82 FR 15711 - Fair Market Rents for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2017; Revised
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Federal Register Volume 82, Issue 60 (March 30, 2017)
Federal Register Volume 82, Issue 60 (March 30, 2017)
| Page Range | 15711-15714 | |
| FR Document | 2017-06298 |
[Federal Register Volume 82, Number 60 (Thursday, March 30, 2017)] [Notices] [Pages 15711-15714] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-06298] [[Page 15711]] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR-5962-N-03] Fair Market Rents for the Housing Choice Voucher Program and Moderate Rehabilitation Single Room Occupancy Program Fiscal Year 2017; Revised AGENCY: Office of the Assistant Secretary for Policy Development and Research, HUD. ACTION: Notice of Revised Fiscal Year (FY) 2017 Fair Market Rents (FMRs) and Discussion of Comments on FY 2017 FMRs. ----------------------------------------------------------------------- SUMMARY: This notice updates the FY 2017 FMRs for Portland, ME HUD Metro FMR Area (HMFA) and Vallejo-Fairfield, CA Metropolitan Statistical Area (MSA), as requested by commenters. In addition to announcing these revised FY 2017 FMRs, this notice also includes HUD responses to the comments received regarding the FY 2017 FMRs. DATES: Effective Date: The revised FY 2017 FMRs for Portland, ME, HMFA and Vallejo-Fairfield, CA, MSA are effective on May 1, 2017. 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, Economic and Market Analysis 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 Web site: http://www.huduser.gov/portal/datasets/fmr.html. FMRs are listed at the 40th or 50th percentile in Schedule B. For informational purposes, 40th percentile recent-mover rents for the areas with 50th percentile FMRs will be provided in the HUD FY 2017 FMR documentation system at https://www.huduser.gov/portal/datasets/fmr.html#2017_query and 50th percentile rents for all FMR areas are published at http://www.huduser.gov/portal/datasets/50per.html. SUPPLEMENTARY INFORMATION: On August 26, 2016, HUD published the FY 2017 FMRs, requesting comments on the FY 2017 FMRs, and outlined procedures for requesting a reevaluation of an area's FY 2017 FMRs (81 FR 58952). This notice revises FY 2017 FMRs for two areas that requested reevaluation and provided data to HUD to allow for a reevaluation, and provides responses to the public comments HUD received on the previous notice referenced above. I. Revised FY 2017 FMRs The FMRs appearing in the following table supersede the use of the FY 2016 FMRs for Portland, ME HUD Metro FMR Area (HMFA) and Vallejo- Fairfield, CA Metropolitan Statistical Area (MSA). The updated FY 2017 FMRs are based on surveys conducted in December 2016 by the area public housing agencies (PHAs) and reflect the estimated 40th percentile rent levels trended to April 1, 2017. The FMRs for the affected area are revised as follows: ---------------------------------------------------------------------------------------------------------------- FMR by number of bedrooms in unit 2017 fair market rent area ------------------------------------------------------------------------------- 0 BR 1 BR 2 BR 3 BR 4 BR ---------------------------------------------------------------------------------------------------------------- Portland, ME, HMFA.............. 911 1028 1301 1755 1906 Vallejo-Fairfield, CA MSA....... 830 1035 1294 1884 2280 ---------------------------------------------------------------------------------------------------------------- The FMR Schedules are amended as shown in the Appendix to this notice and are available on the HUD USER Web site: http://www.huduser.gov/portal/datasets/fmr.html. The FMR Schedules will not be codified in 24 CFR part 888. II. Public Comments on FY 2017 FMRs A total of 29 comments were received and posted on regulations.gov, https://www.regulations.gov/docket?D=HUD-2016-0093. Fourteen of these comments were requests for reevaluation of the FY 2017 FMRs for 11 FMR areas. HUD approved requests for nine metropolitan areas and declined them for two metropolitan areas (where the requester(s) did not administer more than 50 percent of the housing choice voucher families in the metropolitan area, as required) in a posting on October 3, 2016 available at https://www.huduser.gov/portal/datasets/fmr/fmr2017/Areas-where-FY2016-FMRs-Remain-in-Effect.pdf. These nine areas were granted approval to continue to use FY 2016 FMRs until the reevaluation of the FY 2017 FMRs has occurred. Each metropolitan area was given until January 6, 2017 to provide HUD with the data to reevaluate the FY 2017 FMRs. One area, the Dallas, TX HUD Metro FMR Area (HMFA), which uses Small Area FMRs under a court settlement, has already been reevaluated and its FY 2017 Small Area FMRs have been updated (81 FR 78177), effective December 7, 2016. This notice updates FY 2017 FMRs for two additional areas. The remaining six areas did not provide HUD data to complete a reevaluation, and their FY 2017 FMRs are unchanged from the amounts provided in the August 26, 2016 notice. In accordance with the reevaluation procedures outlined in the August 26, 2016 FY 2017 Fair Market Rent notice (81 FR 58952, Section V. Requests For FMR Reevaluations, item 4), HUD posted a listing of these six areas where data was not submitted and announced that the FY 2017 FMRs for these areas became effective on January 9, 2017 (https://www.huduser.gov/portal/datasets/fmr/fmr2017/Areas-Where-FY2017-FMRs-become-effective.pdf). Most of the other comments discussed inaccuracies of the FMRs and a need for more current data. Several of the comments addressed HUD's specific request for public comment on ``on what should be considered `material changes' in FMR estimation methods for purposes of triggering public notice and comment under HOTMA.'' \1\ In addition, there was a request for a change in a geographic area definition for a metropolitan area in which parts of the area are not contiguous. HUD has summarized the comments where possible and provides responses to these comment groups in greater detail below. --------------------------------------------------------------------------- \1\ HOTMA is the Housing Opportunities Through Modernization Act of 2016 (Pub. L. 114-201, approved July 29, 2016). --------------------------------------------------------------------------- General Comments Comments: FMRs do not represent accurate on-the-ground rental market prices. The accuracy of FMRs is a function of the underlying data set and [[Page 15712]] the methodology used to convert the data set to the FMRs, and the source of the data is unchanged