[Federal Register Volume 85, Number 48 (Wednesday, March 11, 2020)]
[Notices]
[Pages 14235-14238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04996]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6161-N-03]
Fair Market Rents for the Housing Choice Voucher Program,Moderate
Rehabilitation Single Room Occupancy Program, and Other ProgramsFiscal
Year 2020; Revised
AGENCY: Office of the Assistant Secretary for Policy Development and
Research, HUD.
ACTION: Notice of revised fiscal year (FY) 2020 fair market rents
(FMRs) and discussion of comments on FY 2020 FMRs.
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SUMMARY: This notice updates the FY 2020 FMRs for six areas based on
new survey data: Asheville, NC HUD Metro FMR Area (HMFA), Eugene-
Springfield, OR Metropolitan Statistical Area (MSA),
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Portland, ME HMFA, Santa Maria-Santa Barbara, CA MSA, Worcester, MA
HMFA, and Guam. Further, HUD responds to comments received on the FY
2020 FMRs.
DATES: Effective Date: The revised FY 2020 FMRs for these six areas are
effective on April 10, 2020.
FOR FURTHER INFORMATION CONTACT: Questions on how to conduct FMR
surveys or concerning further methodological explanations may be
addressed to Marie L. Lihn or Peter B. Kahn, Program Parameters and
Research Division, Office of Economic Affairs, Office of Policy
Development and Research, telephone 202-402-2409. Persons with hearing
or speech impairments may access this number through TTY by calling the
toll-free Federal Relay Service at 800-877-8339 (toll-free).
Questions related to use of FMRs or voucher payment standards
should be directed to the respective local HUD program staff.
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
website: http://www.huduser.gov/portal/datasets/fmr.html. The FY 2020
EXCEL files have been updated to include these revised FMRs and this
data is included in our query system by FMR area. For informational
purposes, the 50th percentile rents for all FMR areas are updated and
published at http://www.huduser.gov/portal/datasets/50per.html.
SUPPLEMENTARY INFORMATION: On August 30, 2019 HUD published the FY 2020
FMRs, requesting comments on the FY 2020 FMRs, and outlining procedures
for requesting a reevaluation of an area's FY 2020 FMRs (84 FR 45789).
This notice revises FY 2020 FMRs for six areas based on data provided
to HUD. In addition to providing revised FY 2020 FMRs, this notice also
provides responses to the public comments HUD received on the notice
referenced above.
I. Revised FY 2020 FMRs
The FMRs appearing in the following table supersede the use of the
FY 2019 FMRs for the five areas requesting reevaluation and for Guam,
which has been using FY 2020 FMRs. The updated FY 2020 FMRs are based
on surveys conducted by the area public housing agencies (PHAs) and
reflect the estimated 40th percentile rent levels trended to April 1,
2020.
The FMRs for the affected area are revised as follows:
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FMR by number of bedrooms in unit
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2020 Fair market
rent area 0 BR 1 BR 2 BR 3 BR
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Asheville, NC HUD Metro FMR $1,039 $1,045 $1,255 $1,717 $2,203
Area.......................
Eugene-Springfield, OR MSA.. 773 893 1,176 1,696 1,989
Portland, ME HUD Metro FMR 1,072 1,167 1,516 1,982 2,413
Area.......................
Santa Maria-Santa Barbara, 1,684 1,964 2,324 3,101 3,572
CA MSA.....................
Worcester, MA HUD Metro FMR 1,013 1,100 1,398 1,742 1,894
Area.......................
Guam........................ 952 1,043 1,374 1,982 2,412
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The FY 2020 FMRs are amended and are available on the HUD USER
website: http://www.huduser.gov/portal/datasets/fmr.html. The FY 2020
Small Area FMRs (SAFMRs) for metropolitan areas with revised FMRs have
also been updated commensurate with the metropolitan area revisions and
may be found at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.
II. Public Comments on FY 2020 FMRs
A total of 20 comments were received and posted on regulations.gov,
https://www.regulations.gov/docket?D=HUD-2019-0070. Of the 20 comments
received, nine were reevaluation requests for nine FMR areas. HUD
granted requests for reevaluation for 8 FMR areas, and rejected one
request submitted by a tenant looking for affordable housing in
Memphis, TN. HUD could not approve this request because the request was
not made by housing agencies administering more than half of the
vouchers in the FMR area as required by item 1 in the request for
reevaluation procedures in the August 30, 2019 Federal Register notice.
HUD discussed these requests for reevaluation in a posting available at
https://www.huduser.gov/portal/datasets/fmr/fmr2020/Areas-where-FY2019-
;FMRs-Remain-in-Effect.pdf.
