[Federal Register Volume 85, Number 158 (Friday, August 14, 2020)]
[Notices]
[Pages 49666-49672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17717]
[[Page 49666]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6224-N-01]
Fair Market Rents for the Housing Choice Voucher Program,
Moderate Rehabilitation Single Room Occupancy Program, and Other
Programs Fiscal Year 2021
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of Fiscal Year (FY) 2021 Fair Market Rents (FMRs).
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SUMMARY: Section 8(c)(1) of the United States Housing Act of 1937
(USHA), as amended by the Housing Opportunities Through Modernization
Act of 2016 (HOTMA), requires the Secretary to publish FMRs not less
than annually, adjusted to be effective on October 1 of each federal
fiscal year (FFY). This notice describes the methods used to calculate
the FY 2021 FMRs and enumerates the procedures for Public Housing
Agencies (PHAs) and other interested parties to request reevaluations
of their FMRs as required by HOTMA. The trend factors used in the FY
2021 FMRs include updated economic assumptions to reflect the economic
downturn caused by the COVID-19 pandemic.
DATES:
Comment Due Date: September 30, 2020.
Applicable Date: October 1, 2020 unless HUD receives a valid
request for reevaluation of specific area FMRs as described below.
ADDRESSES: HUD invites interested persons to submit comments regarding
the FMRs and to request reevaluation of the FY 2021 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/Request for Reevaluation'' section. There are two methods for
submitting public comments.
1. Submission of Comments by Mail. Comments or requests for
reevaluation 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 standard mail often results in delayed delivery. To ensure
timely receipt of comments or reevaluation requests, HUD recommends
that comments or requests submitted by standard mail be submitted at
least two weeks in advance of the deadline. HUD will make all comments
or reevaluation requests received by mail available to the public at
https://www.regulations.gov.
2. Electronic Submission of Comments. Interested persons may submit
comments or reevaluation requests electronically through the Federal
eRulemaking Portal at https://www.regulations.gov. HUD strongly
encourages commenters to submit comments or reevaluation requests
electronically. Electronic submission of comments or reevaluation
requests allows the author maximum time to prepare and submit a comment
or reevaluation request, ensures timely receipt by HUD, and enables HUD
to make them immediately available to the public. Comments or
reevaluation requests submitted electronically through the https://www.regulations.gov website can be viewed by other submitters and
interested members of the public. Commenters or reevaluation requestors
should follow instructions provided on that site to submit comments or
reevaluation requests electronically.
Note: To receive consideration as public comments or reevaluation
requests, comments or requests 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 or Reevaluation Requests. Facsimile (FAX)
comments or requests for FMR reevaluation are not acceptable.
Public Inspection of Public Comments and Reevaluation Requests. All
properly submitted comments and reevaluation requests 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 and
reevaluation requests 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 (toll-free
number). Copies of all comments and reevaluation requests 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 website https://www.huduser.gov/portal/datasets/fmr.html. FMRs are listed at the 40th percentile in the Schedule of
Metropolitan and Non-Metropolitan Area FMRs. For informational
purposes, 50th percentile rents for all FMR areas will be published at
https://www.huduser.gov/portal/datasets/50per.html.
Questions related to use of FMRs or voucher payment standards
should be directed to the respective local HUD program staff. Questions
on how to conduct FMR surveys may be addressed to Marie L. Lihn or
Peter B. Kahn of the Program Parameters and Research 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 pprd@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 number).
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 website. Complete documentation of the
methods and data used to compute each area's FY 2021 FMRs is available
at https://www.huduser.gov/portal/datasets/fmr.html#2021_query. FY 2021
FMRs are available in a variety of electronic formats at https://www.huduser.gov/portal/datasets/fmr.html. FMRs may be accessed in PDF
as well as in Microsoft Excel. Small Area FMRs for all metropolitan FMR
areas are available in Microsoft Excel format at: https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.
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 Housing Choice
[[Page 49667]]
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 recipients and the maximum
amount of rent a recipient may pay for property leased with Continuum
of Care funds, 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 utilities) of privately owned,
decent, and safe rental housing of a modest (non-luxury) nature with
suitable amenities and is typically set at the 40th percentile of the
distribution of gross rents. HUD's FMR calculations represent HUD's
best effort to estimate the 40th percentile gross rent \1\ paid by
recent movers into standard quality units in each FMR area. In
addition, all rents subsidized under the HCV program must meet
reasonable rent standards.