from last year. HUD Response: The American Community Survey (ACS) continues to be the primary source of gross rent data used in the calculation of the FMRs as it is the only known statistically reliable data source that provides comprehensive information on gross rents paid collected in a consistent manner nationwide. The ACS data HUD acquires is adjusted for housing quality and calculated at the 40th percentile rent for the FMR areas. HUD does point out that the data used to calculate FY 2017 FMRs is one year more current than the data used to calculate FY 2016 FMRs. HUD uses the most current ACS data available when calculating the FMRs. As an example, consider the publication timeline for the FY 2017 FMRs. The FY 2017 FMRs were calculated in June and July of 2016 for publication in August 2016, but the 2015 ACS data was not released until September through December of 2016. Therefore, during calculation of FY 2017 FMRs, the 2014 ACS data was the most current available ACS data. HUD augments the most current available ACS data with the annual change in gross rents measured by the Bureau of Labor Statistics' Consumer Price Index (measured between 2014 and 2015 in the FY 2017 FMR example), and a forecasted trend factor to align the calculated FMRs with the Fiscal Year for which the FMRs are effective. Comments: Inaccurate FMRs have strong negative impacts on PHAs' ability to serve Housing Choice Voucher (HCV) participants. Low-income families that rely on the HCV program will feel the greatest impact in areas where the published FMRs are too low relative to actual costs. These low FMRs cause cost burdens for voucher-assisted households to increase, sometimes to the point of forcing low-income families to seek housing in areas with greater concentrations of poverty and lower- quality housing stock. HUD Response: HUD is aware of the impacts when FMRs are too high or too low and strives to limit inaccuracies and year-to-year fluctuations in FMRs. HUD continually reviews its methodology and expects to propose changes in a future Federal Register notice. Comments: HUD's previous statements about making further changes that would be reflected in its FY 2017 FMRs, were not acted upon. There are erratic fluctuations in FMR values within the same bedroom size in the same county, in opposite directions year over year, which do not accurately reflect many local housing markets. There are fluctuations in FMR values in opposite directions between different bedroom sizes within the same year and there are erratic fluctuations in opposite directions year over year that have had the effect of largely cancelling each other out over this three-year period, in a way that does not accurately reflect gross rent values in many rental housing markets. This commenter also expressed concern in the large variations in differences between the FY 2017 Unadjusted rents and the FY 2017 Final FMRs. HUD Response: HUD's initial plan for Proposed FY 2017 FMRs included several changes to the FMR calculation methods to address these criticisms of FMRs; however, with the enactment of the Housing Opportunities Through Modernization Act (HOTMA) (Pub. L. 114-201, approved July 29, 2016) which changed the FMR publication process, there was insufficient time to publish a notice of proposed material change, review comments, and post FY 2017 FMRs with a 30-day delayed effective date (as is all now required), and still meet the mandated October 1, 2016 effective date for FY 2017 FMRs (which is unchanged). Therefore, HUD published FY 2017 FMRs with no methodology changes, and expects to propose them in a forthcoming notice. HUD implemented the state non-metropolitan minimum FMR standard to ensure that voucher holders have access to suitable rental housing units where the rent paid is sufficient to cover the long-term operating and capital requirements for the dwelling. Areas where the state non-metropolitan minimum rent is applied have ACS-based unadjusted rents that are below a reasonable level for these long-term commitments. State non-metropolitan minimum rents are calculated as the population weighted median 2 bedroom rent calculated from the data specific to each non-metropolitan county in a state. The Final 2 bedroom FMR for an area becomes the state non-metropolitan minimum if the rent calculated based on the county level data is below the minimum; therefore, depending on the distribution of county-level unadjusted rents, certain counties could have considerable differences between their unadjusted rent and their published FMR. Unadjusted rents are made available to PHAs solely for the purpose of setting flat rents for their public housing portfolios. Comments: FMRs are deeply flawed and the changes HUD has taken regarding annual adjustment factors are still insufficient. Actions taken by the Senate Appropriations Committee are an attempt to force HUD to make deeper and broader improvements to its FMRs. The Senate FY 2017 THUD-Appropriations bill (Pub. L. 114-223, approved on September 29, 2016) appropriates $41.5 million to HUD to pay for local rental market surveys of areas affected by changing economic conditions and natural disasters. HUD Response: The funds in the Senate appropriations bill referenced by the commenter are for the American Housing Survey, which focuses on housing quality and other demographic issues rather than rents. This is a longitudinal survey with limited local data and the funds cannot be redirected for rent surveys in areas affected by changing economic conditions and natural disasters. The HUD appropriations previously used to conduct rent surveys to adjust FMRs have not been made since 2012. Comments: Ever since HUD used its discretionary authority to adopt each new OMB area for FMR purposes, starting in FY 2006, HUD's rent estimates have gone haywire. To calculate the FY 2016 FMRs, HUD incorporated OMB's latest metropolitan area definition from 2013. As a result, there are counties previously designated by HUD as non-metro that HUD subsequently designated as metropolitan and vice-versa. HUD's FMR areas and SAFMR areas artificially inflate rent values in non- metropolitan areas and artificially deflate FMR values in metropolitan areas. HUD Response: In 2006, when HUD applied OMB's new metropolitan area definitions based on the 2000 Decennial Census to the FMRs, HUD was following longstanding past practice. HUD modified FMR areas in accordance with updated OMB area definitions after the 1980, and 1990 Decennial Censuses. HUD's incorporation of the 2010 Decennial Census- based area definitions into the FY 2016 FMRs continued HUD's longstanding past practices. The