------------------------------------

    \3\ HUD currently assesses recent mover estimates to be 
statistically reliable if the margin of error of the estimate is 
smaller than half the size of the estimate itself (i.e., less than 
50%).
---------------------------------------------------------------------------

    When data from a larger geographic unit is required, data from 
progressively larger areas is considered until a statistically reliable 
result is obtained. The order of consideration depends on the type of 
area for which the recent mover factor is being calculated. For 
metropolitan FMR areas that are subareas of larger metropolitan areas, 
the order is the FMR area, the metropolitan area, the aggregated 
metropolitan parts of the state, and the entire state. Metropolitan 
areas that are not divided follow a similar progression from FMR area 
data, to data from the aggregated metropolitan parts of the state, to 
state-level data. In non-metropolitan areas, HUD bases the recent mover 
factor on data from within the FMR area, or from the aggregated non-
metropolitan parts of the state, or if that is not available, from the 
whole state.
    HUD proposes to modify the test of statistical reliability for ACS 
recent mover data in the same manner as the proposed change discussed 
under base rents. In addition, when an FMR area does not have 
statistically reliable two-bedroom data, HUD proposes that before using 
data from a larger geographic area to calculate the recent mover 
factor, HUD would first check to see if the data aggregated across 
``all-bedroom'' count units is statistically reliable for the FMR area. 
If so, HUD will use the ``all-bedroom'' data to calculate the recent 
mover factor instead of moving to the next larger geography. 
Incorporating ``all-bedroom'' rents into the recent mover factor 
calculation when statistically reliable two-bedroom data is not 
available preserves the use of local information to the greatest extent 
possible. However, where statistically reliable ``all-bedroom'' data is 
not available, HUD will continue to use data from the larger 
geographical area(s), as described above.

2. Small Area Fair Market Rents Methodology Changes

    Currently, HUD calculates Small Area FMRs \4\ using a rent ratio 
determined by dividing the median gross rent across all bedrooms for 
the Small Area ZCTAs by the similar median gross rent for the parent 
metropolitan area of the ZIP code. In order to maintain stability in 
the rent ratio, HUD averages the three most current rent ratios and 
multiplies this averaged rent ratio by the most recent two-bedroom FMR 
for the parent metropolitan area. HUD is proposing updates to the 
calculation of Small Area FMRs that are consistent with the other 
proposed methodology changes in this Notice.
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    \4\ More information regarding the history of Small Area FMRs, 
including information concerning the Small Area FMR Demonstration is 
available at: https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.
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A. Alternative to the Rent Ratio Method
    In order to use more local data, HUD is proposing to calculate 
Small Area FMRs directly from the standard quality gross rents provided 
to HUD by the Census Bureau for ZCTAs, when such data is statistically 
reliable, instead of using the current rent ratio calculation. For each 
ZCTA with statistically reliable gross rent estimates, using the 
expanded test of statistical reliability proposed elsewhere in this 
notice (i.e., estimates with margins of error ratios below 50 percent 
and based on at least 100 observations), HUD will calculate a two-
bedroom equivalent 40th percentile gross rent using either one-, two-, 
or three-bedroom gross rent data. The order preference for using the 
gross rent distribution data would be: Two-bedroom gross rents, one-
bedroom gross rents, and three-bedroom gross rents. If either the one-
bedroom or three-bedroom gross rent data is used because the two-
bedroom gross rent data is not statistically reliable, the one-bedroom 
or three-bedroom 40th percentile gross rent will be converted to a two-
bedroom equivalent rent using the bedroom ratios for the ZCTA's parent 
metropolitan area. In order to add increased stability to these Small 
Area FMR estimates, HUD will average the latest three years of gross 
rent estimates.\5\ For ZCTAs without usable gross rent data, HUD will 
continue to calculate Small Area FMRs using the rent ratio method 
currently employed.
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    \5\ For example, for (hypothetical) FY 2017 FMRs using this 
methodology, HUD would average the gross rents from 2012, 2013 and 
2014 5-Year ACS estimates. The 2012 and 2013 gross rent estimates 
would be adjusted to 2014 dollars using the metropolitan area's 
gross rent CPI adjustment factors.
---------------------------------------------------------------------------

    For ZCTAs relying on the rent ratio method (i.e., in small areas 
where the standard quality median gross rent is not statistically 
reliable), HUD will continue its current practice of substituting the 
median gross rent for the county containing the ZCTA in the numerator 
of the rent ratio calculation. The denominator remains the median gross 
rent for the ZCTA's parent metropolitan area (discussed below in 
section B). HUD will continue to multiply this rent ratio 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. HUD will continue to use a rolling-average of ACS data in 
calculating the Small Area FMR rent ratios. HUD believes coupling the 
most current data with previous years' data minimizes excessive year-
to-year variability in Small Area FMR rent ratios due to sampling 
variance. Therefore, HUD will update the rent ratios each year.
B. ZCTA to Metropolitan Area Link
    HUD is also proposing to change the linkage between a ZCTA and its 
parent metropolitan area. Currently, HUD links each ZCTA to its parent 
OMB-defined Core Based Statistical Area (CBSA). Going forward, HUD 
proposes to link each ZCTA to its published FMR area; that is, each 
ZCTA will be linked to its parent HUD Metropolitan Fair Market Rent 
Area (HMFA), if it exists. If no parent HUD FMR exists, the ZCTA will 
continue to be linked to its parent CBSA. This change is being proposed 
to take advantage of the more localized recent mover factors for 
subareas of OMB-defined metropolitan areas when available.
    New, hypothetical FY 2017 Small Area FMRs incorporating all 
proposed calculation changes are available at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.

IV. Request for Public Comments on Changes

    HUD continually strives to calculate FMRs that can serve as an 
effective program parameter while meeting the statutory requirement to 
use ``the most recent available data.'' Therefore, HUD is requesting 
specific comments on these methodological changes, noting that HUD's 
objectives are to: (1) Limit volatility in annual FMR changes by adding 
an observation count requirement of at least 100, and by averaging 
prior year rent data when the new requirements for statistical 
reliability are not met; (2) improve the use of local data in 
calculating the recent mover factor by allowing the use of ``all-
bedroom'' observations in the calculation of the recent mover factor 
before using data from a larger area; and (3) involve the use of more 
local data in the calculation of Small Area FMRs when possible, 
including by using ZCTA gross rents and making changes to the rent 
ratio calculation.
    These methodology changes are not monodirectional; for example, the

[[Page 24381]]

application of a stricter statistical significance test may lower rents 
in an area, while the use of the more local ``all-bedroom'' recent 
mover factor may increase rents in the same area.
    In addition, HUD solicits comments on the possible effects of 
changes in FMR methodology on the achievement of fair housing and other 
civil rights goals and objectives, including increasing mobility of 
low-income persons to areas of high opportunity and lower poverty, and 
whether other methodological changes might better ensure appropriate 
fair housing outcomes.
    HUD respectfully requests that comments filed in response to this 
notice remain focused on the proposed calculation changes. Hypothetical 
FY 2017 FMRs and Small Area FMRs, using these new methodology changes, 
are published at https://www.huduser.gov/portal/datasets/fmr.html and 
https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html, 
respectively.

V. Environmental Impact

    This notice proposes changes in the way FMRs are calculated and 
does 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).

    Dated: May 4, 2017.
Matthew E. Ammon,
General Deputy Assistant Secretary for Policy Development and Research.
[FR Doc. 2017-10907 Filed 5-25-17; 8:45 am]
 BILLING CODE 4210-67-P