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\1\ HUD also calculates and posts 50th percentile rent estimates
for the purposes of Success Rate Payment Standards as defined at 24
CFR 982.503(e) (estimates available at: https://www.huduser.gov/portal/datasets/50per.html), which policy was not changed by the
Small Area FMR rule.
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II. Procedures for the Development of FMRs
Section 8(c)(1) of the USHA, as amended by HOTMA (Pub. L. 114-201,
approved July 29, 2016), requires the Secretary of HUD to publish FMRs
not less than annually. Section 8(c)(1)(A) states that each FMR ``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 . . .'' Section
8(c)(1)(B) requires that HUD publish, not less than annually, new FMRs
on the World Wide Web or in any other manner specified by the
Secretary, and that HUD must also notify the public of when it
publishes FMRs by Federal Register notice. After notification, the FMRs
``shall become effective no earlier than 30 days after the date of such
publication,'' and HUD must provide a procedure for the public to
comment and request a reevaluation of the FMRs in a jurisdiction before
the FMRs become effective. Consistent with the statute, HUD is issuing
this notice to notify the public that FY 2021 FMRs are available at
https://www.huduser.gov/portal/datasets/fmr.html and will become
effective on October 1, 2020. This notice also provides procedures for
FMR reevaluation requests.
III. FMR Methodology
This section provides a brief overview of how HUD computes the FY
2021 FMRs. HUD is making no changes to the estimation methodology for
FMRs as used by HUD for the FY 2020 FMRs. For complete information on
how HUD derives each area's FMRs, see the online documentation at
https://www.huduser.gov/portal/datasets/fmr.html#2021_query.
In conjunction with the use of 2018 American Community Survey (ACS)
data, HUD has implemented the following geography change, the
designation of the two counties comprising newly created Twin Falls, ID
MSA as metropolitan counties. These two counties will be designated as
Twin Falls County, ID HUD Metro FMR Area and Jerome County, ID HUD
Metro FMR Area. Although the FMRs for these counties will be calculated
separately, the metropolitan area designation impacts the FMR
calculations since the areas will use the Idaho metropolitan state-
based recent mover factor instead of the Idaho state non-metropolitan
recent mover factor.
A. Base Year Rents
For FY 2021 FMRs, HUD uses the U.S. Census Bureau's 5-year ACS data
collected between 2014 and 2018 and released in December 2019 as the
base rents for the FMR calculations. The ACS data released at the end
of 2019 is the most current ACS data available at the time the FY 2021
FMRs are calculated. HUD pairs a ``margin of error'' test \2\ with an
additional requirement based on the number of survey observations
supporting the estimate to improve the statistical reliability of the
ACS data used in the FMR calculations. 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 requires that, in addition to
the ``margin of error'' test, ACS rent estimates must be based on at
least 100 observations to be used as base rents.
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\2\ HUD's margin of error test requires that the margin of error
of the ACS estimate is less than half the size of the estimate
itself.
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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 ratio greater than 50 percent or fewer
than 100 observations), HUD will use an average of the base rents over
the three most recent years \3\ (provided that there is data available
for at least two of these years),\4\ 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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\3\ For FY 2021, the three years of ACS data in question are
2016, 2017 and 2018. The 2016 data are adjusted to be denominated in
2018 dollars using the growth in Consumer Price Index (CPI)-based
gross rents measured between 2016 and 2018. Similarly, the 2017
gross rent data is adjusted to 2018 denominated dollars using the
growth in CPI-based gross rents measured between 2017 and 2018.
\4\ To be used in the three-year average calculation, the 5-year
estimates must be minimally statistically qualified; that is, the
margin of error of the estimates must be less than half the size of
the estimate.
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HUD has updated base rents each year using annually updated 5-year
data made available since FY 2012. HUD also updates base rents for
Puerto Rico FMRs using data collected between 2014 and 2018 through the
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)
measured directly. However, due to the way Census constructs the 5-year
ACS data, HUD developed a new method for calculating recent-mover FMRs
in FY 2012, which HUD continues to use in FY 2021. Under this method,
HUD assigns all areas a base rent, which is the two-bedroom standard
quality 5-year gross rent estimate from the ACS; then, because HUD's
regulations mandate that FMRs must be published as recent mover gross
rents, HUD applies a recent-mover factor to the base rents assigned
from the 5-year ACS data.\5\ The calculation of the recent mover factor
is described below.