updated OMB area definitions' changes in area geography, and especially changes from non-metropolitan to metropolitan area designations, are important in providing consistency across all federal programs. HUD specifically considers the impact of area definition changes on Fair Market Rent levels and other program parameters when implementing metropolitan area definition changes, and specifically deviates from OMB definitions to prevent large changes when sufficient local data is available. Comments: HUD should use more timely data when calculating FMRs. HUD should work to develop a method to incorporate more recent data into its [[Page 15713]] published FMRs rather than continue to rely on PHA-funded studies to correct inaccuracies in FMRs. The ACS five-year and one-year datasets do not possess adequate external validity for calculating current non- regulated rents for all FMR areas. Additionally, the ACS dataset fails to capture key data on housing quality to ensure that calculations are based on the relevant population. This omission greatly alters the FMR estimates and leads to underestimation of the current housing costs. PHAs are not well suited to conduct surveys and compile sophisticated statistical analyses. This is a function that would be better suited for HUD's Office of Policy Development and Research (PD&R). HUD Response: There is no other data on gross rents paid that is consistently collected on a nationwide basis, available to HUD, and more timely than the ACS dataset. HUD recognizes the housing quality data limitations of the ACS dataset and uses a combination of ACS survey responses and a public housing ``cut-off'' rent calculated from HUD administrative data to identify and eliminate these low rent units from the distribution of gross rents paid before a 40th percentile rent is calculated. The rationale for using this ``cut-off'' rent is that units with gross rents below these amounts are either of insufficient quality to meet the housing quality standards for units occupied by voucher holders, or are representative of an assisted tenant's out of pocket expenses and not a true measure of the market gross rent for the unit. Eliminating these units from the distribution before the 40th percentile rent is calculated raises the 40th percentile rent for the area. As discussed earlier, HUD currently lacks funding and the mechanisms necessary to collect rent data by a more specialized survey method. Comments: The effective date for new FMRs should be 60 days from publication, not 30 days. HUD has offered only a 30-day period for PHAs to submit a request for reevaluation of the FMR for their regions. HUD should provide at least 60 days for PHAs to make a reevaluation request. Further, PHAs should be able to choose to continue to use the prior year FMR or use the new FMR for which they requested a reevaluation. Otherwise, a PHA seeking reevaluation whose FMR has increased is, in effect, penalized for requesting reevaluation because it must continue to use the prior year's lower FMR. HUD Response: HOTMA requires that FMRs become effective no less than 30 days following their publication. In order to provide additional time for PHAs to implement newly effective FMRs, HUD's Small Area FMR rule (81 FMR 80567) provides that all PHAs have up to three months from the date when the new FMRs go into effect in which to update their payment standards if a change is necessary to fall within the basic range of the new FMRs. Regarding the timing of reevaluation requests, the FY 2017 FMRs were delayed due to the HOTMA-mandated changes in FMR publication requirements and procedures. Based on timing constraints, HUD provided the longest window possible for making the FY 2017 FMRs effective and for providing a request for FMR reevaluation. Finally, provisions within HOTMA govern the process for FMR reevaluation requests. Specifically, HOTMA states: ``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.'' [emphasis added]. Therefore, HUD may not make the newly calculated FMRs effective when a valid reevaluation request is received. Practically speaking, allowing a PHA to use the higher of the previous year or current year FMR would also create significant issues for quality control and program audit activities. Comments: HUD should allow interested stakeholders to comment on the utility component of FMRs. We recommend that HUD provide PHAs with the utility data it gathers from the annual FMR calculations so that PHAs may evaluate the percentage change in the utility component from year to year. HUD Response: HUD receives ACS data on gross rents paid from the Census Bureau to determine FMRs. The utility component is embedded in this gross rent and not separately available. The inflation adjustments HUD applies to the ACS data includes indices for rent and utilities. While the rent and utility inflation indices can be found in the FMR documentation system, they only serve to inflate the gross rents HUD receives from the ACS, and are not separate estimates of the utility component of gross rent. Section 108 of HOTMA charges HUD with collecting data on utility consumption and costs in local areas to the extent that HUD can do so cost efficiently. HUD is reviewing what can be accomplished cost efficiently and will release these data when they become available. Comments: HUD should take an expansive view of what constitutes a ``material change'' in FMR estimation methods. It is unlikely that HUD can predict the impact of changes in FMR methodology for every FMR geography. The ``material change'' criteria should not be based on either the number of FMR areas impacted or a triggering threshold based on the number of areas whose FMRs would change by a certain percentage before HUD is required to get comments on a ``material change''. Only changes that impact how a PHA can spend money (since PHA payment standards are based on FMRs) should be required to be considered material. HUD Response: HUD appreciates this comment and HUD is taking an expansive view on what constitutes a ``material change'' and intends to provide an opportunity for public comment on all FMR methodological changes in forthcoming proposed notices of material changes in FMR calculations. Moreover, HUD points out that most method changes do not occur in one direction and are not static. That is, FMRs in some areas will go up and some areas will go down as a result of calculation changes, and these changes may mean that an area that went up one year will go down the next year. Comments: HUD should consider smoothing-out the sharp swings in rents from the year-to-year caused by year-to-year changes in the