Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing assistance to aid lower-income families in renting safe and decent housing. Housing assistance payments are limited by FMRs established by HUD for different geographic areas. In the Housing Choice Voucher (HCV) program, the FMR is the basis for determining the "payment standard amount" used to calculate the maximum monthly subsidy for an assisted family. See 24 CFR 982.503. HUD also uses the FMRs to determine initial renewal rents for some expiring project-based Section 8 contracts, initial rents for housing assistance payment contracts in the Moderate Rehabilitation Single Room Occupancy program, rent ceilings for rental units in both the HOME Investment Partnerships program and the Emergency Solution Grants program, calculation of maximum award amounts for Continuum of Care recipients and the maximum amount of rent a recipient may pay for property leased with Continuum of Care funds, and calculation of flat rents in Public Housing units. In general, the FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities and is typically set at the 40th percentile of the distribution of gross rents. HUD's FMR calculations represent HUD's best effort to estimate the 40th percentile gross rent paid by recent movers into standard quality units in each FMR area. In addition, all rents subsidized under the HCV program must meet reasonable rent standards.

As of October 2, 2000, HUD required FMRs to be set at the 50th percentile for areas where HUD determined higher FMRs were needed to help families assisted under certain HUD programs find and lease decent and affordable housing (65 FR 58870). On November 16, 2016, HUD published a Final Rule entitled "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 FMRs" (Small Area FMR final rule) (81 FR 80567), with an effective date of January 17, 2017. The Small Area FMR final rule eliminates the 50th percentile FMR provisions in the FMR regulations (24 CFR 888.113)¹ and provides that areas currently designated as 50th percentile areas remain 50th percentile areas until their current 3-year eligibility period expires. At the end of the 3-year eligibility period, these areas revert to 40th percentile FMR status. If PHAs in areas converting from 50th percentile FMRs to 40th percentile FMRs meet the deconcentration criteria specified in 24 CFR 982.503(f), available at: https://www.gpo.gov/fdsys/pkg/CFR-2016-title24-vol4/pdf/CFR-2016-title24-vol4-sec982-503.pdf, they may petition HUD to maintain payment standards based on 50th percentile rents on that basis. The following areas completed their 3 years of 50th percentile eligibility in FY 2018 and will revert to 40th percentile FMR status in FY 2019:

FY 2018 50TH-PERCENTILE FMR AREAS REVERTING TO 40TH PERCENTILE FMRS IN FY 2019

Baltimore-ColumbiaTowson, MD MSA.	Philadelphia-CamdenWilmington, PA-NJDE-MD.
Washington, DC-VAMD HUD Metro FMR Area	West Palm BeachBoca Raton, FL HUD Metro FMR Area

The following is a list of FMR areas that retain 50th percentile FMRs for FY 2019, along with the year that they will revert to 40th percentile status:

FY 2019 50TH-PERCENTILE FMR AREAS WITH YEAR OF REVERSION TO 40TH PERCENTILE FMRS

Bergen-Passaic, NJ HUD Metro FMR Area ..................................	2020
Spokane, WA HUD Metro FMR Area ...........................................	2020
San Diego-Carlsbad-San Marcos, CA MSA ..................................	2020

Footnotes:

¹Separately from the Small Area FMR regulations, HUD also calculates and posts 50th percentile rent estimates for the purposes of Success Rate Payment Standards, as defined at 24 CFR 982.503(e) (estimates available at: http://www.huduser.gov/portal/datasets/50per.html), which policy was not changed by the Small Area FMR rule.