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\5\ HUD's regulations at 24 CFR 888.113(a) incorporate recent-
mover data into FMR calculations because the gross rents of those
who most recently moved into their units likely depicts the most
current market conditions observable through the ACS. Rents paid by
renters renewing existing leases may not reflect the most current
market conditions, in part because these renters may have clauses
within their leases that predetermine the annual increases in rents
paid (i.e., rent escalator clauses).
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[[Page 49668]]
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. HUD
calculates the recent-mover factor as the change between the 5-year
2014-2018 standard quality two-bedroom gross rent and the 1-year 2018
recent mover 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 so the base rent is updated and trended. When the recent-mover factor
is greater than one, the base rent is effectively replaced with the
recent-mover rent for that area and that is what is updated and
trended. For virtually all metropolitan areas, one-year recent-mover
data is the basis for the updated and trended FMRs.
The calculation of the recent-mover factor for FY 2021 continues to
use statistical reliability requirements that are similar to those for
base rents. That is, for a recent-mover gross rent estimate to be
considered statistically reliable, the estimate must have a margin of
error ratio that is less than 50 percent, and the estimate must be
based on 100 or more observations.
When an FMR area does not have statistically reliable two-bedroom
recent-mover data, the ``all-bedroom'' 1-year recent-mover ACS data for
the FMR area is tested for statistical reliability.\6\ An ``all-
bedroom'' recent-mover factor from the FMR area will be used, if
statistically reliable, before substituting a two-bedroom recent-mover
factor from 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.
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\6\ ``All-bedroom'' refers to estimates aggregated together
regardless of the number of bedrooms in the dwelling unit.
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However, where statistically reliable ``all-bedroom'' data is not
available, HUD will continue to base FMR areas' recent-mover factors on
larger geographic areas, following the same procedures used
historically: HUD tests data from differently sized geographic areas in
the following order (from small to large), and bases the recent-mover
factor on the first statistically reliable recent-mover rent estimate
in the geographic hierarchy listed below.
For metropolitan areas that are sub-areas of larger
metropolitan areas, the order is the FMR area, metropolitan area,
aggregated metropolitan parts of the state, and state.
For metropolitan areas that are not divided, the order is
the FMR area, aggregated metropolitan parts of the state, and state.
In non-metropolitan areas, the order is the FMR area,
aggregated non-metropolitan parts of the state, and state.
The process for calculating each area's recent mover factor is
detailed in the FY 2021 FMR documentation system available at:
https://www.huduser.gov/portal/datasets/fmr.html#2021_query. Applying
the recent-mover factor to the standard quality base rent produces an
``as of'' 2018 recent mover two-bedroom gross rent for the FMR area.
C. Other Rent Survey Data
HUD calculated base rents for the insular areas using data
collected during the 2010 decennial census of American Samoa, Guam, the
Northern Mariana Islands, and the Virgin Islands beginning with the FY
2016 FMRs.\7\ This 2010 base year data is updated through 2018 for the
FY 2021 FMRs using the growth in national ACS data.
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\7\ 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 have been incorporated into the FY 2020
FMRs.
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HUD does not use ACS data to establish the base rent or recent-
mover factor for 21 areas where the FY 2021 FMRs are based on locally
collected survey data which are more recent than the 2018 ACS. For
larger metropolitan areas that have valid ACS one-year recent-mover
data, survey data may not be any older than the mid-point of the
calendar year for the ACS one-year data. Since the ACS one-year data
used for the FY 2021 FMRs is from 2018, larger areas may not use survey
data collected before June 30, 2018 for the FY 2021 FMRs. Smaller areas
without statistically reliable 1-year ACS data may continue to use
local survey data until the mid-point of the 5-year ACS data is more
recent than the local survey. The following list enumerates the areas
with local areas surveys and the year of the survey data:
Survey data from 2017 is used to adjust the FMRs for Hood
River County, OR; Wasco County, OR; Hawaii County, HI; and Jonesboro,
AR HMFA.