determination of the recent mover factor. Such large changes affect planning and management efforts. HUD Response: HUD may assess the need to propose changes to the FMR estimation methodology related to data integrity in a forthcoming notice of Proposed Material Change that should reduce such large year- to-year swings that can arise from the one-year recent mover data. Comments: The bonuses for three-bedroom, four-bedroom and higher bedroom-count units, ostensibly to help the largest and most difficult- to-house families find units, should not be used without qualification. HUD's policy signals to every developer that a greater profit is to be found in the production of high bedroom-count units. The per-room rent differential offered by HUD for a three-bedroom unit is five times as attractive (per room) as the one offered for a single-bedroom unit, and thus hinders our ability to respond to local housing market conditions. HUD Response: The bonuses applied to the ratios used to calculate the FMRs for higher bedroom-count units have been an important means of serving the relatively small group of large-sized families dependent on vouchers. While HUD appreciate the comment, HUD does not believe the bonuses should be eliminated, even for certain areas. [[Page 15714]] Comments Specific to Puerto Rico Comments: HUD should not use multiple non-contiguous geographical areas as an FMR Area nor apply a single FMR to non-adjacent geographical areas. HUD's use of non-contiguous county equivalents (municipios) in a metropolitan area does not conform to the adjacency standard governing the designation of metropolitan and nonmetropolitan areas. HUD Response: The county removed from the Barranquitas Aibonito- Quebradillas FMR area was not removed because it is not a contiguous area, it was removed because OMB removed it from this metropolitan area. OMB kept the remaining non-contiguous county (municipio), Maunabo, in the metropolitan area, and did not follow the adjacency criteria for this metropolitan area. Both counties (municipios) have been in the metro area at least as far back as 2006. Functionally, removing Maunabo Municipio from the current FMR area will not change the effective FMR for the municipio as there is insufficient data to calculate a stand-alone FMR for the municipio and the state non- metropolitan minimum would still be used. Comments: The use of the Consumer Expenditure Survey (CES) heat use index as a proxy to adjust the ``Rent of primary residence'' statistic to remove the influence of utilities has a depressing effect in a tropical area. HUD Response: HUD's longstanding use of the CES heat use index helps HUD estimate the portion of gross rent attributable to shelter cost and the portion attributable to utility costs. The commenter suggests that HUD's methodology has the effect of lowering FMRs in tropical areas. However, given recent economic trends, increasing the influence of utility costs in the calculation of gross rents in Puerto Rico at this time would further depress rents, not raise them. More fundamentally, HUD's use of the heat use index to ``remove'' the influence of utilities from the ``rent of primary residence component'' of gross rents is necessary because the rent of primary residence index captures some utility costs for units where utilities are included in the rent payment. Therefore, HUD must determine how much utility costs are embedded in the rent of primary residence so as to not double count the influence of utility costs changes when constructing a gross rent inflation factor. To summarize how the CES heat use index is used in the calculation of FMRs: FMRs are gross rent estimates. Gross rents include the cost of the shelter plus the cost of the necessary utilities for the dwelling unit. In order to produce an FMR that comports with the statutory requirements of calculating the FMRs ``based on the most recent available data trended so the rentals will be current for the year to which they apply,'' HUD uses data from the American Community Survey on gross rents paid, updated by the change in gross rents measured through the CPI and trended using a national forecast of expected growth in gross rents. In order to calculate a gross rent increase factor using CPI data, HUD must determine how to combine the CPI's measurement of the ``rent of primary residence'' and the ``fuels and utilities'' component of Housing. This step is complicated by the fact that some of the rents reported in the survey used to generate the CPI data for ``rent of primary residence'' already include utility costs. To cleanly separate the two components of ``rents'' and ``utilities,'' it is necessary to factor out any utility costs reported as rents. HUD uses the CES heat use index to estimate this amount. Several years ago, HUD began using CPI ``rent'' and ``utilities'' components measured solely for Puerto Rico to calculate Puerto Rico's gross rent increase factor. However, because no local measure is known to exist that could serve as the equivalent of the CES heat use index, HUD uses the South Census Region CES information as a proxy in Puerto Rico. For the relevant time period (2014 to 2015), the ``rent of primary residence'' statistic measured across all of Puerto Rico increased by 0.47 percent while the ``fuels and utilities'' component of housing declined by 14.75 percent. Given the large decrease in fuels and utilities measured in Puerto Rico, every combination of the two CPI components to obtain a measurement of the change in gross rents where the weight on the ``rent of primary residence'' component is 95 percent or less for Puerto Rico yields an overall negative CPI update factor (less than 1). Therefore, as stated above, increasing the influence of utility costs in the calculation of gross rents in Puerto Rico in 2017 would further depress rents, not raise them. III. Environmental Impact This Notice makes changes in FMRs for two FMR areas 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 23, 2017. Matthew E. Ammon, General Deputy Assistant Secretary for Policy Development & Research. [FR Doc. 2017-06298 Filed 3-29-17; 8:45 am] BILLING CODE 4210-67-P
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DEPARTMENT OF HOUSING AND FOR FURTHER INFORMATION, CONTACT: www.huduser.gov/portal/datasets/
URBAN DEVELOPMENT Questions on how to conduct FMR fmr.html#2017_query and 50th
surveys or concerning further percentile rents for all FMR areas are
[Docket No. FR–5962–N–03] methodological explanations may be published at http://www.huduser.gov/
Fair Market Rents for the Housing addressed to Marie L. Lihn or Peter B. portal/datasets/50per.html.
