Notice2023-23685
Small Area Fair Market Rents in the Housing Choice Voucher Program Metropolitan Areas Subject to Small Area Fair Market Rents
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Published
October 25, 2023
Issuing agencies
Housing and Urban Development Department
Abstract
In 2016, HUD completed a final rule requiring the use of Small Area Fair Market Rents (SAFMRs) in certain metropolitan areas to use in the administration of the Housing Choice Voucher (HCV) program. These areas were based on certain selection criteria and values. These criteria are: at least 2,500 HCVs must be under lease in the metropolitan FMR area; at least 20 percent of the standard quality rental stock within the metropolitan FMR area is in small areas (ZIP codes) where the Small Area FMR is more than 110 percent of the metropolitan FMR; the percentage of voucher families living in concentrated low-income areas within the area must be at least 25 percent; the measure of the percentage of voucher holders living in concentrated low-income areas relative to all renters within these areas over the entire metropolitan area exceeds 155 percent (or 1.55); and the vacancy rate for the metropolitan area is higher than 4 percent. This notice lists the metropolitan areas that will be subject to Small Area FMRs based on the final rule's requirement that HUD "make new area designations every 5 years thereafter as new data becomes available."
Full Text
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<title>Federal Register, Volume 88 Issue 205 (Wednesday, October 25, 2023)</title>
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[Federal Register Volume 88, Number 205 (Wednesday, October 25, 2023)]
[Notices]
[Pages 73352-73354]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-23685]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6426-N-01]
Small Area Fair Market Rents in the Housing Choice Voucher
Program Metropolitan Areas Subject to Small Area Fair Market Rents
AGENCY: Office of the Assistant Secretary for Policy Development and
Research and the Office of the Assistant Secretary for Public and
Indian Housing, U.S. Department of Housing and Urban Development (HUD).
ACTION: Notice.
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SUMMARY: In 2016, HUD completed a final rule requiring the use of Small
Area Fair Market Rents (SAFMRs) in certain metropolitan areas to use in
the administration of the Housing Choice Voucher (HCV) program. These
areas were based on certain selection criteria and values. These
criteria are: at least 2,500 HCVs must be under lease in the
metropolitan FMR area; at least 20 percent of the standard quality
rental stock within the metropolitan FMR area is in small areas (ZIP
codes) where the Small Area FMR is more than 110 percent of the
metropolitan FMR; the percentage of voucher families living in
concentrated low-income areas within the area must be at least 25
percent; the measure of the percentage of voucher holders living in
concentrated low-income areas relative to all renters within these
areas over the entire metropolitan area exceeds 155 percent (or 1.55);
and the vacancy rate for the metropolitan area is higher than 4
percent. This notice lists the metropolitan areas that will be subject
to Small Area FMRs based on the final rule's requirement that HUD
``make new area designations every 5 years thereafter as new data
becomes available.''
DATES: Implementation date: October 1, 2024.
FOR FURTHER INFORMATION CONTACT: Questions on this notice may be
addressed to Peter Kahn, Associate Deputy Assistant Secretary, Office
of Policy Development, Office of Policy Development and Research, HUD
Headquarters, 451 7th Street SW, Room 8106, Washington, DC 20410,
telephone number (202) 402-2409; or via email at <a href="/cdn-cgi/l/email-protection#a0f3e1e6edf2fff2d5ccc5e0c8d5c48ec7cfd6"><span class="__cf_email__" data-cfemail="623123242f303d30170e07220a17064c050d14">[email protected]</span></a>.
HUD welcomes and is prepared to receive calls from individuals who are
deaf or hard of hearing, as well as individuals with speech or
communication disabilities. To learn more about how to make an
accessible telephone call, please visit: <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.
This Federal Register notice will be available electronically from
the HUD User page at <a href="https://www.huduser.gov/portal/datasets/fmr.html">https://www.huduser.gov/portal/datasets/fmr.html</a>.
Federal Register notices also are available electronically from <a href="https://www.federalregister.gov">https://www.federalregister.gov</a>.