Survey data from 2018 is used to adjust the FMR for
Portland-Vancouver-Hillsboro, OR-WA; Burlington-South Burlington, VT;
Coos County, OR; Curry County, OR; Oakland-Fremont, CA HUD Metro FMR
Area; San Francisco, CA HUD Metro FMR Area; San Jose-Sunnyvale-Santa
Clara, CA HUD Metro FMR Area; Boston-Cambridge-Quincy, MA-NH HUD Metro
FMR Area; Douglas County, OR; and San Diego-Carlsbad, CA MSA.
Survey data from 2019 is used to adjust the FMRs for Kauai
County, HI; Asheville, NC HUD Metro FMR Area; Eugene-Springfield, OR
MSA; Portland, ME HUD Metro FMR Area; Santa Maria-Santa Barbara, CA
MSA; Worcester, MA HUD Metro FMR Area; and Guam.
Survey data from 2020 is used to calculate the FMRs for
Santa Cruz-Watsonville, CA MSA.
D. Updates From 2018 to 2019
HUD updates the ACS-based ``as of'' 2018 rent through 2019 using
the annual change in gross rents measured through the Consumer Price
Index (CPI) from 2018 to 2019 (CPI update factor). As in previous
years, HUD uses local CPI data coupled with Consumer Expenditure Survey
data for FMR areas within Class A metropolitan areas covered by local
CPI data. In 2018, the Bureau of Labor Statistics (BLS) changed the
area definitions of its Class A metropolitan areas from the 1990
definition of Consolidated Metropolitan Statistical Areas (CMSA) to
smaller Core-Based Statistical Area (CBSA) MSAs. In addition, BLS
eliminated some areas from this Class A collection: Pittsburgh, PA MSA;
Cleveland-Elyria, OH MSA; Cincinnati, OH-KY-IN MSA; Kansas City, MO-KS
MSA; Milwaukee-Waukesha-West Allis, WI MSA; and Portland-Vancouver-
Hillsboro, OR-WA MSA. HUD estimated these areas' FMRs using regional
CPI beginning with the FY 2020 FMRs and continues the use of regional
CPI factors in FY 2021. HUD uses CPI data aggregated at the Census
region level for all Class B and C size metropolitan areas and non-
metropolitan areas. Additionally, HUD uses CPI data collected locally
in Puerto Rico as the basis for CPI adjustments from 2018 to 2019 for
all Puerto Rico FMR areas.
E. Trend Factor Forecasts
Following the application of the appropriate CPI update factor, HUD
trends the gross rent estimate from 2019 to FY 2021 using local and
regional forecasts of the CPI gross rent data. Riverside-San
Bernardino-Ontario, CA MSA as a newly designated Class A city (it was
previously part of the Los Angeles-Riverside-Orange County, CA CMSA)
has data for a CPI update factor, but does not have enough data for a
trend factor forecast; therefore, until there is sufficient history to
create a
[[Page 49669]]
credible local trend factor forecast its trend factor is the regional
(West) trend factor. The actual model used for each trend factor has
been chosen based on which model generates the lowest Root Mean Square
Error (RMSE) statistic. As detailed in the June 5, 2019 Federal
Register notice (84 FR 26141), the trend factors were selected from a
series of time series models based on national inputs (National Input
Model or NIM), local inputs (Local Input Model or LIM) and historical
values of the predicted series (Pure Time Series--PTS). HUD will hold
the type of model selected (NIM, LIM, or PTS) constant for 5 years and
will reassess the model selections during the calculation of the FY
2025 FMRs. For instances when HUD changes the functional form of the
model (NIM, PTS, LIM) for a geographic area that is different from the
previous model selection, HUD will ensure the change is not due to
overfitting the model or outliers in the data. HUD will update and run
the gross rent forecast models annually with updated actual data and
newly created input forecasts. For FY 2021, in the NIM models, HUD is
using economic projections that account for the COVID-19 impacts on the
economy .\8\
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\8\ Congressional Budget Office (CBO) economic projections, May
2020.