Choice Voucher Program and Kahn, Economic and Market Analysis SUPPLEMENTARY INFORMATION: On August
Moderate Rehabilitation Single Room Division, Office of Economic Affairs, 26, 2016, HUD published the FY 2017
Occupancy Program Fiscal Year 2017; Office of Policy Development and FMRs, requesting comments on the FY
Revised Research, telephone 202–402–2409. 2017 FMRs, and outlined procedures for
Persons with hearing or speech requesting a reevaluation of an area’s FY
AGENCY: Office of the Assistant impairments may access this number 2017 FMRs (81 FR 58952). This notice
Secretary for Policy Development and through TTY by calling the toll-free revises FY 2017 FMRs for two areas that
Research, HUD. Federal Relay Service at 800–877–8339 requested reevaluation and provided
ACTION: Notice of Revised Fiscal Year (toll-free). data to HUD to allow for a reevaluation,
(FY) 2017 Fair Market Rents (FMRs) and Questions related to use of FMRs or and provides responses to the public
Discussion of Comments on FY 2017 voucher payment standards should be comments HUD received on the
FMRs. directed to the respective local HUD previous notice referenced above.
program staff.
SUMMARY: This notice updates the FY For technical information on the I. Revised FY 2017 FMRs
2017 FMRs for Portland, ME HUD Metro methodology used to develop FMRs or The FMRs appearing in the following
FMR Area (HMFA) and Vallejo- a listing of all FMRs, please call the table supersede the use of the FY 2016
Fairfield, CA Metropolitan Statistical HUD USER information line at 800– FMRs for Portland, ME HUD Metro FMR
Area (MSA), as requested by 245–2691 (toll-free) or access the Area (HMFA) and Vallejo-Fairfield, CA
commenters. In addition to announcing information on the HUD USER Web site: Metropolitan Statistical Area (MSA).
these revised FY 2017 FMRs, this notice http://www.huduser.gov/portal/ The updated FY 2017 FMRs are based
also includes HUD responses to the datasets/fmr.html. FMRs are listed at on surveys conducted in December 2016
comments received regarding the FY the 40th or 50th percentile in Schedule by the area public housing agencies
2017 FMRs. B. For informational purposes, 40th (PHAs) and reflect the estimated 40th
DATES: Effective Date: The revised FY percentile recent-mover rents for the percentile rent levels trended to April 1,
2017 FMRs for Portland, ME, HMFA areas with 50th percentile FMRs will be 2017.
and Vallejo-Fairfield, CA, MSA are provided in the HUD FY 2017 FMR The FMRs for the affected area are
effective on May 1, 2017. documentation system at https:// revised as follows:
FMR by number of bedrooms in unit
2017 fair market rent area
0 BR 1 BR 2 BR 3 BR 4 BR
Portland, ME, HMFA ............................................................ 911 1028 1301 1755 1906
Vallejo-Fairfield, CA MSA .................................................... 830 1035 1294 1884 2280
The FMR Schedules are amended as reevaluation of the FY 2017 FMRs has fmr2017/Areas-Where-FY2017-FMRs-
shown in the Appendix to this notice occurred. Each metropolitan area was become-effective.pdf).