SUPPLEMENTARY INFORMATION:
I. Background
On November 16, 2016, HUD published a final rule entitled
``Establishing a More Effective Fair Market Rent (FMR) System; Using
Small Area Fair Market Rents (Small Area FMRs) in Housing Choice
Voucher Program Instead of the Current 50th Percentile FMRs'' (81 FR
80567) (``final rule'' or ``Small Area FMRs final rule''). As HUD
explained in the 2016 Rule, Small Area FMRs complement HUD's other
efforts to support households in making informed choices about units
and neighborhoods with the goal of increasing the share of households
that choose to use their vouchers in low poverty opportunity areas. In
the final rule, HUD announced amendments to HUD's FMR regulations
applicable to the HCV program. Also on November 16, 2016, HUD published
a Federal Register notice entitled ``Small Area Fair Market Rents in
Housing Choice Voucher Program Values for Selection Criteria and
Metropolitan Areas Subject to Small Area Fair Market Rents'' (81 FR
80678) (``November 2016 notice'') which established the values for the
selection criteria and listed the initial metropolitan areas that are
subject to SAFMRs implemented through the Small Area FMRs final rule.
The final rule included a requirement that HUD make new area
designations every 5 years as new data becomes
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available. Because the PHAs operating in the areas mandated in the
November 2016 notice began using SAFMRs beginning on April 1, 2018, it
is now appropriate for HUD to undertake the evaluation of new data and
identify additional areas where SAFMRs will be required.
II. Policy Development Process and Stakeholder Engagement
Staff from the Office of Policy Development and Research (PD&R) and
the Office of Public and Indian Housing (PIH) engaged in a process of
stakeholder outreach and policy development to learn about the
implementation of SAFMRs. HUD engaged local PHAs, researchers, and key
stakeholders, including fair housing groups, to better understand PHAs'
implementation of SAFMRs and their impact on families.
PD&R and PIH held listening sessions with PHAs in several
metropolitan areas that were required to adopt SAFMRs under the 2016
rule. Overall, HUD heard from 19 PHAs across these metropolitan areas,
as well as from a statewide agency managing the Housing Choice Voucher
program.
HUD also met with researchers conducting research on the impacts of
SAFMRs. PD&R has provided data licenses to four research teams to
conduct SAFMR analyses, and two of those teams presented initial
findings using HUD's administrative data. (The other research teams do
not yet have research findings to share.)
In the policy development process, HUD sought answers to two basic
categories of questions:
(1) What challenges did PHAs experience in the implementation and
administration of SAFMRs? How could HUD improve the policy to make
implementation easier?
(2) How did the use of SAFMRs impact families with vouchers? Is
there evidence that the use of SAFMRs expanded housing choices and
opportunity, particularly their ability to access higher-rent, lower-
poverty areas?
HUD listening sessions with PHAs focused on their experience with
implementing SAFMRs, including administrative burdens. PHAs emphasized
that implementation required changes to IT systems, staff training,
revision of materials and briefings for tenants, and a process of
landlord education. While experience varied, many PHAs found the
implementation challenging in one or more of these areas, at least
initially. Many PHAs also felt that the rollout of the initial SAFMRs
happened too quickly, and that PHAs should have at least six months--or
perhaps a year--to implement the program. Nearly all PHAs also
emphasized the importance of additional training and technical
assistance to implement SAFMRs.
The academic research teams' preliminary data analysis using HUD's
administrative records identified the following key findings:
New voucher recipients were more likely to move to low-poverty
neighborhoods after SAFMRs were implemented. The program reduced their
overall concentration in low-rent, high-poverty neighborhoods. This
finding held across demographic groups, including households of color
and those with children. However, the magnitude of these positive
effects is modest. These findings for newly admitted families are
consistent with those from prior studies, such as HUD's 2017 interim
evaluation of the SAFMR demonstration at five sites. The latter study,
however, found much larger increases in the share of existing voucher
holders that moved to high-rent areas following SAFMR implementation.
SAFMRs did not affect the success of households with vouchers in
leasing up (i.e., the number of households leasing up within 180 days),
even for high-barrier households or those living in zip codes where
SAFMRs were lower than FMRs.