Public housing agencies in the eight areas where HUD agreed to
reevaluate the FY 2020 FMRs continued to use FY 2019 FMRs during the
reevaluation period as mandated by the Housing Opportunities Through
Modernization Act. Five of these eight areas have continued to use FY
2019 FMRs since January 10, 2020 because they provided valid survey
data to revise the FY 2020 FMRs. FY 2020 FMRs became effective on
January 13, 2020 for the three areas where local survey data was not
submitted by the January 10, 2020 cut-off date. HUD published a list of
the three FMR areas not providing data on January 13, 2020 stating that
the FY 2020 FMRs become effective on January 13, 2020 (https://www.huduser.gov/portal/datasets/fmr/fmr2020/FMR-Areas-Requesting-Re-evaluation-and-No-Data-Submission.pdf). This notice provides the
reevaluated FY 2020 FMRs for the five areas requesting reevaluation and
for Guam.
General Comments
Most of the comments not related to specific areas requesting a
reevaluation discussed inaccuracies of the FMRs and a need for more
current and local data. These comments and their responses are
discussed in greater detail below.
Comment: Several commenters suggested that HUD should provide
additional funding to PHAs who undertake local area surveys. One
comment noted that the cost for address-based mail surveys is in the
$5,000 to $10,000 range.
HUD Response: HUD reminds PHAs that paying for local area rent
surveys is an eligible expense to be paid from on-going administrative
fees or their administrative fee reserve account. The estimate of
$5,000 to $10,000 per survey is incorrect. This value is apparently
based on a study conducted in 2012 for very small metropolitan areas
with fewer than 20,000 rental units. Far fewer than 100 survey cases
were acceptable at this time, but no longer because over time HUD has
imposed a minimum 100 observation requirement to reduce year to year
fluctuations in FMRs. The cost of the survey increases with the size of
the FMR, the size of the rental market and the availability and cost of
good rental market lists.
Comment: HUD's reliance on setting FMRs at the 40th percentile is
flawed
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because this only works if there is a normal distribution of rental
units. Sub-standard housing should be removed from the distribution
when calculating a 40th percentile rent.
HUD Response: The purpose of using a percentile instead of an
average is to account for abnormal distributions. HUD removes responses
from the American Community Survey (ACS) when the respondent reports
the unit does not have a complete kitchen or complete plumbing to
address sub-standard units. In addition, HUD determines a ``public
housing cut-off rent'' to eliminate the bottom end of the distribution
of rental units from the ACS before the 40th percentile rent is
calculated as a proxy to remove units with low rents that are likely in
non-market transactions (e.g., rented from relatives), subsidized (ACS
does not ask whether households receive rental subsidies), or are
otherwise inadequate in some manner not measured by the ACS. HUD uses a
consistent method to calculate this distribution cut off for each HUD
region. HUD continues to explore alternatives for removing assisted
units from the ACS responses before the 40th percentile rent is
calculated for the purpose of calculating FMRs.
Comment: HUD needs to conduct its own analysis or research to
address market anomalies and account for erratic fluctuations in FMRs
between years and by bedroom size.
HUD Response: HUD did conduct research into different methods of
calculating the trend factor and implemented metropolitan and regional
forecasting into the calculation of the trend factor in the FY 2020
FMRs.
To correct erratic fluctuations in FMRs year over year, HUD has
implemented steps to attenuate the fluctuations found in the annually
updated survey data. HUD has made methodology changes that call for
averaging bedroom ratios over three years of data and averaging base
rents over the same period when the data is limited. The statutory
directive to use the most recent data available compels HUD to update
the data behind each area's FMR calculation when new data is released.
Consequently, FMRs will change from year to year in accordance with
changes in the underlying survey data. HUD emphasizes that the primary
data source for FMRs is a survey (ACS) and while surveyors do their
best to select unbiased random samples of the population, sampling
error persists within survey statistics.
Comment: Along with inadequate administrative fees, inadequate FMRs
result in voucher underutilization nationwide. HUD's methodology for
setting FMRs also often results in a reduction of choice and in many
places relegates voucher holders to the poorest areas.
HUD Response: HUD's methodology for calculating FMRs has been
revised to improve choice in metropolitan areas through the use of
Small Area FMRs and in all FMR areas by the use of local or regional
trend factors as opposed to one national trend factor. Outside the
voucher program, however, especially for programs that only allow for
the use of area-wide FMRs, the FMR may cover the cost of units with
rent above the 40th percentile found in the poorest of areas.
Comment: HUD should create new administrative mechanisms to cope
with inaccurate FMRs.
HUD Response: HUD does have procedures that provide flexibility in
the voucher program that allow PHAs to keep payment standards constant
when FMRs decline. For areas where rents increase more rapidly than
what is captured by the most recent data available to HUD in
calculating FMRs, the department provides a mechanism for more recent
data collected in a survey to be supplied to HUD. Lastly, HUD has eased
the exception payment standard regulations in metropolitan areas to
allow for the use of up to 110 percent of the Small Area FMR as an
exception payment standard with no approval needed from HUD. The only
requirement is for PHAs to notify HUD of their use of Small Area FMRs
in this manner. New administrative procedures would have to be
developed by the programs other than the Housing Choice Voucher program
to allow for use of payment standards to provide additional
flexibility. Each program required to use FMRs without similar
flexibility to payment standards would have to amend its regulations to
allow for flexible application of FMRs if statute permits.