and are available on the HUD USER given until January 6, 2017 to provide Most of the other comments discussed
Web site: http://www.huduser.gov/ HUD with the data to reevaluate the FY inaccuracies of the FMRs and a need for
portal/datasets/fmr.html. The FMR 2017 FMRs. One area, the Dallas, TX more current data. Several of the
Schedules will not be codified in 24 HUD Metro FMR Area (HMFA), which comments addressed HUD’s specific
CFR part 888. uses Small Area FMRs under a court request for public comment on ‘‘on what
II. Public Comments on FY 2017 FMRs settlement, has already been reevaluated should be considered ‘material changes’
and its FY 2017 Small Area FMRs have in FMR estimation methods for
A total of 29 comments were received purposes of triggering public notice and
been updated (81 FR 78177), effective
and posted on regulations.gov, https:// comment under HOTMA.’’ 1 In addition,
www.regulations.gov/docket?D=HUD- December 7, 2016. This notice updates
FY 2017 FMRs for two additional areas. there was a request for a change in a
2016-0093. Fourteen of these comments geographic area definition for a
were requests for reevaluation of the FY The remaining six areas did not provide
HUD data to complete a reevaluation, metropolitan area in which parts of the
2017 FMRs for 11 FMR areas. HUD area are not contiguous. HUD has
approved requests for nine metropolitan and their FY 2017 FMRs are unchanged
from the amounts provided in the summarized the comments where
areas and declined them for two possible and provides responses to these
metropolitan areas (where the August 26, 2016 notice. In accordance
with the reevaluation procedures comment groups in greater detail below.
requester(s) did not administer more
than 50 percent of the housing choice outlined in the August 26, 2016 FY 2017 General Comments
asabaliauskas on DSK3SPTVN1PROD with NOTICES
voucher families in the metropolitan Fair Market Rent notice (81 FR 58952, Comments: FMRs do not represent
area, as required) in a posting on Section V. Requests For FMR accurate on-the-ground rental market
October 3, 2016 available at https:// Reevaluations, item 4), HUD posted a prices. The accuracy of FMRs is a
www.huduser.gov/portal/datasets/fmr/ listing of these six areas where data was function of the underlying data set and
fmr2017/Areas-where-FY2016-FMRs- not submitted and announced that the
Remain-in-Effect.pdf. These nine areas FY 2017 FMRs for these areas became 1 HOTMA is the Housing Opportunities Through
were granted approval to continue to effective on January 9, 2017 (https:// Modernization Act of 2016 (Pub. L. 114–201,
use FY 2016 FMRs until the www.huduser.gov/portal/datasets/fmr/ approved July 29, 2016).
VerDate Sep<11>2014 19:09 Mar 29, 2017 Jkt 241001 PO 00000 Frm 00027 Fmt 4703 Sfmt 4703 E:\FR\FM\30MRN1.SGM 30MRN1](https://thefederalregister.org/doc/82_FR_15771/page/1.svg)
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published FMRs rather than continue to PHAs to implement newly effective methods. It is unlikely that HUD can
rely on PHA-funded studies to correct FMRs, HUD’s Small Area FMR rule (81 predict the impact of changes in FMR
inaccuracies in FMRs. The ACS five- FMR 80567) provides that all PHAs methodology for every FMR geography.
year and one-year datasets do not have up to three months from the date The ‘‘material change’’ criteria should
possess adequate external validity for when the new FMRs go into effect in not be based on either the number of
calculating current non-regulated rents which to update their payment FMR areas impacted or a triggering
for all FMR areas. Additionally, the ACS standards if a change is necessary to fall threshold based on the number of areas
dataset fails to capture key data on within the basic range of the new FMRs. whose FMRs would change by a certain
housing quality to ensure that Regarding the timing of reevaluation percentage before HUD is required to get
calculations are based on the relevant requests, the FY 2017 FMRs were comments on a ‘‘material change’’. Only
population. This omission greatly alters delayed due to the HOTMA-mandated changes that impact how a PHA can
the FMR estimates and leads to changes in FMR publication spend money (since PHA payment
underestimation of the current housing requirements and procedures. Based on standards are based on FMRs) should be
costs. PHAs are not well suited to timing constraints, HUD provided the required to be considered material.
conduct surveys and compile longest window possible for making the HUD Response: HUD appreciates this
sophisticated statistical analyses. This is FY 2017 FMRs effective and for comment and HUD is taking an
a function that would be better suited providing a request for FMR expansive view on what constitutes a
for HUD’s Office of Policy Development reevaluation. Finally, provisions within ‘‘material change’’ and intends to
and Research (PD&R). HOTMA govern the process for FMR provide an opportunity for public
HUD Response: There is no other data reevaluation requests. Specifically, comment on all FMR methodological
on gross rents paid that is consistently HOTMA states: ‘‘The Secretary shall changes in forthcoming proposed
collected on a nationwide basis, establish a procedure for public housing notices of material changes in FMR
available to HUD, and more timely than agencies and other interested parties to calculations. Moreover, HUD points out
the ACS dataset. HUD recognizes the comment on such fair market rentals that most method changes do not occur
housing quality data limitations of the and to request, within a time specified in one direction and are not static. That
ACS dataset and uses a combination of by the Secretary, reevaluation of the fair is, FMRs in some areas will go up and
ACS survey responses and a public market rentals in a jurisdiction before some areas will go down as a result of
housing ‘‘cut-off’’ rent calculated from such rentals become effective.’’ calculation changes, and these changes
HUD administrative data to identify and [emphasis added]. Therefore, HUD may may mean that an area that went up one
eliminate these low rent units from the not make the newly calculated FMRs year will go down the next year.