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E. Bedroom Rent Adjustments
HUD updates the bedroom ratios used in the calculation of FMRs
annually. The bedroom ratios which HUD used in the calculation of FY
2021 FMRs have been updated using average data from three five-year ACS
data series (2012-2016, 2013-2017, and 2014-2018). The bedroom ratio
methodology used in this update is unchanged from previous calculations
using 2000 Census data. HUD only uses estimates with a margin of error
ratio of less than 50 percent. If an area does not have reliable
estimates in at least two of the previous three ACS releases, bedroom
ratios for the area's larger parent geography are used.
HUD uses two-bedroom units for its primary calculation of FMR
estimates. This is generally the most common size of rental unit and,
therefore, the most reliable to survey and analyze. After estimating
two-bedroom FMRs, HUD calculates bedroom ratios for each FMR area which
relate the prices of smaller and larger units to the cost of two-
bedroom units. To ensure an adequate distributional fit in these
bedroom ratio calculations in particular FMR areas, HUD establishes
bedroom interval ranges which set upper and lower limits for bedroom
ratios nationwide, based on an analysis of the range of such intervals
for all areas with large enough samples to permit accurate bedroom
ratio determinations.
In the calculation of FY 2021 FMR estimates, HUD set the bedroom
interval ranges as follows: Efficiency FMRs are constrained to fall
between 0.66 and 0.86 of the two-bedroom FMR; one-bedroom FMRs must be
between 0.76 and 0.88 of the two-bedroom FMR; three-bedroom FMRs (prior
to the adjustments described below) must be between 1.14 and 1.32 of
the two-bedroom FMR; and four-bedroom FMRs (again, prior to adjustment)
must be between 1.26 and 1.61 of the two-bedroom FMR. Given that these
interval ranges partially overlap across unit bedroom counts, HUD
further adjusts bedroom ratios for a given FMR area, if necessary, to
ensure that higher bedroom-count units have higher rents than lower
bedroom-count units within that area. The bedroom ratios for Puerto
Rico follow these constraints.
HUD also further adjusts the rents for three-bedroom and larger
units to reflect HUD's policy to set higher rents for these units.\9\
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.
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\9\ As mentioned above, HUD applies the interval ranges for the
three-bedroom and four-bedroom FMR ratios prior to making these
adjustments. In other words, the adjusted three- and four-bedroom
FMRs can exceed the interval ranges, but the unadjusted FMRs cannot.
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HUD derives FMRs for units with more than four bedrooms 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.
Similarly, HUD derives FMRs for single-room occupancy units by
subtracting 25 percent from the zero-bedroom FMR (i.e., they are set at
0.75 times the zero-bedroom (efficiency) FMR).\10\
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\10\ As established in the interim rules implementing the
provisions of the Quality Housing and Work Responsibility Act of
1998 (Title V of the FY 1999 HUD Appropriations Act; Pub. L. 105-
276). In 24 CFR 982.604.
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F. Limit on FMR Decreases
Within the Small Area FMR final rule published on November 16,
2016, HUD amended 24 CFR 888.113 to include a limit on the amount that
FMRs may annually decrease. The current year's FMRs resulting from the
application of the bedroom ratios, as discussed in section (E) above,
may be no less than 90 percent of the prior year's FMRs for units with
the same number of bedrooms. Accordingly, if the current year's FMRs
are less than 90 percent of the prior year's FMRs as calculated by the
above methodology, HUD sets the current year's FMRs equal to 90 percent
of the prior year's FMRs. For areas where use of Small Area FMRs in the
administration of their voucher programs is required, the FY 2021 Small
Area FMRs may be no less than 90 percent of the FY 2020 Small Area
FMRs. For all other metropolitan areas, for which Small Area FMRs are
calculated so that they may be used for other allowable purposes if
desired (e.g., exception payment standards, public housing flat rents),
the FY 2021 Small Area FMRs may be no less than 90 percent of the
greater of the FY 2020 metropolitan area-wide FMRs or the applicable FY
2020 Small Area FMR.
G. Other Limits on FMRs
All FMRs are subject to a state or national minimum. HUD calculates
a population-weighted median two-bedroom 40th percentile rent across
all non-metropolitan portions of each state, which, for the purposes of
FMRs, is the state minimum rent. State-minimum rents for each FMR area
are available in the FY 2021 FMR Documentation System, available at
https://www.huduser.gov/portal/datasets/fmr.html#2021_query. HUD also
calculates the population-weighted median two-bedroom 40th percentile
rent across all non-metropolitan portions of the country, which, for
the purposes of FMRs, is the national minimum rent. For FY 2021, the
national minimum rent is $734. The applicable minimum rent for a
particular area is the lower of the state or national minimum. Each
area's two-bedroom FMR must be no less than the applicable minimum
rent.