Section 8(c)(1) of the USHA, as amended by the Housing Opportunity Through Modernization Act of 2016 (HOTMA) (Pub. L. 114-201, approved July 29, 2016), requires the Secretary of HUD to publish FMRs not less than annually. Section 8(c)(1)(A) states that each FMR "shall be adjusted to be effective on October 1 of each year to reflect changes, based on the most recent available data trended so the rentals will be current for the year to which they apply..." Section 8(c)(1)(B) requires that HUD publish, not less than annually, new FMRs on the World Wide Web or in any other manner specified by the Secretary, and that HUD must also notify the public of when it publishes FMRs by Federal Register notice. After notification, the FMRs "shall become effective no earlier than 30 days after the date of such publication," and HUD must provide a procedure for the public to comment and request a reevaluation of the FMRs in a jurisdiction before the FMRs become effective. Consistent with the statute, HUD is issuing this notice to notify the public that FY 2019 FMRs are available at https://www.huduser.gov/portal/datasets/fmr.html and will become effective on October 1, 2018.
This notice also provides procedures for FMR reevaluation requests.

This section provides a brief overview of how HUD computes the FY 2019 FMRs. HUD is making no changes to the estimation methodology for FMRs as used by HUD for the FY 2018 FMRs. The only difference is the use of more recent data. For complete information on how HUD determines FMR areas, and on how HUD derives each area's FMRs, see the online documentation at https://www.huduser.gov/portal/datasets/fmr.html#2019_query.

In conjunction with the use of 2016 American Community Survey (ACS) data, HUD has implemented the following geography changes: Effective May 1, 2016, Garfield County, Oklahoma became the metropolitan area of Enid, OK metropolitan statistical area (MSA). In addition, HUD changed from two separate county-based HUD Metro FMR Areas (HMFA) (Kalawao County, HI HMFA and Maui County, HI HMFA) to a two county MSA, the KahuluiWailuku-Lahaina, HI MSA due to extremely limited data available for Kalawao County, HI.

A. Base Year Rents

For FY 2019 FMRs, HUD uses the U.S. Census Bureau's 5-year ACS data collected between 2012 and 2016 (released in December 2017) as the base rents for the FMR calculations. In order to improve the statistical reliability of the ACS data used in the FMR calculations, HUD pairs a "margin of error" test ² with an additional test based on the number of survey observations supporting the estimate, beginning with the FY 2018 FMRs and continuing with the FY 2019 FMRs. The Census Bureau does not provide HUD with an exact count of the number of observations supporting the ACS estimate; rather, the Census Bureau provides HUD with categories of the number of survey responses underlying the estimate, including whether the estimate is based on more than 100 observations. Using these categories, HUD requires that, in addition to the "margin of error" test, ACS rent estimates must be based on at least 100 observations in order to be used as base rents.

For areas in which the 5-year ACS data for two-bedroom, standard quality gross rents do not pass the statistical reliability tests (i.e., have a margin of error ratio greater than 50 percent or fewer than 100 observations), HUD will use an average of the base rents over the three most recent years (provided that there is data available for at least two of these years),³ or if such data is not available, using the two-bedroom rent data within the next largest geographic area, which for a non-metropolitan area would be the state non-metro area rent data.

Since FY 2012, HUD has updated base rents each year based on new 5-year data, for which HUD used 2005-2009 ACS data. HUD is also updating base rents for Puerto Rico FMRs using data collected through the Puerto Rico Community Surveys (PRCS) between 2012 and 2016. HUD first updated the

Puerto Rico base rents in FY 2014 based on 2007-2011 PRCS data collected through the ACS program.

HUD historically based FMRs on gross rents for recent movers (those who have moved into their current residence in the last 24 months) measured directly from decennial census long form survey responses. However, due to the way the 5-year ACS data are constructed, HUD developed a new method for calculating recent-mover FMRs in FY 2012, which HUD continues to use in FY 2019: HUD assigns all areas a base rent, which is the two-bedroom standard quality 5- year gross rent estimate from the ACS; then, because HUD's regulations mandate that FMRs must be published as recent mover gross rents, HUD applies a recent mover factor to the base rents assigned from the 5-year ACS data.⁴ The calculation of the recent mover factor is described below.