Comment: Adjustments to FMRs must be followed by the commensurate
adjustments in the Renewal Funding Inflation Factors (RFIF),
particularly in the years following rapid growth and increase in the
FMR.
HUD Response: HUD includes revised FMRs in that year's RFIFs. This
gives those areas that provided new survey data with an increase in
their RFIF in the first year over what they would have had under the
FMRs without the revision. In subsequent years, while the survey is
still effective, their FMRs will only increase by normal factors, and
the RFIFs change accordingly.
Comment: Proper consideration is not being paid by HUD to rapidly
escalating market rents; HUD should tie FMR calculations to the
qualifier provided in Comprehensive Housing Market Analysis (CMHA) and
other such publications. The qualifiers include economy, sales market
and rental market and include categorical ranking and description that
give more insight into local market conditions than older census survey
data.
HUD Response: HUD's Comprehensive Housing Market Analysis (CHMA)
and other such publications are undertaken primarily to assess the
demand for construction of new housing units over a three-year market
horizon. Moreover, CHMAs are not conducted in all areas and are
typically not annually updated. Finally, the area over which a CHMA is
conducted is at the discretion of HUD's Field Economist organization
and may not align with FMR area boundaries. This is to ensure the
construction demand estimates provided in the CHMAs are targeted
appropriately. These reasons make CHMAs a poor source of data for
calculating FMRs. Finally, the FY 2020 appropriations statute directs
HUD to undertake a research study to determine alternative methods for
calculating FMRs in markets with rapidly rising rents. HUD is in the
initial stages of beginning this research effort and expects to have
the research completed sometime in 2021.
Comment: HUD should increase transparency of the FMR calculation,
especially for FMR areas that are based on local rent surveys. Unless
full transparency is provided into the calculations and methodology
used in determining FMRs, the argument that HUD cannot use private data
is invalid. HUD should publish a forecast at 6 months into the year of
the trend factor, so agencies are given plenty of time to plan a rent
survey or deal with other negative impacts to funding.
HUD Response: For the FY 2020 FMRs, HUD modified its Documentation
System to provide better information for areas that receive an FMR
based on current or past surveys.
Comment: HUD should continue to refine its methodology for
calculating FMRs. A high priority should be placed on improving the
data that is used to derive more accurate FMRs. HUD should explore
``scraping'' local rent data or purchase this data for access to rents
in newer Class A properties. HUD should use more timely data when
calculating FMRs. In addition, HUD needs to use data to exclude rent
controlled units from FMR calculations. Other than various private data
sources, HUD could enter into an interagency agreement with the IRS to
get
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information on monthly rent and size of units from landlord tax
filings.
HUD Response: There is no other data on gross rents paid that is
consistently collected on a nationwide basis, available to HUD, that is
more current than the data we receive through the ACS. Proprietary
rental data cannot be used as the basis for the FMR calculations
because it is not consistently available for all areas and is not
collected in such a way that it is statistically representative of the
rental markets it covers. Some of these sources focus on rents for
major apartment projects only. Additionally, rents for single family
homes, which are at least 30 percent of the rental market in major
metropolitan areas and a greater portion in rural areas, are typically
compiled from internet-based ads, or the small subset of professionally
managed single-family rental units and generally are not representative
of the entire rental stock of single family homes. Online listings of
rents are similar to newspaper ads which have been excluded as a source
of rent data for FMRs since the mid-1980s due to a directive issued by
HUD's Inspector General because they do not constitute a statistically
representative sample of the rental market for an area.
HUD can only exclude rent control units if it has some basis for
determining the scope of rents in an area that are governed by rent
control.
The Federal Government invests a substantial amount of resources in
collecting socio-economic data through the American Community Survey
(ACS). Furthermore, the Census Bureau has statutory advantages in
compelling responses to the ACS and receives significantly higher
response rates than HUD could achieve if it was to undertake its own
survey program. The IRS is prohibited by law from releasing taxpayer
information such as rental income, even to other Federal agencies.
Comment: HUD should use the 2017 American Community Survey data to
compare the gross rent by FMR area to the FY 2017 FMRs to determine
accuracy of FMRs and report back to the industry.
HUD Response: HUD undertook an analysis such as this and reported
the results in a recent report to Congress. Please see the section
labeled ``Accuracy of FMRs'' in HUD's report ``Proposals To Update the
Fair Market Rent Formula'', page 3, available at https://www.huduser.gov/portal/sites/default/files/pdf/Proposals-To-Update-the-Fair-Market-Rent-Formula.pdf. Between 2009 and 2016 for areas with
sufficiently large ACS recent mover rental unit samples, the ACS-
measured 40th percentile gross rents were within 90 to 110 percent of
the published FMRs in 83.4 to 94.3 percent of cases. These results do
not adjust for more recent improvements in the FMR estimation method.
III. Environmental Impact
This Notice involves establishment of a rate 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: March 5, 2020.
Todd M. Richardson,
General Deputy Assistant Secretary, Office of Policy Development and
Research.
[FR Doc. 2020-04996 Filed 3-10-20; 8:45 am]
BILLING CODE 4210-67-P