As in prior years, Small Area FMRs are subject to a maximum limit.
HUD limits each two-bedroom Small Area FMR to be no more than 150
percent of the two-bedroom FMR for the metropolitan area where the ZIP
code is located.
IV. Small Area FMRs
Small Area FMRs for all metropolitan areas are listed in the Small
Area FMR Schedule. Other Metropolitan PHAs operating in areas where the
Small Area FMR is not required to be used and interested in using Small
Area FMRs in the operation of their Housing Choice Voucher program
should contact their
[[Page 49670]]
local HUD field office to request approval from HUD to do so.
HUD calculates Small Area FMRs directly from the standard quality
gross rents provided to HUD by the Census Bureau for ZIP Code
Tabulation Areas (ZCTAs), when such data is statistically reliable. The
ZCTA two-bedroom equivalent 40th percentile gross rent is analogous to
the standard quality base rents set for metropolitan areas and non-
metropolitan counties. For each ZCTA with statistically reliable gross
rent estimates, using the expanded test of statistical reliability
first used in FY 2018 (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 the
first statistically reliable gross rent distribution data from the
following data sets (in this order): 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. To increase stability to these Small Area FMR
estimates, HUD averages the latest three years of gross rent
estimates.\11\
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\11\ For example, for FY 2021 Small Area FMRs, HUD averages the
gross rents from 2016, 2017, and 2018 5-Year ACS estimates. The 2016
and 2017 gross rent estimates would be adjusted to 2018 dollars
using the metropolitan area's gross rent CPI adjustment factors.
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For ZCTAs without usable gross rent data by bedroom size, HUD will
continue to calculate Small Area FMRs using the rent ratio method
similar to that HUD has used in past Small Area FMR calculations. To
calculate Small Area FMRs using a rent ratio, HUD divides 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. If
a ZCTA does not have reliable rent data at the all bedroom level, HUD
will then check to see if the ZCTA is bordered by ZCTAs that themselves
have reliable rent data. If at least half of a ZCTA's ``neighbors''
have such data, the weighted average of those estimates will be used as
the basis for the SAFMR rather than a county proxy, where the weight is
the length of the shared boundary between the ZCTA and its neighbor. In
small areas where the neighboring ZCTA median gross rents are not
statistically reliable, HUD continues to substitute the median gross
rent for the county containing the ZIP code in the numerator of the
rent ratio calculation. HUD multiplies this rent ratio by the current
two-bedroom rent for the metropolitan area containing the small area to
generate the current year two-bedroom rent for the small area.
HUD continues 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 year's data minimizes excessive year-to-year
variability in Small Area FMR rent ratios due to sampling variance.
Therefore, for FY 2021 Small Area FMRs, HUD has updated the rent ratios
to use an average of the rent ratios calculated from the 2012-2016,
2013-2017, and 2014-2018 5-year ACS estimates.
V. Request for Public Comments and FMR Reevaluations
HUD will continue to accept public comments on the methods HUD uses
to calculate FY 2021 FMRs, including Small Area FMRs, and the FMR
levels for specific areas. Due to its current funding levels, HUD does
not have sufficient resources to conduct local surveys of rents to
address comments filed regarding the FMR levels for specific areas.
PHAs may continue to fund such surveys independently, as specified
below, using ongoing administrative fees or their administrative fee
reserve if they so choose. HUD continually strives to calculate FMRs
that meet the statutory requirement of using ``the most recent
available data'' while also serving as an effective program parameter.
PHAs or other parties interested in requesting HUD's reevaluation
of their area's FY 2021 FMRs, as provided for under section 8(c)(1)(B)
of USHA, must follow the following procedures:
1. By the end of the comment period, such reevaluation requests
must be submitted publicly through https://www.regulations.gov/ or
directly to HUD as described above. The area's PHA or, in multi-
jurisdictional areas, PHA(s) representing at least half of the voucher
tenants in the FMR area, must agree that the reevaluation is necessary.