B. Recent Mover Factor

Following the assignment of the standard quality two-bedroom rent described above, HUD applies a recent mover factor to these rents. HUD calculates the recent mover factor as the change between the 5-year 2012-2016 standard quality two-bedroom gross rent and the 1-year 2016 recent mover gross rent for the recent mover factor area. HUD does not allow recent mover factors to lower the standard quality base rent; therefore, if the 5-year standard quality rent is larger than the comparable 1-year recent mover rent, the recent mover factor is set to 1. The calculation of the recent mover factor for FY 2019 continues with the modifications first applied to the FY 2018 FMRs. Similar to the statistical reliability requirements for base rents, for a recent mover gross rent estimate to be considered statistically reliable, the estimate must have a margin of error ratio that is less than 50 percent, and the estimate must be based on 100 or more observations.

When an FMR area does not have statistically reliable two-bedroom recent mover data, the "all-bedroom"⁵ 1-year recent mover ACS data for the FMR area is tested for statistical reliability. An "all-bedroom" recent mover factor from the FMR area will be used, if statistically reliable, before substituting a two-bedroom recent mover factor from the next larger geography. Incorporating "all-bedroom" rents into the recent mover factor calculation when statistically reliable two-bedroom data is not available preserves the use of local information to the greatest extent possible.

However, where statistically reliable "all-bedroom" data is not available, HUD will continue to base FMR areas' recent mover factors on larger geographic areas, following the same procedures used historically: HUD tests data from differently sized geographic areas from small to large, and bases the recent mover factor on the first statistically reliable recent mover rent estimate in the geographic hierarchy listed below.

• For metropolitan areas that are subareas of larger metropolitan areas, the order is the FMR area, metropolitan area, aggregated metropolitan parts of the state, and state.
• For metropolitan areas that are not divided, the order is the FMR area, aggregated metropolitan parts of the state, and the state.
• In non-metropolitan areas, the order is the FMR area, aggregated nonmetropolitan parts of the state, and the state.

The process for calculating each area's recent mover factor is detailed in the FY 2019 FMR documentation system available at: https://www.huduser.gov/portal/datasets/fmr.html#2019_query.

Applying the recent mover factor to the standard quality base rent produces an "as of" 2016 recent mover two-bedroom gross rent for the FMR area.

C. Other Rent Survey Data

HUD calculated base rents for the insular areas using the 2010 decennial census of American Samoa, Guam, the Northern Mariana Islands, and the Virgin Islands beginning with the FY 2016 FMRs.6 This 2010 base year data is updated through 2016 for the FY 2019 FMRs using national ACS data.

HUD does not use ACS data to establish the base rent or recent mover factor for 10 areas where the FY 2018 FMR was adjusted based on the following survey data:

• Survey data from 2016 is used to adjust the FMR for Portland, ME.
• Survey data from 2017 is used to adjust the FMRs for Santa Rosa, CA; Seattle-Bellevue, WA HMFA; Hood River County, OR; Wasco County, OR; Hawaii County, HI; Jonesboro, AR HMFA; Urban Honolulu, HI MSA; and Santa Maria-Santa Barbara, CA MSA.
• Survey data from 2018 is used to adjust the FMR for Santa CruzWatsonville, CA MSA.

For larger metropolitan areas that have valid ACS one-year recent mover data, survey data may not be any older than the midpoint of the calendar year for the ACS one-year data. Since the ACS one-year data used for the FY 2019 FMRs is from 2016, larger areas may not use survey data collected before June 30, 2016, for the FY 2019 FMRs. Smaller areas without 1-year ACS data, may continue to use local survey data until the mid-point of the 5-year ACS data is more recent than the local survey.⁷

D. Updates From 2016 to 2017 and Forecast to FY 2019

HUD updates the ACS-based "as of" 2016 rent through the end of 2017 using the annual change in gross rents measured through the Consumer Price Index (CPI) from 2016 to 2017 (CPI update factor). As in previous years, HUD uses local CPI data coupled with Consumer Expenditure Survey data for FMR areas with at least 75 percent of their population within Class A metropolitan areas covered by local CPI data. In FMR areas that do not meet this criterion, including Class B and C size metropolitan areas and nonmetropolitan areas, HUD uses CPI data aggregated at the Census region level.

