82 FR 58439 - Notice for Suspension of Small Area Fair Market Rent (Small Area FMR) Designations; Solicitation of Comment

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 82, Issue 237 (December 12, 2017)

On August 10, 2017, pursuant to the authority provided in regulation, HUD suspended for two years the designation for the mandatory use of Small Area Fair Market Rents (Small Area FMRs) for certain metropolitan areas that had previously been designated for Small Area FMR use (Suspension). After HUD provided notice of this suspension, interested persons requested an opportunity to review and comment on the Suspension. While HUD is not required to post the Suspension for public comment, this notice solicits comment for a period of 30 days. At the expiration of the 30-day period, HUD will review the comments and consider if any further changes to the Suspension are necessary.

[Federal Register Volume 82, Number 237 (Tuesday, December 12, 2017)]
[Notices]
[Pages 58439-58441]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-26695]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6070-N-01]


Notice for Suspension of Small Area Fair Market Rent (Small Area 
FMR) Designations; Solicitation of Comment

AGENCY: Office of Public and Indian Housing, HUD.

ACTION: Notice; solicitation of comment.

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SUMMARY: On August 10, 2017, pursuant to the authority provided in 
regulation, HUD suspended for two years the designation for the 
mandatory use of Small Area Fair Market Rents (Small Area FMRs) for 
certain metropolitan areas that had previously been designated for 
Small Area FMR use (Suspension). After HUD provided notice of this 
suspension, interested persons requested an opportunity to review and 
comment on the Suspension. While HUD is not required to post the 
Suspension for public comment, this notice solicits comment for a 
period of 30 days. At the expiration of the 30-day period, HUD will 
review the comments and consider if any further changes to the 
Suspension are necessary.

DATES: Comment Due Date: January 11, 2018.

ADDRESSES: Interested persons are invited to submit comments regarding 
this notice, and HUD's temporary suspension of the use of Small Area 
FMRs, to the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW, Room 
10276, Washington, DC 20410-0500. Communications must refer to the 
above docket number and title. There are two methods for submitting 
public comments. All submissions must refer to the above docket number 
and title.
    Submission of Comments by Mail. Comments may be submitted by mail 
to the Regulations Division, Office of General Counsel, Department of 
Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make comments immediately available 
to the public. Comments submitted electronically through the 
www.regulations.gov website can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
notice.

    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications 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 appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at 202-708-
3055 (this is not a toll-free number). Individuals with

[[Page 58440]]

speech or hearing impairments may access this number via TTY by calling 
the Federal Relay Service at 1-800-877-8339 (this is a toll-free 
number). Copies of all comments submitted are available for inspection 
and downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Todd M. Richardson, Deputy Assistant 
Secretary, Office of Policy Development, Office of Policy Development 
and Research, Department of Housing and Urban Development, 451 7th 
Street SW, Room 4130, Washington, DC 20410, 202-708-1537, ext. 5706 
(this is not a toll-free number).

SUPPLEMENTARY INFORMATION: Since October 2011, all Public Housing 
Agencies (PHAs) operating the Housing Choice Voucher (HCV) program in 
the Dallas, TX HUD Metro FMR Area have been using Small Area Fair 
Market Rents (Small Area FMRs). The use of Small Area FMRs was intended 
to give HCV families access to areas of high opportunity and lower 
poverty by providing a subsidy that is adequate to cover rents in those 
areas, thereby reducing the number of voucher families that reside in 
areas of high poverty concentration. The PHAs in Dallas began using 
Small Area FMRs as the result of a legal settlement.
    HUD announced the commencement of the Small Area FMR demonstration 
in November 2012. Five PHAs participated voluntarily in this 
demonstration, which sought to assess the effect on families of using 
FMRs published at the U.S. Postal Service ZIP code level (i.e., Small 
Area FMRs) in lieu of FMRs published at the metropolitan area level.\1\
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    \1\ Four of the five demonstration PHAs requested and were 
permitted by HUD to continue using Small Area FMRs in the operation 
of their HCV programs after the demonstration ended.
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    In 2015, HUD awarded a cooperative agreement to Abt Associates to 
evaluate the use of Small Area FMRs by the five PHAs that voluntarily 
participated in the demonstration, as well as two PHAs operating the 
voucher program in the Dallas, TX HUD Metro FMR Area. Abt was charged 
with examining whether and to what extent providing higher subsidies in 
ZIP code areas where rents are higher, and lower subsidies in ZIP code 
areas where rents are lower, helps HCV families to better access areas 
of opportunity. HUD also requested that the evaluation examine how the 
transition from metropolitan-wide to Small Area FMRs affected families 
and landlords, and the impact of Small Area FMRs on HCV subsidy and 
administrative costs.
    On November 16, 2016, HUD published its ``Establishing a More 
Effective Fair Market Rent System; Using Small Area Fair Market Rents 
in the Housing Choice Voucher Program Instead of the Current 50th 
Percentile FMR'' final rule (81 FR 80567). This final rule required the 
use of Small Area FMRs in certain metropolitan areas instead of the 
50th percentile rent previously used. On the same day, HUD published a 
notice listing areas in which the use of Small Area FMRs is mandatory 
beginning on October 1, 2017 (81 FR 80678).
    On April 26, 2017, HUD received Abt's Small Area Fair Market Rent 
Demonstration Evaluation Interim Report.\2\ The Interim Report examines 
changes in outcomes from 2010 to 2015 and documents several findings 
that HUD finds concerning. In addition, it indicates that further 
research is needed to address several critical questions with respect 
to the potential harm to HCV families (both participants and 
applicants) and PHAs in areas transitioning to Small Area FMRs.
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    \2\ The Small Area Fair Market Rent Demonstration Evaluation 
Interim Report may be found at https://www.huduser.gov/portal/sites/default/files/pdf/SAFMR-Interim-Report.pdf.
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    On August 10, 2017, pursuant to the authority provided in 
regulation, HUD suspended the designation for the mandatory use of 
Small Area FMRs for 23 of the 24 metropolitan areas that would become 
subject to the requirement on October 1, 2017 (Suspension).\3\ The 
Suspension was made pursuant to 24 CFR 888.113(c)(4), which provides 
that HUD may suspend the Small Area FMR designation for a metropolitan 
area when HUD by notice makes a documented determination that such 
action is warranted. Specifically, Sec.  888.113(c)(4) provides:
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    \3\ The Small Area FMR designation remains in effect for the 
Dallas-Plano-Irving, TX Metro Division (also referred to as the 
Dallas, TX HUD Metro FMR Area). All PHAs administering the HCV 
program in the Dallas-Plano-Irving, TX Metro Division have been 
using Small Area FMRs since 2011 as a result of a legal settlement.

