Department of Housing and Urban Development December 16, 2005 – Federal Register Recent Federal Regulation Documents

This notice proposes changes in the metropolitan area definitions used to calculate HUD median family income estimates and income limits. In this notice, HUD is proposing to issue FY2006 income limits that are based on current Office of Management and Budget (OMB) metropolitan statistical area (MSA) definitions based on 2000 Census data rather than to continue to use old OMB metropolitan area definitions based on 1990 Census data. OMB revises metropolitan area definitions after each Decennial Census. It issued its 2000-Census based definitions in 2003, which contained substantial changes to several metropolitan area definitions. These changes were made to better reflect metropolitan area commuting and economic patterns. The OMB metropolitan area definitions are used on a widespread basis throughout the federal government for both data collection and program administrative purposes. HUD proposed implementing these definitions in its 2004 publication of proposed FY2005 Section 8 Fair Market Rents. It planned to issue FY2005 income limits using the same area definitions. In response to public comments, it reverted to use of old OMB definitions in its final FY2005 Fair Market Rent (FMR) publication. HUD noted in this publication that it intended to continue exploring how to best implement the new definitions, and subsequently received a number of comments supporting use of the new definitions. To meet the needs of agencies required to use current OMB metropolitan area definitions, it published a separate set of FY2005 income estimates based on the new definitions. HUD's final FY2006 FMR publication of October 3, 2005, uses the new OMB definitions in defining metropolitan areas, but modified these definitions to permit subareas based on old metropolitan area definitions in instances when FMRs based on the old definitions differed significantly from the new metropolitan area-wide FMRs. The new approach leaves open the question of whether a hold- harmless provision of some type should be applied in instances where the new metropolitan area definitions produce decreases in estimates of median family income and/or income limits. The statute governing how income limits are to be defined is relatively detailed, but the Secretary of HUD does have limited discretion over its application. Given the number of changes associated with OMB's new metropolitan area definitions, the Department wishes to solicit public comments on this matter prior to implementation. In order to provide directly comparable estimates on the impacts of the changes in metropolitan area definitions on income limits, revised FY2005 income limits were calculated using the new area definitions. The actual FY2006 estimates using the new definitions are likely to be at least somewhat higher than the comparable FY2005 estimates. To provide detailed information on the impacts of the new metropolitan area definitions, HUD prepared a table that compares FY2005 actual income limits with the equivalent FY2005 income limits calculated using the new metropolitan area definitions. Two versions of revised FY2005 income limits are providedone without any hold-harmless policy and one with a hold-harmless policy based on the published FY2005 income limits for the primary old-definition component of the new metropolitan area. This table identifies all of the component parts of the new metropolitan areas and shows which parts previously had different income limits. The table may be obtained at www.huduser.org/datasets/ il.html. In addition to inviting comments on the hold-harmless policy, HUD is also interested in comments on FMR area definitions for areas where two or more metropolitan areas were merged under the new definitions. In preparing its proposed FY2006 FMRs, HUD opted to disaggregate such areas when their FMRs differed by more than 5 percent so as to better reflect local market conditions. In reviewing the impacts of FMR area changes on income limits, it was found that most areas had minimal changes in income limits. There were two notable exceptions. Under the new area definitions, the former Bergen-Passaic and Monmouth-Ocean metropolitan areas were added to New York City and the former Fort Lauderdale and West Palm Beach-Boca Raton metropolitan areas were added to Miami. In both instances, the old metropolitan areas had very similar 2000 Census-based FMRs to those of the metropolitan areas to which they were being added, but they had significantly higher median family income and income limit amounts. HUD therefore wishes to invite comments as to whether any of these areas should be treated as distinct subparts of their new OMB metropolitan areas, as was done for subparts with measurably different FMRs. Establishing separate income limit areas would mean that separate FMR areas would also be established. In these specific instances, however, the changes in FMR area configurations would have no impact on FY2006 FMRs and would be likely to have very little impact on FY2007 FMRs. HUD believes that the primary area hold-harmless appears to provide the best compromise between program objectives and program administrative considerations. Given that there are methodological changes involved, however, HUD wishes to obtain public comments before calculating and publishing FY2006 income limits.