2. For a re-evaluation to occur, the requestor(s) must supply HUD
with data more recent than the 2018 ACS data used in the calculation of
the FY 2021 FMRs. HUD requires data on gross rents paid in the FMR area
for standard quality rental housing units occupied by recent movers.
The data delivered must be sufficient for HUD to calculate a 40th and
50th percentile two-bedroom rent.\12\ Should this type of data not be
available, requestors may gather this information using the survey
guidance available at https://www.huduser.gov/portal/datasets/fmr/NoteRevisedAreaSurveyProcedures.pdf and https://www.huduser.gov/portal/datasets/fmr/PrinciplesforPHA-ConductedAreaRentSurveys.pdf.
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\12\ Although there are no longer 50th percentile FMRs, HUD must
calculate 50th percentile rents for the Success Rate Payment
Standard under 24 CFR 982.503(e).
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3. On or about October 2, 2020 HUD will post a list, at https://www.huduser.gov/portal/datasets/fmr.html, of the areas requesting
reevaluations and where FY 2020 FMRs remain in effect. 42 U.S.C.
1437f(c)(1)(B) includes the following: ``The Secretary shall establish
a procedure for public housing agencies and other interested parties to
comment on such fair market rentals and to request, within a time
specified by the Secretary, reevaluation of the fair market rentals in
a jurisdiction before such rentals become effective.'' Therefore, areas
where valid reevaluation requests are submitted continue to use FY 2020
FMRs whether the FY 2021 FMRs are lower or higher than the FY 2020
FMRs.
4. Data for reevaluations must be supplied to HUD no later than
Friday January 8, 2021. On Monday January 11, 2021, HUD will post at
https://www.huduser.gov/portal/datasets/fmr.html a listing of the areas
that requested FMR reevaluations but did not deliver data and making
the FY 2021 FMRs effective in these areas. All survey responses
gathered as part of the survey efforts should be delivered to HUD. In
addition to the survey data, HUD requires a current utility schedule in
order to evaluate the survey responses. Finally, HUD encourages PHAs to
evaluate their survey data to ensure the survey provides the expected
results. Should PHAs or their contractors undertake this evaluation,
HUD requests that this analysis also be submitted.
5. HUD will use the data delivered by January 8, 2021 to reevaluate
the FMRs and following the reevaluation, will post revised FMRs with an
accompanying Federal Register notice stating the revised FMRs are
available, which will include HUD's responses to comments filed during
the comment period for this notice.
6. Any data supporting a change in FMRs supplied after January 8,
2021 will be incorporated into FY 2022 FMRs.
7. PHAs operating in areas where the calculated FMR is lower than
the published FMR (i.e., those areas where HUD has limited the decrease
in the annual change in the FMR to 10 percent) may request payment
standards below the basic range (24 CFR
[[Page 49671]]
982.503(d)) and reference the ``unfloored'' rents (i.e., the
unfinalized FMRs calculated by HUD prior to application of the 10-
percent-decrease limit) depicted in the FY 2021 FMR Documentation
System (available at: https://www.huduser.gov/portal/datasets/fmr.html#2021_query).
Questions on how to conduct FMR surveys may be addressed to Marie
L. Lihn or Peter B. Kahn of the Program Parameters and Research
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 pprd@hud.gov.
For small metropolitan areas without one-year ACS data and non-
metropolitan counties, HUD has developed a method using mail surveys
that is discussed on the FMR web page: https://www.huduser.gov/portal/datasets/fmr.html#survey_info. This method 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 method for mail surveys in
areas with 1-year ACS data or in areas not covered by ACS data, HUD
would apply the standard established for Random-Digit Dialing (RDD)
telephone rent surveys. HUD will evaluate these survey results to
determine whether they would establish a new FMR statistically
different from the current FMR, which means that the survey confidence
interval must not include 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 methods are acceptable in providing data to support
reevaluation requests if the survey method can provide statistically
reliable, unbiased estimates of gross rents paid 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 non-metropolitan areas may survey three-bedroom units, in
addition to one- and two-bedroom units and are only required to get 100
eligible survey responses. In certain circumstances, PHAs may conduct
surveys of groups of non-metropolitan counties. HUD must approve all
county-grouped 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 in counties where FMRs are
based on the combined rents in the cluster of FMR areas, HUD will not
revise their FMRs 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 current 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. Staff from HUD's Program
Parameters and Research Division will work with PHAs in areas
requesting reevaluations to provide the minimum number of survey cases
required to ensure that data submitted for reevaluation represent a
statistically valid sample.