These researchers have not yet examined the financial impacts of
SAFMRs on PHAs, including the average HAP paid by PHAs. HUD's 2017
study found, however, that average per unit costs (PUCs) and housing
assistance payments (HAPs) declined after SAFMR implementation, as
increased costs in higher-rent areas were more than offset by lower
costs in lower-rent areas.
HUD's staff undertook an analysis of PHA PUC information between
2015 and 2022. While the average PUC in the mandated metropolitan areas
is higher than the average PUC in 2 control groups identified as part
of the analysis, there is little discernible difference in the annual
change in average PUC in each of these areas. In other words, PUCs did
not rise more quickly in mandated metropolitan areas than in other
metropolitan areas. The control groups where those areas that met four
of the five criteria and three of the five criteria in 2016.\1\
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\1\ Note: All areas used as control groups met the 2,500 voucher
units under lease criteria.
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III. Selection Parameters for Identifying Small Area FMRs Area
Following the outreach process, HUD's analysis of administrative
data and the evaluation of updated selection criteria, HUD deliberated
on the appropriate next steps. Following these deliberations, HUD
committed to provide: adequate technical assistance, opportunities for
peer-to-peer training, additional program materials, and additional
training for HUD field office staff.
Through this notice, HUD is affirming the same selection values
used to determine the first cohort of metropolitan FMR areas subject to
SAFMRs for use in the administration of tenant-based assistance under
the HCV program in this next round of determinations.\2\ Metropolitan
FMR areas meeting the following requirements will be subject to Small
Area FMRs consistent with 24 CFR 888.113(c):
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\2\ 24 CFR 888.113(c)(4) states, in part, that SAFMR
designations are permanent; therefore, the first cohort of areas
remain required SAFMR areas and were not reevaluated.
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(i) There are at least 2,500 HCVs under lease, counted using HUD
administrative data as of December 31, 2022;
(ii) At least 20 percent of the standard quality rental stock,
within the metropolitan FMR area is in small areas (ZIP codes) where
the Small Area FMR is more than 110 percent of the metropolitan FMR,
measured using HUD's special tabulations of American Community Survey
(ACS) data through the distribution of Adjusted Standard Quality Rental
Units, and FY 2023 Fair Market Rents; \3\
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\3\ For criteria (ii)-(iv) the specifics of how the criteria is
calculated is found in the Notice of Proposed Rulemaking, available
at <a href="https://www.huduser.gov/portal/datasets/fmr/fmr2016p/SAFMR-Notice-Proposed-Rule.pdf">https://www.huduser.gov/portal/datasets/fmr/fmr2016p/SAFMR-Notice-Proposed-Rule.pdf</a>.
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(iii) The percentage of voucher families living in concentrated
low-income areas within the area must be at least 25 percent calculated
using 2023 designations of Qualifies Census Tracts and 2021 ACS 5-year
tabulations of renter occupied units;
(iv) The measure of the percentage of voucher holders living in
concentrated low-income areas relative to all renters within these
areas over the entire metropolitan area exceeds 155 percent (or 1.55)
using the 2023 designations of Qualified Census Tracts; and
(v) The vacancy rate for the metropolitan area is higher than 4
percent calculated as the average of the vacancy rates for each area
calculated
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from the 2018, 2019 and 2021 1-year ACS tabulations.\4\
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\4\ The calculation of the vacancy rate is defined in the Final
Rule, available at <a href="https://www.huduser.gov/portal/datasets/fmr/fmr2016f/SAFMR-Final-Rule.pdf">https://www.huduser.gov/portal/datasets/fmr/fmr2016f/SAFMR-Final-Rule.pdf</a>.
