Presented at the Tennessee Association of
Housing and Redevelopment Authorities
Spring Workshop, April 24, 2006.




   Un...
Metropolitan areas*
• First defined in 1949
• Intended for preparation, presentation, comparison of data


“The original m...
Metropolitan areas (cont’d)

MSAs have changed between 1950 and 1993 due to the
recognition of new areas as they reached t...
Metropolitan areas (cont’d)
MSAs were designed as a way of presenting information, not
as an analytical tool for understan...
METROPOLITAN AREAS, 1950
                    1973
                    1971
                    1963




  First use of Met...
METROPOLITAN AREAS, 1973
                    1981




    Kingsport-Bristol SMSA is renamed and with
    Clarksville-Hopki...
METROPOLITAN AREAS, 1981
                    1983




    Knoxville MSA is expanded to include Grainger,
    Jackson MSA i...
METROPOLITAN AREAS, 1983
                    1993




    Chattanooga isexpanded to Grainger Sequatchie
    Jackson MSAisn...
METROPOLITAN AREAS, 1993
NEW METROPOLITAN AREAS




          Now, with MICROPOLITAN areas!
New Metropolitan areas
This lack of conceptualization of non-metro areas is
reflected in the definition put forth by the O...
New Metropolitan areas (cont’d)
The inclusion of outlying counties, or rather the exclusion of
non-integrated counties is ...
New Metropolitan areas (cont’d)

These new commuting ties, used to qualify an outlying
county for inclusion into a metro a...
New Metropolitan areas (cont’d)

OLD AREA DEFINITIONS

Old MSA............                 Cities or urbanized areas with ...
Metropolitan areas (cont’d)
NEW AREA DEFINITIONS:

Core-Based Statistical Area...Nucleus around which
there is a high degr...
CBSAs in Northern Middle TN
      and SAs in Northern Middle TN

METROPOLITAN



                                         ...
Metropolitan areas (cont’d)
  Consolidated
      MSA
                                       MSA                           ...
New Metropolitan area Factoids

FACTOIDS:

Under the old system, 20% of the US land area was
classified and considered “me...
New Metropolitan area Factoids (cont’d)

FACTOIDS:

This means that while previously only 848 counties in the US
were prev...
New Metropolitan area Factoids (cont’d)

FACTOIDS:

The new definitions alter the social and economic attributes
of many m...
New Metropolitan area Factoids (cont’d)

FACTOIDS:

This is particularly relevant for Tennessee where we rank
10th in the ...
New Metropolitan area Factoids (cont’d)

FACTOIDS:

State agencies like the Tennessee Housing Development
Agency, which re...
Establishment of Fair Market Rent
Section 8 of the U.S. Housing Act of 1937 authorizes
housing assistance to aid lower-inc...
Uses of Fair Market Rent
The primary uses of FMRs are:
• To determine payment standard amounts for the
  Housing Choice Vo...
Current Fair Market Rent
The FY2006 Fair Market Rents were proposed on June 2, 2005 and
effective on October 1, 2005.

The...
Public Comments on Fair Market Rent
During the comment period, which ended August 1, 2005,
HUD received 58 public comments...
Justifications for Metropolitan Area
Updates to Fair Market Rent

The FY2006 FMRs are based on current OMB metropolitan
ar...
Justifications for Metropolitan Area
Updates to Fair Market Rent (cont’d)

According to the Brookings Institution*

“Over ...
Clarksville          CENSUS COMMUTE
39 miles    24                               65
54 min.              Time: 25.9 minute...
Steps used in Developing and
Updating the Final FY 2006 FMRs


•   Formation of the final FY 2006 FMR areas
•   The 2000 C...
Formation of the final FY 2006 FMR areas


• HUD examines the new metropolitan areas to see if
  they are different from F...
Evaluating the 2000 Census benchmark

• If any of the evaluated Metro FMR Areas have Base
  Rents that differ from the Bas...
An Concrete Example

• Nashville-Davidson-Murfreesboro, TN MSA is expanded
  due to 2003 changes to MSA definitions.

• Th...
An Concrete Example (cont’d)
• Because Cannon and Trousdale Counties have an
  insufficient 2000 Census 2-bedroom recent m...
An Concrete Example (cont’d)

• The Nashville-Davidson-Murfreesboro, TN HUD Metro
  FMR Area is a HUD-defined metropolitan...
Nashville-Davidson-Murfreesboro MSA
FAIR MARKET RENT CHANGES, 2005-2006




Counties highlighted in RED gained at least 14% in FMR
Counties highlighted in YEL...
FAIR MARKET RENT JUMPERS
 Group 1




These four counties were included in their
Respective MSA due to a lack of recent mo...
FAIR MARKET RENT JUMPERS
       Group 2




These 20 counties were assigned the floor FMR:
“the median county rent for all...
What to take home


• The new MSA definitions are not perfect, but they are
  much improved and more reflective of the com...
What to take home (cont’d)


• Fair market rents have changed across the state.

• For some areas the change has been sign...
What to take home (cont’d)


• Efforts to build upon the Census 2000 reporting, through
  Random Digit Dialing surveys to ...
What to take home (cont’d)

• Some counties, for nothing more than a lack of recent
  movers, have been included in CBSAs ...
Thank you very much for your
         attention.