distribution of gross rents paid before a effective when a valid reevaluation Comments: HUD should consider
40th percentile rent is calculated. The request is received. Practically speaking, smoothing-out the sharp swings in rents
rationale for using this ‘‘cut-off’’ rent is allowing a PHA to use the higher of the from the year-to-year caused by year-to-
that units with gross rents below these previous year or current year FMR year changes in the determination of the
amounts are either of insufficient would also create significant issues for recent mover factor. Such large changes
quality to meet the housing quality quality control and program audit affect planning and management efforts.
standards for units occupied by voucher activities.
holders, or are representative of an Comments: HUD should allow HUD Response: HUD may assess the
assisted tenant’s out of pocket expenses interested stakeholders to comment on need to propose changes to the FMR
and not a true measure of the market the utility component of FMRs. We estimation methodology related to data
gross rent for the unit. Eliminating these recommend that HUD provide PHAs integrity in a forthcoming notice of
units from the distribution before the with the utility data it gathers from the Proposed Material Change that should
40th percentile rent is calculated raises annual FMR calculations so that PHAs reduce such large year-to-year swings
the 40th percentile rent for the area. As may evaluate the percentage change in that can arise from the one-year recent
discussed earlier, HUD currently lacks the utility component from year to year. mover data.
funding and the mechanisms necessary HUD Response: HUD receives ACS Comments: The bonuses for three-
to collect rent data by a more data on gross rents paid from the Census bedroom, four-bedroom and higher
specialized survey method. Bureau to determine FMRs. The utility bedroom-count units, ostensibly to help
Comments: The effective date for new component is embedded in this gross the largest and most difficult-to-house
FMRs should be 60 days from rent and not separately available. The families find units, should not be used
publication, not 30 days. HUD has inflation adjustments HUD applies to without qualification. HUD’s policy
offered only a 30-day period for PHAs the ACS data includes indices for rent signals to every developer that a greater
to submit a request for reevaluation of and utilities. While the rent and utility profit is to be found in the production
the FMR for their regions. HUD should inflation indices can be found in the of high bedroom-count units. The per-
provide at least 60 days for PHAs to FMR documentation system, they only room rent differential offered by HUD
make a reevaluation request. Further, serve to inflate the gross rents HUD for a three-bedroom unit is five times as
PHAs should be able to choose to receives from the ACS, and are not attractive (per room) as the one offered
continue to use the prior year FMR or separate estimates of the utility for a single-bedroom unit, and thus
use the new FMR for which they component of gross rent. Section 108 of hinders our ability to respond to local
requested a reevaluation. Otherwise, a HOTMA charges HUD with collecting housing market conditions.
PHA seeking reevaluation whose FMR data on utility consumption and costs in HUD Response: The bonuses applied
asabaliauskas on DSK3SPTVN1PROD with NOTICES
has increased is, in effect, penalized for local areas to the extent that HUD can to the ratios used to calculate the FMRs
requesting reevaluation because it must do so cost efficiently. HUD is reviewing for higher bedroom-count units have
continue to use the prior year’s lower what can be accomplished cost been an important means of serving the
FMR. efficiently and will release these data relatively small group of large-sized
HUD Response: HOTMA requires that when they become available. families dependent on vouchers. While
FMRs become effective no less than 30 Comments: HUD should take an HUD appreciate the comment, HUD
days following their publication. In expansive view of what constitutes a does not believe the bonuses should be
order to provide additional time for ‘‘material change’’ in FMR estimation eliminated, even for certain areas.
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![15714 Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices
Comments Specific to Puerto Rico shelter plus the cost of the necessary Dated: March 23, 2017.
Comments: HUD should not use utilities for the dwelling unit. In order Matthew E. Ammon,
multiple non-contiguous geographical to produce an FMR that comports with General Deputy Assistant Secretary for Policy
areas as an FMR Area nor apply a single the statutory requirements of calculating Development & Research.
FMR to non-adjacent geographical areas. the FMRs ‘‘based on the most recent [FR Doc. 2017–06298 Filed 3–29–17; 8:45 am]
HUD’s use of non-contiguous county available data trended so the rentals will BILLING CODE 4210–67–P
equivalents (municipios) in a be current for the year to which they
metropolitan area does not conform to apply,’’ HUD uses data from the
the adjacency standard governing the American Community Survey on gross
rents paid, updated by the change in DEPARTMENT OF THE INTERIOR
designation of metropolitan and
gross rents measured through the CPI
nonmetropolitan areas. Fish and Wildlife Service
HUD Response: The county removed and trended using a national forecast of
from the Barranquitas Aibonito- expected growth in gross rents. In order [FWS–HQ–FHC–2017–N033;
to calculate a gross rent increase factor FXFR131109WFHS0–167–FF09F10000]
Quebradillas FMR area was not removed
using CPI data, HUD must determine
because it is not a contiguous area, it
how to combine the CPI’s measurement Information Collection Request Sent to
was removed because OMB removed it
of the ‘‘rent of primary residence’’ and the Office of Management and Budget
from this metropolitan area. OMB kept
the ‘‘fuels and utilities’’ component of for Approval; Injurious Wildlife;
the remaining non-contiguous county
Housing. This step is complicated by Importation Certification for Live Fish
(municipio), Maunabo, in the
the fact that some of the rents reported and Fish Eggs
metropolitan area, and did not follow
in the survey used to generate the CPI
the adjacency criteria for this AGENCY: Fish and Wildlife Service,
data for ‘‘rent of primary residence’’
metropolitan area. Both counties Interior.