Additionally, HUD is using CPI data collected locally in Puerto Rico as the basis for CPI adjustments from 2016 to 2017 for all Puerto Rico FMR areas. Following the application of the appropriate CPI update factor, HUD trends the gross rent estimate from 2017 to FY 2019 using a national forecast of expected growth in gross rents. This forecast produces "as of" FY 2019 FMRs.

E. Bedroom Rent Adjustments

HUD updates the bedroom ratios used in the calculation of FMRs annually. The bedroom ratios which HUD used in the calculation of FY 2019 FMRs have been updated using average data from three 5-year ACS data series (2010-2014, 2011-2015, and 2012-2016). The bedroom ratio methodology used in this update is unchanged from previous calculations using 2000 Census data. HUD only uses estimates with a margin of error ratio of less than 50 percent. If an area does not have reliable estimates in at least two of the previous three ACS releases, bedroom ratios for the area's larger parent geography are used.

HUD uses two-bedroom units for its primary calculation of FMR estimates. This is generally the most common size of rental unit and, therefore, the most reliable to survey and analyze. After estimating two-bedroom FMRs, HUD calculates bedroom ratios for each FMR area which relate the prices of smaller and larger units to the cost of twobedroom units. To prevent illogical results in particular FMR areas, HUD establishes bedroom interval ranges which set upper and lower limits for bedroom ratios nationwide, based on an analysis of the range of such intervals for all areas with large enough samples to permit accurate bedroom ratio determinations.

In the calculation of FY 2019 FMR estimates, HUD set the bedroom interval ranges as follows: Efficiency FMRs are constrained to fall between 0.64 and 0.85 of the two-bedroom FMR; onebedroom FMRs must be between 0.76 and 0.87 of the two-bedroom FMR; three-bedroom FMRs (prior to the adjustments described below) must be between 1.15 and 1.33 of the twobedroom FMR; and four-bedroom FMRs (again, prior to adjustment) must be between 1.26 and 1.63 of the twobedroom FMR. Given that these interval ranges partially overlap across unit bedroom counts, HUD further adjusts bedroom ratios for a given FMR area, if necessary, to ensure that higher bedroom-count units have higher rents than lower bedroom-count units within that area. The bedroom ratios for Puerto Rico follow these constraints. HUD also further adjusts the rents for three-bedroom and larger units to reflect HUD's policy to set higher rents for these units.⁸ This adjustment is intended to increase the likelihood that the largest families, who have the most difficulty in leasing units, will be successful in finding eligible program units. The adjustment adds 8.7 percent to the unadjusted three-bedroom FMR estimates and adds 7.7 percent to the unadjusted four-bedroom FMR estimates.

HUD derives FMRs for units with more than four bedrooms by adding 15 percent to the four-bedroom FMR for each extra bedroom. For example, the FMR for a five-bedroom unit is 1.15 times the four-bedroom FMR, and the FMR for a six-bedroom unit is 1.30 times the four-bedroom FMR. Similarly, HUD derives FMRs for single-room occupancy units by subtracting 25 percent from the zero-bedroom FMR (i.e., they are set at 0.75 times the zerobedroom (efficiency) FMR).⁹

F. Limit on FMR Decreases Within the Small Area FMR final rule published on November 16, 2016, HUD amended 24 CFR 888.113 to include a limit on the amount that FMRs may annually decrease. The current year's FMRs resulting from the application of the bedroom ratios, as discussed in section (E) above, may be no less than 90 percent of the prior year's FMRs for units with the same number of bedrooms. Accordingly, if the current year's FMRs are less than 90 percent of the prior year's FMRs as calculated by the above methodology, HUD sets the current year's FMRs equal to 90 percent of the prior year's FMRs. For areas where use of Small Area FMRs in the administration of their voucher programs is required, the FY 2019 Small Area FMRs may be no less than 90 percent of the FY 2018 Small Area FMRs. For all other metropolitan areas, for which Small Area FMRs are calculated so that they may be used for other allowable purposes if desired (e.g., exception payment standards, public housing flat rents), the FY 2019 Small Area FMRs may be no less than 90 percent of the greater of the FY 2018 metropolitan area-wide FMRs or the applicable FY 2018 Small Area FMR.