    HUD will designate Small Area FMR areas at the beginning of a 
Federal fiscal year, such designations will be permanent, and [HUD] 
will make new area designations thereafter as new data becomes 
available. HUD may suspend a Small Area FMR designation from a 
metropolitan area, or may temporarily exempt a PHA in a Small Area 
FMR metropolitan area from use of the Small Area FMRs, when HUD by 
notice makes a documented determination that such action is 
warranted. Actions that may serve as the basis of a suspension of 
Small Area FMRs are:
    i. A Presidentially declared disaster area that results in the 
loss of a substantial number of housing units;
    ii. A sudden influx of displaced households needing permanent 
housing; or
    iii. Other events as determined by the Secretary (emphasis 
added).

    Based on the findings in Abt's Small Area Fair Market Rent 
Demonstration Evaluation Interim Report, summarized above, HUD has 
concerns that the mandatory use of Small Area FMRs, without sufficient 
preparation and mitigation of potential unintended consequences, could 
put some PHAs at risk of causing an adverse rental housing market 
condition. Accordingly, after careful consideration, HUD issued the 
Suspension of the Small Area FMR designation for 23 of the 24 
metropolitan areas that had previously been designated for mandatory 
Small Area FMR use. The Suspension was for two Federal fiscal years 
(FYs), becoming effective at the beginning of FY 2020 (October 1, 2019) 
instead of FY 2018. To provide notice to affected PHAs, HUD sent 
letters to more than 200 PHAs in the 23 metropolitan areas noted in the 
Suspension. Additionally, HUD posted an article regarding the 
Suspension on its website.\4\
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    \4\ See HUD, Giving Public Housing Agencies More Time to 
Succeed, PD&R Edge, https://www.huduser.gov/portal/pdredge/pdr-edge-frm-asst-sec-082817.html.
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    The delayed implementation of mandatory Small Area FMR adoption 
will provide HUD with reasonable time to analyze the final findings of 
the demonstration and determine what measures are necessary to mitigate 
negative effects, if possible. For example, the delay may allow HUD to 
develop guidance and technical assistance that is informed by the 
lessons learned from the demonstration.
    Notwithstanding the exercise of this authority, the Small Area FMR 
Rule permits any PHA that voluntarily seeks to adopt SAFMRs to do so. 
The program regulations at 24 CFR 888.113(c)(3) provide that a PHA 
administering an HCV program in a metropolitan area not subject to the 
mandatory application of Small Area FMRs may opt to use Small Area FMRs 
by seeking approval from HUD's Office of Public and Indian Housing 
(PIH) through written request to PIH. In light of the findings of Abt's 
Small Area Fair Market Rent Demonstration Evaluation Interim Report 
referenced above, should HUD receive a request under this provision, 
HUD will consider in its approval determination a PHA's ability to 
provide reasonable assurance that adoption of Small Area FMRs will not 
result in an adverse housing market condition.
    With this notice, HUD seeks public comment on the Suspension. While

[[Page 58441]]

HUD is not required to post the Suspension for public comment, this 
notice solicits comment for a period of 30 days. At the expiration of 
the 30-day period, HUD will review the comments and consider if any 
further changes to the Suspension are necessary. Interested parties can 
find the Suspension in the Supporting Documents section of the docket 
associated with this notice, at www.regulations.gov, and on HUD's 
website at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.

    Dated: December 1, 2017.
Dominique Blom,
General Deputy Assistant Secretary, Office of Public and Indian 
Housing.
[FR Doc. 2017-26695 Filed 12-11-17; 8:45 am]
 BILLING CODE 4210-67-P