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, but in no case
will fewer than 100 eligible cases be considered.
HUD has developed guidance on how to provide data-supported
comments on Small Area FMRs using HUD's special tabulations of the
distribution of gross rents by unit bedroom count for ZIP Code
Tabulation Areas. This guidance is available at https://www.huduser.gov/portal/datasets/fmr.html in the FY 2021 FMR section
under the ``Documents'' tab and should be used by interested parties in
commenting on whether or not the level of Small Area FMRs are too high
or too low (i.e., Small Area FMRs that are larger than the gross rent
necessary to make 40 percent of the units accessible for an individual
zip code or that are smaller than the gross rent necessary to make 40
percent of the units accessible for a given zip code). HUD will post
revised Small Area FMRs after confirming commenters' calculations.
As stated earlier in this notice, HUD is required to use the most
recent data available when calculating FMRs. Therefore, in order to
reevaluate an area's FMR, HUD requires more current rental market data
than the 2018 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.
VI. Environmental Impact
This Notice involves the establishment of FMR 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 available at https://www.huduser.gov/portal/datasets/fmr.html.
Dated: August 10, 2020.
Seth D. Appleton,
Assistant Secretary for Policy Development and Research.
Fair Market Rents for the Housing Choice Voucher Program Schedule B--
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 uses the metropolitan CBSAs, which are made up of one
or more counties, as defined by OMB, with some modifications. HUD is
generally assigning separate FMRs to the component counties of CBSA
Micropolitan Areas.
b. Modifications to OMB Definitions--Following OMB guidance, the
estimation procedure for the FY 2021 FMRs incorporates the OMB
definitions of metropolitan areas based on the CBSA standards as
implemented with 2000 Census data and updated by the 2010 Census in
February 28, 2013, including incremental adjustments through August 15,
2017. The adjustments made to the 2000
[[Page 49672]]
definitions to separate subparts of these areas where FMRs or median
incomes would otherwise change significantly are continued. In
addition, to limit FMR changes based solely on geography and to provide
FMRs at the smallest possible area of geography, no counties were added
to existing metropolitan areas beginning with changes to metropolitan
area definitions from the 2010 Census and implemented in the FY 2016
FMRs. All counties added to existing metropolitan areas are treated as
separate counties for FMR calculations and new metropolitan areas of
more than one county will have separate FMRs for each county in that
new MSA. Rents from a county that is a sub-area will not be used in the
remaining metropolitan sub-area rent determination. All metropolitan
areas that have been subdivided by HUD will use ACS data which conforms
to HUD's area definition if statistically reliable information exists.
If statistically reliable data for the HUD defined area is not
available, HUD uses information from the average of the last three
years. If that is not available, then the FMR of the larger
encompassing geography is used, which is the MSA for a metropolitan
county and the non-metropolitan portion of a State for a non-
metropolitan county.
The specific counties and New England towns and cities within each
state in MSAs and HMFAs were not changed by the August 2017 OMB
metropolitan area definitions. These areas are listed in Schedule B,
available online at https://www.huduser.gov/portal/datasets/fmr.html.
2. Unit Bedroom Count Adjustments
The Metropolitan and Non-Metropolitan Area FMR Schedule s is
available at https://www.huduser.gov/portal/datasets/fmr.html and shows
the FMRs for zero-bedroom through four-bedroom units. The Small Area
FMR Schedule shows Small Area FMRs for all metropolitan areas. FMRs for
unit sizes larger than four bedrooms may be 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 Metropolitan and Non-Metropolitan FMR Area Schedule lists
FMRs alphabetically by state, by metropolitan area and by non-
metropolitan county within each state and are available at https://www.huduser.gov/portal/datasets/fmr.html.
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 non-metropolitan counties are listed alphabetically on each
line of the non-metropolitan county listings.
d. The New England towns and cities included in a non-metropolitan
county are listed immediately following the county name.
[FR Doc. 2020-17717 Filed 8-13-20; 8:45 am]
BILLING CODE 4210-67-P