G. Other Limits on FMRs

All FMRs are subject to a state or national minimum. HUD calculates a population-weighted median twobedroom 40th percentile rent across all non-metropolitan portions of each state, which, for the purposes of FMRs, is the state minimum rent. State-minimum rents for each FMR area are available in the FY 2019 FMR Documentation System, available at https://www.huduser.gov/portal/datasets/fmr.html#2019_query. HUD also calculates the population-weighted median two-bedroom 40th percentile rent across all non-metropolitan portions of the country, which, for the purposes of FMRs, is the national minimum rent. For FY 2019, the national minimum rent is $700. The applicable minimum rent for a particular area is the lower of the state or national minimum. Each area's twobedroom FMR must be no less than the applicable minimum rent.

As in prior years, Small Area FMRs are subject to a maximum limit. HUD limits each two-bedroom Small Area FMR to be no more than 150 percent of the two-bedroom FMR for the metropolitan area where the ZIP code is located.

Footnotes:

²HUD's margin of error test requires that the margin of error of the ACS estimate is less than half the size of the estimate itself.
³For FY 2019, the three years of ACS data in question are 2014, 2015 and 2016. The 2014 data are adjusted to be denominated in 2016 dollars using the growth in CPI-based gross rents measured between 2014 and 2016. Similarly, the 2015 gross rent data is adjusted to 2016 denominated dollars using the growth in CPI-based gross rents measured between 2015 and 2016.
⁴HUD's regulations incorporate recent mover data into FMR calculations because the gross rents of those who most recently moved into their units likely depicts the most current market conditions observable through the ACS. Rents paid by renters renewing existing leases may not reflect the most current market conditions, in part because these renters may have clauses within their leases that predetermine the annual increases in rents paid (i.e., rent escalator clauses).
⁵ "All-bedroom" refers to estimates aggregated together regardless of the number of bedrooms in the dwelling unit.
⁶The ACS is not conducted in the Pacific Islands (Guam, Northern Marianas and American Samoa) or the US Virgin Islands. As part of the 2010 Decennial Census, the Census Bureau conducted "long-form" sample surveys for these areas. The results gathered by this long form survey have been incorporated into the FY 2019 FMRs.
⁷The 2013-2017 5-Year ACS data and the 2017 1-Year ACS data will be used to calculate the FY 2020 FMRs. We did discontinue the use of survey in Kauai and Maui counties in HI and in VallejoFairfield, CA even though these surveys did not meet the age requirements because the data provided did not meet our current tighter statistical standards enacted for the FY 2018 FMRs. In all cases the FMRs for FY 2019 would have been lower than for FY 2018 and in some cases, much lower.
⁸As mentioned above, HUD applies the interval ranges for the three-bedroom and four-bedroom FMR ratios prior to making these adjustments. In other words, the adjusted three- and four-bedroom FMRs can exceed the interval ranges, but the unadjusted FMRs cannot.
⁹As established in the interim rules implementing the provisions of the Quality Housing and Work Responsibility Act of 1998 (Title V of the FY 1999 HUD Appropriations Act; Pub. L. 105-276). In 24 CFR 982.604.

HOTMA changed the manner in which vouchers are used to subsidize manufactured home units. Please see HUD's Notice from January 18, 2017 (82 FR 5458) for more detailed information concerning the use of vouchers for manufactured home units. Due to the nature of these changes, HUD will no longer be publishing exception rents for Manufactured Home Space pad rents.