already include utility costs. To cleanly
(municipios) have been in the metro separate the two components of ‘‘rents’’ ACTION: Notice; request for comments.
area at least as far back as 2006. and ‘‘utilities,’’ it is necessary to factor
Functionally, removing Maunabo out any utility costs reported as rents. SUMMARY: We (U.S. Fish and Wildlife
Municipio from the current FMR area HUD uses the CES heat use index to Service) have sent an Information
will not change the effective FMR for estimate this amount. Collection Request (ICR) to the Office of
the municipio as there is insufficient Several years ago, HUD began using Management and Budget (OMB) for
data to calculate a stand-alone FMR for CPI ‘‘rent’’ and ‘‘utilities’’ components review and approval. We summarize the
the municipio and the state non- measured solely for Puerto Rico to ICR below and describe the nature of the
metropolitan minimum would still be calculate Puerto Rico’s gross rent collection and the estimated burden and
used. increase factor. However, because no cost. This information collection is
Comments: The use of the Consumer local measure is known to exist that scheduled to expire on March 31, 2017.
Expenditure Survey (CES) heat use could serve as the equivalent of the CES We may not conduct or sponsor and a
index as a proxy to adjust the ‘‘Rent of heat use index, HUD uses the South person is not required to respond to a
primary residence’’ statistic to remove Census Region CES information as a collection of information unless it
the influence of utilities has a proxy in Puerto Rico. For the relevant displays a currently valid OMB control
depressing effect in a tropical area. time period (2014 to 2015), the ‘‘rent of number. However, under OMB
HUD Response: HUD’s longstanding primary residence’’ statistic measured regulations, we may continue to
use of the CES heat use index helps across all of Puerto Rico increased by conduct or sponsor this information
HUD estimate the portion of gross rent 0.47 percent while the ‘‘fuels and collection while it is pending at OMB.
attributable to shelter cost and the utilities’’ component of housing DATES: You must submit comments on
portion attributable to utility costs. The declined by 14.75 percent. Given the or before May 1, 2017.
commenter suggests that HUD’s large decrease in fuels and utilities ADDRESSES: Send your comments and
methodology has the effect of lowering measured in Puerto Rico, every
FMRs in tropical areas. However, given suggestions on this information
combination of the two CPI components collection to the Desk Officer for the
recent economic trends, increasing the to obtain a measurement of the change
influence of utility costs in the Department of the Interior at OMB–
in gross rents where the weight on the OIRA at (202) 395–5806 (fax) or OIRA_
calculation of gross rents in Puerto Rico ‘‘rent of primary residence’’ component
at this time would further depress rents, DOCKET@OMB.eop.gov (email). Please
is 95 percent or less for Puerto Rico provide a copy of your comments to the
not raise them. More fundamentally, yields an overall negative CPI update
HUD’s use of the heat use index to Service Information Collection
factor (less than 1). Therefore, as stated Clearance Officer, U.S. Fish and
‘‘remove’’ the influence of utilities from above, increasing the influence of utility
the ‘‘rent of primary residence Wildlife Service, MS BPHC, 5275
costs in the calculation of gross rents in Leesburg Pike, Falls Church, VA 22041–
component’’ of gross rents is necessary Puerto Rico in 2017 would further
because the rent of primary residence 3803 (mail), or madonna_baucum@
depress rents, not raise them. fws.gov (email). Please include ‘‘1018–
index captures some utility costs for
units where utilities are included in the III. Environmental Impact 0078’’ in the subject line of your
rent payment. Therefore, HUD must This Notice makes changes in FMRs comments. You may review the ICR
determine how much utility costs are for two FMR areas and does not online at http://www.reginfo.gov. Follow
asabaliauskas on DSK3SPTVN1PROD with NOTICES
embedded in the rent of primary constitute a development decision the instructions to review Department of
residence so as to not double count the affecting the physical condition of the Interior collections under review by
influence of utility costs changes when specific project areas or building sites. OMB.
constructing a gross rent inflation factor. Accordingly, under 24 CFR 50.19(c)(6), FOR FURTHER INFORMATION CONTACT:
To summarize how the CES heat use this Notice is categorically excluded Madonna Baucum, at madonna_
index is used in the calculation of from environmental review under the baucum@fws.gov (email) or (703) 358–
FMRs: FMRs are gross rent estimates. National Environmental Policy Act of 2503 (telephone).
Gross rents include the cost of the 1969 (42 U.S.C. 4321). SUPPLEMENTARY INFORMATION:
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Document Created: 2017-03-30 01:35:28
Document Modified: 2017-03-30 01:35:28
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice of Revised Fiscal Year (FY) 2017 Fair Market Rents (FMRs) and Discussion of Comments on FY 2017 FMRs. | |
| Dates | Effective Date: The revised FY 2017 FMRs for Portland, ME, HMFA and Vallejo-Fairfield, CA, MSA are effective on May 1, 2017. | |
| FR Citation | 82 FR 15711 |
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