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The additional metropolitan FMR Areas that meet these requirements
are as follows:
Akron, OH MSA
Augusta-Richmond County, GA-SC HUD Metro FMR Area
Beaumont-Port Arthur, TX MSA
Birmingham-Hoover, AL HUD Metro FMR Area
Buffalo-Cheektowaga-Niagara Falls, NY MSA
Charleston-North Charleston, SC MSA
Chattanooga, TN-GA MSA
Cincinnati, OH-KY-IN HUD Metro FMR Area
Cleveland-Elyria, OH MSA
Columbus, OH HUD Metro FMR Area
Dayton-Kettering, OH MSA
Des Moines-West Des Moines, IA HUD Metro FMR Area
Detroit-Warren-Livonia, MI HUD Metro FMR Area
Fort Wayne, IN MSA
Greensboro-High Point, NC HUD Metro FMR Area
Harrisburg-Carlisle, PA MSA
Indianapolis-Carmel, IN HUD Metro FMR Area
Jersey City, NJ HUD Metro FMR Area
Kansas City, MO-KS HUD Metro FMR Area
Knoxville, TN HUD Metro FMR Area
Los Angeles-Long Beach-Glendale, CA HUD Metro FMR Area
Louisville, KY-IN HUD Metro FMR Area
Memphis, TN-MS-AR HUD Metro FMR Area
Miami-Miami Beach-Kendall, FL HUD Metro FMR Area
Mobile, AL HUD Metro FMR Area
Montgomery, AL MSA
Nashville-Davidson--Murfreesboro--Franklin, TN HUD Metro FMR Area
Oklahoma City, OK HUD Metro FMR Area
Omaha-Council Bluffs, NE-IA HUD Metro FMR Area
Orlando-Kissimmee-Sanford, FL MSA
Oxnard-Thousand Oaks-Ventura, CA MSA
Phoenix-Mesa-Scottsdale, AZ MSA
Raleigh, NC MSA
San Jose-Sunnyvale-Santa Clara, CA HUD Metro FMR Area
Seattle-Bellevue, WA HUD Metro FMR Area
St. Louis, MO-IL HUD Metro FMR Area
Tucson, AZ MSA
Tulsa, OK HUD Metro FMR Area
Virginia Beach-Norfolk-Newport News, VA-NC HUD Metro FMR Area
Wichita, KS HUD Metro FMR Area
Winston-Salem, NC HUD Metro FMR Area
Consistent with the first cohort of Small Area FMR designated areas
and as stated in 24 CFR 888.113(c)(4), these designations are
permanent.
IV. Additional Information
Since the first cohort of mandatory Small Area FMR areas were
required to begin using Small Area FMRs in the administration of the
tenant-based voucher programs in April of 2018, this notice fulfills
HUD's 5-year requirement under the Small Area FMR final rule. Setting
the implementation date of this notice as October 1, 2024, provides
sufficient time for PHAs operating in the newly announced required
areas to acquire sufficient training and provides time for further
market analysis to prepare to set their payments standards using Small
Area FMRs instead of metropolitan area-wide FMRs. Finally, setting an
implementation date of October 1, 2024, provides that PHAs operating in
this second cohort of mandatory areas, under normal voucher program
operations, must have their payment standards aligned with the Small
Area FMRs in their operating areas by January 1, 2025. Should a PHA
operating in these 41 areas wish to begin using Small Area FMRs in the
administration of their voucher programs prior to October 1, 2024, they
will need to seek HUD permission pursuant to an opt-in decision by a
PHA under 24 CFR 888.113(c)(3): ``A PHA administering an HCV program in
a metropolitan area not subject to the 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.'' Until
the SAFMRs take effect for PHAs in the 41 metropolitan areas identified
in this Notice, any decision by a PHA to use SAFMRs is an opt-in
decision, consistent with 24 CFR 88.113(c)(3) and Section 5(b) of PIH
Notice 2018-01.
If a PHA operating in one these 41 areas is unable to implement
Small Area FMRs within the timeframes provided in this notice, they may
petition HUD for a temporary exemption as specified in 24 CFR 888.113
(c)(4), which states in part, ``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 Small Aree FMRs, when
HUD by notice make 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.'' For additional guidance,
PHAs who want to petition HUD for an exemption should refer to section
9 of PIH Notice 2018-01, available at <a href="https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2018-01.pdf">https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2018-01.pdf</a>.
Solomon J. Greene,
Principal Deputy Assistant Secretary for Policy Development and
Research.
Dominique Blom,
General Deputy Assistant Secretary for Public and Indian Housing.
[FR Doc. 2023-23685 Filed 10-23-23; 4:15 pm]
BILLING CODE 4210-67-P
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