PHAs operating the Housing Choice Voucher (HCV) program in the 24 metropolitan areas identified in the November 16, 2016 Federal Register notice "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) are required to use Small Area FMRs unless the PHA has received a temporary exemption from such use; HUD has suspended the Small Area FMR designation for the metropolitan area under 24 CFR 888.113(c)(4); or the PHA is a Moving to Work PHA with an approved alternative payment standard policy. For more information on the process of obtaining a temporary exemption or area-wide suspension, please see PIH Notice 2018-01: Guidance on Recent Changes in Fair Market Rent (FMR), Payment Standard, and Rent Reasonableness Requirements in the Housing Choice Voucher Program, item (9) beginning on page 13, available at: https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2018-01.pdf.

Small Area FMRs for all metropolitan areas are listed in the Schedule B addendum. Other metropolitan PHAs interested in using Small Area FMRs in the operation of their Housing Choice Voucher program must contact their local HUD field office to request approval from HUD. In the FY 2018 FMR Federal Register notice (82 FR 41637), HUD announced changes in the way Small Area FMRs are calculated and continues this change for the FY 2019 Small Area FMRs. HUD calculates Small Area FMRs directly from the standard quality gross rents provided to HUD by the Census Bureau for ZIP Code Tabulation Areas (ZCTAs), when such data is statistically reliable, instead of using the current rent ratio calculation. The ZCTA two-bedroom equivalent 40th percentile gross rent is analogous to the standard quality base rents set for metropolitan areas and nonmetropolitan counties. For each ZCTA with statistically reliable gross rent estimates, using the expanded test of statistical reliability first used in FY 2018 (i.e., estimates with margins of error ratios below 50 percent and based on at least 100 observations), HUD will calculate a two-bedroom equivalent 40th percentile gross rent using the first statistically reliable gross rent distribution data from the following data sets (in this order): Two-bedroom gross rents, one-bedroom gross rents, and three-bedroom gross rents. If either the one-bedroom or three-bedroom gross rent data is used because the two bedroom gross rent data is not statistically reliable, the one-bedroom or three-bedroom 40th percentile gross rent will be converted to a two-bedroom equivalent rent using the bedroom ratios for the ZCTA's parent metropolitan area. To increase stability to these Small Area FMR estimates, HUD averages the latest three years of gross rent estimates.¹⁰

For ZCTAs without usable gross rent data by bedroom size, HUD will continue to calculate Small Area FMRs using the rent ratio method similar to that which HUD has used in past Small Area FMR calculations. To calculate Small Area FMRs using a rent ratio, HUD divides the median gross rent across all bedrooms for the small area (a ZIP code) by the similar median gross rent for the metropolitan area of the ZIP code. In small areas where the median gross rent is not statistically reliable, HUD substitutes the median gross rent for the county containing the ZIP code in the numerator of the rent ratio calculation. HUD multiplies this rent ratio by the current two-bedroom rent for the metropolitan area containing the small area to generate the current year two-bedroom rent for the small area. HUD continues to use a rolling average of ACS data in calculating the Small Area FMR rent ratios. HUD believes coupling the most current data with previous year's data minimizes excessive year-to-year variability in Small Area FMR rent ratios due to sampling variance. Therefore, for FY 2019 Small Area FMRs, HUD has updated the rent ratios to use an average of the rent ratios calculated from the 2010-2014, 2011-2015, and 2012-2016 5-year ACS estimates.

Footnotes:

¹⁰For example, for FY 2019 Small Area FMRs, HUD averages the gross rents from 2014, 2015 and 2016 5-Year ACS estimates. The 2014 and 2015 gross rent estimates would be adjusted to 2016 dollars using the metropolitan area's gross rent CPI adjustment factors.

Although HUD has not changed the FMR estimation method for FY 2019, HUD will continue to accept public comments on the methods HUD uses to calculate FY 2019 FMRs, including Small Area FMRs, and the FMR levels for specific areas. Due to its current funding levels, HUD no longer has sufficient resources to conduct local surveys of rents to address comments filed regarding the FMR levels for specific areas. PHAs may continue to fund such surveys independently, as specified below, using administrative fees if they so choose. HUD continually strives to calculate FMRs that meet the statutory requirement of using "the most recent available data" while also serving as an effective program parameter.

PHAs or other interested parties interested in requesting HUD reevaluation of their area's FY 2019 FMRs, as provided for under section 8(c)(1)(B) of USHA, must follow the following procedures:

1. By the end of the comment period, such reevaluation requests must be submitted publicly through www.regulations.gov or directly to HUD as described above. The area's PHA or, in multijurisdictional areas, PHA(s) representing at least half of the voucher tenants in the FMR area, must agree that the reevaluation is necessary.

2. In order for a reevaluation to occur, the requestor(s) must supply HUD with data more recent than the 2016 American Community Survey data used in the calculation of the FY 2019 FMRs.

HUD requires data on gross rents paid in the FMR area for standard quality rental housing units. The data delivered must be sufficient for HUD to calculate a 40th and 50th percentile two-bedroom rent. Should this type of data not be available, requestors may gather this information using the survey guidance available at https://www.huduser.gov/portal/datasets/fmr/NoteRevisedAreaSurveyProcedures.pdf and https://www.huduser.gov/portal/datasets/fmr/PrinciplesforPHA-ConductedAreaRentSurveys.pdf.

3. On or about October 2, HUD will post a list, at https://www.huduser.gov/portal/datasets/fmr.html of the areas requesting reevaluations and where FY 2018 FMRs remain in effect.

4. Data for reevaluations must be supplied to HUD no later than Friday, January 11, 2019. On Monday January 14, 2018, HUD will post at https://www.huduser.gov/portal/datasets/fmr.html a listing of the areas failing to deliver data and making the FY 2019 FMRs effective in these areas.

5. HUD will use the data delivered by January 11, 2019, to reevaluate the FMRs and following the reevaluation, will post revised FMRs with an accompanying Federal Register notice stating the revised FMRs are available, which will include HUD responses to comments filed during the comment period.

6. Any data supporting a change in FMRs supplied after January 11, 2019, will be incorporated into FY 2020 FMRs.

7. PHAs operating in areas where the calculated FMR is lower than the published FMR (i.e., those areas where HUD has limited the decrease in the annual change in the FMR to 10 percent) may request payment standards below the basic range (24 CFR 982.503(d)) and reference the "unfloored" rents (i.e., the unfinalized FMRs calculated by HUD prior to application of the 10-percent-decrease limit) depicted in the FY 2019 FMR Documentation System available at: https://www.huduser.gov/portal/datasets/fmr.html#2019_query.

Questions on how to conduct FMR surveys may be addressed to Marie L. Lihn or Peter B. Kahn of the Economic and Market Analysis Division, Office of Economic Affairs, Office of Policy Development and Research at HUD headquarters, 451 7th Street SW, Room 8208, Washington, DC 20410; telephone number 202-402-2409 (this is not a tollfree number), or via email at emad-hq@hud.gov.

For small metropolitan areas without one-year ACS data and nonmetropolitan counties, HUD has developed a method using mail surveys that is discussed on the FMR web page: https://www.huduser.gov/portal/datasets/fmr.html#survey_info. This method allows for the collection of as few as 100 one-bedroom, two-bedroom and three-bedroom recent mover (tenants that moved in last 24 months) units.

While HUD has not developed a specific method for mail surveys in areas with 1-year ACS data or in areas not covered by ACS data, HUD will apply the standard established for Random-Digit Dialing (RDD) telephone rent surveys. HUD will evaluate these survey results to determine whether to establish a new FMR statistically different from the current FMR, which means that the survey confidence interval must not include the FMR. The survey should collect results based on 200 one-bedroom and two-bedroom eligible recent mover units to provide a small enough confidence interval for significant results in large market mail surveys. Areas with statistically reliable 1-year ACS data are not considered to be good candidates for local surveys due to the size and completeness of the ACS process.

Other survey methods are acceptable in providing data to support reevaluation requests if the survey method can provide statistically reliable, unbiased estimates of the gross rent of the entire FMR area. In general, recommendations for FMR changes and supporting data must reflect the rent levels that exist within the entire FMR area and should be statistically reliable.

PHAs in non-metropolitan areas may, in certain circumstances, conduct surveys of groups of counties. HUD must approve all county-grouped surveys in advance. PHAs are cautioned that the resulting FMRs may not be identical for the counties surveyed; each individual FMR area will have a separate FMR based on the relationship of rents in that area to the combined rents in the cluster of FMR areas. In addition, PHAs are advised that in counties where FMRs are based on the combined rents in the cluster of FMR areas, HUD will not revise their FMRs unless the grouped survey results show a revised FMR statistically different from the combined rent level.

Survey samples should preferably be randomly drawn from a complete list of rental units for the FMR area. If this is not feasible, the selected sample must be drawn to be statistically representative of the entire rental housing stock of the FMR area. Surveys must include units at all rent levels and be representative by structure type (including single-family, duplex, and other small rental properties), age of housing unit, and geographic location. The current 5-year ACS data should be used as a means of verifying if a sample is representative of the FMR area's rental housing stock.

A PHA or contractor that cannot obtain the recommended number of sample responses after reasonable efforts should consult with HUD before abandoning its survey; in such situations, HUD may find it appropriate to relax normal sample size requirements.

HUD has developed guidance on how to provide data-supported comments on Small Area FMRs using HUD's special tabulations of the distribution of gross rents by unit bedroom count for ZIP Code Tabulation Areas. This guidance is available at https://www.huduser.gov/portal/datasets/fmr.html in the FY 2019 FMR section and should be used by interested parties in commenting on whether or not the level of Small Area FMRs are too high or too low (i.e., Small Area FMRs that are larger than the gross rent necessary to make 40 percent of the units accessible for an individual ZIP code or that are smaller than the gross rent necessary to make 40 percent of the units accessible for a given ZIP code).

HUD will post revised Small Area FMRs after confirming commenters' calculations.

As stated earlier in this notice, HUD is required to use the most recent data available when calculating FMRs. Therefore, in order to reevaluate an area's FMR, HUD requires more current rental market data than the 2016 ACS.

HUD encourages a PHA or other interested party that believes the FMR in their area is incorrect to file a comment even if they do not have the resources to provide market-wide rental data. In these instances, HUD will use the comments, should survey funding be restored, when determining the areas HUD will select for HUD-funded local area rent surveys.

HUD received 10 comments addressing the use of FMR surveys in the calculation of Renewal Funding Inflation Factors (RFIFs). Most of the comments received directed HUD to continue using FMR surveys in the calculation of RFIFs. Consequently, HUD does not have current plans to discontinue use of FMR surveys in the rent change component of RFIF calculations. HUD is still determining the exact methods to use when incorporating surveys in RFIF calculations. Public comments will be discussed in greater detail, and HUD's responses will be provided, in the 2019 Renewal Funding Inflation Factor notice. HUD provides the above information in this notice for the awareness of PHAs that are considering undertaking a survey to reevaluate their FY 2019 FMRs.

This Notice involves the establishment of FMR schedules, which do not constitute a development decision affecting the physical condition of specific project areas or building sites. Accordingly, under 24 CFR 50.19(c)(6), this Notice is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Accordingly, the Fair Market Rent Schedules, which will not be codified in 24 CFR part 888, are available at https://www.huduser.gov/portal/datasets/fmr.html.

Dated: August 27, 2018.

Todd M. Richardson, General Deputy Assistant Secretary, Office of Policy Development and Research.