      PAUL HENKEL, Chief of Research
      Tennessee Housing Developmen...
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MSAs Defined

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MSAs Defined

  1. 1. Presented at the Tennessee Association of Housing and Redevelopment Authorities Spring Workshop, April 24, 2006. Understanding the Changing MSA Definitions and Fair Market Rents PAUL HENKEL, Chief of Research Tennessee Housing Development Agency Phone: 615-741-9658 E-mail: paul.henkel@state.tn.us Additional Contributor: Hulya Arik, Sr. Research Analyst
  2. 2. Metropolitan areas* • First defined in 1949 • Intended for preparation, presentation, comparison of data “The original metropolitan statistical area concept was predicated on the model of a large central city of over 50,000 residents that served as a hub of social and economic activity for surrounding counties.” ** * Federal Register v.63, N.244, p.70526 ** Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  3. 3. Metropolitan areas (cont’d) MSAs have changed between 1950 and 1993 due to the recognition of new areas as they reached the minimum required city or urbanized area population. This shift in residential and commuting patterns was influenced by such developments as: • The Interstate Highway System also known as the Dwight D. Eisenhower National System of Interstate and Defense Highways, authorized by the Federal-Aid Highway Act of 1956.* • The invention of the radial tire in 1946 by Michelin and its widespread use in the U.S. beginning in the 1970s.* * http://en.wikipedia.org/wiki/Tyres
  4. 4. Metropolitan areas (cont’d) MSAs were designed as a way of presenting information, not as an analytical tool for understanding processes or informing programs. Additionally, MSAs are what I would call “metrocentric”. That is…they were developed to present urban information, and as such were not very effective at dealing with presenting the complexities of rurality. This has not changed within the new MSA system.
  5. 5. METROPOLITAN AREAS, 1950 1973 1971 1963 First use of Metropolitan Areas Union County Purposes Nashville SMA adds Sumner for Statistical Knoxville SMA adds and Wilson Counties Kingsport-Bristol SMSA is created with Chattanooga SMSA adds Sequatchie Hawkins Nashville SMSA adds Tipton County and Marion and Memphis Robertson, Cheatham, Dickson, Sullivan CountiesCounties Williamson, and Rutherford Counties
  6. 6. METROPOLITAN AREAS, 1973 1981 Kingsport-Bristol SMSA is renamed and with Clarksville-Hopkinsville SMSA is createdexpanded to include Washington, Montgomery County Carter, and Unicoi Counties
  7. 7. METROPOLITAN AREAS, 1981 1983 Knoxville MSA is expanded to include Grainger, Jackson MSA is created and includes Madison County Jefferson, and Sevier Counties
  8. 8. METROPOLITAN AREAS, 1983 1993 Chattanooga isexpanded to Grainger Sequatchie Jackson MSAisnow reduced excludingand Jefferson MemphisMSAMSA is excludesinclude Chester County Knoxville MSA expanded to include Fayette County County and is expanded to include Loudon County Counties
  9. 9. METROPOLITAN AREAS, 1993 NEW METROPOLITAN AREAS Now, with MICROPOLITAN areas!
  10. 10. New Metropolitan areas This lack of conceptualization of non-metro areas is reflected in the definition put forth by the OMB: The general concept of a Metropolitan Statistical Area or a Micropolitan Statistical area is that of an area containing a recognized population nucleus and adjacent communities that have a high degree of integration with that nucleus. (Fed. Register v.65, n.249, p.82228) …beginning in 1996, previous definitions were reviewed by the Metropolitan Area Standards Review Committee and revised to be effective with the release of the 2000 census
  11. 11. New Metropolitan areas (cont’d) The inclusion of outlying counties, or rather the exclusion of non-integrated counties is based only on commuting patterns. According to Brookings Institution research*: • “The extent of urban areas has…changed, due to population growth and new definitional criteria….[thus increasing] the number of central counties [and] enlarging the potential commuting fields [while at the same time] new commuting criteria…are more restrictive…” * Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  12. 12. New Metropolitan areas (cont’d) These new commuting ties, used to qualify an outlying county for inclusion into a metro area, equate to at least 25% of the working population.* Inclusions of the Micropolitan Statistical Area has broadened the applicability of the new standards to a much greater proportion of previously classified non-metropolitan areas. * Miller K (2004) What is Rural? Rural by the Numbers, No. 1. Rural Policy Research Institute.
  13. 13. New Metropolitan areas (cont’d) OLD AREA DEFINITIONS Old MSA............ Cities or urbanized areas with at least 50,000 people (Counties included/excluded based on employment, commuting, and pop. density criteria) Primary MSA....... county(s) in a metro area that with at least 100,000 people. Combined MSA.... aggregation of 2+ PMSAs. Central City.......... Census designated place was automatically designated. Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  14. 14. Metropolitan areas (cont’d) NEW AREA DEFINITIONS: Core-Based Statistical Area...Nucleus around which there is a high degree of integration. Can be metro (50,000+) or micro (10,000-49,999). MSA...At least one urbanized area with at least 50,000 people . (Counties included based on commuting criteria) Micropolitan Statistical Area...At least one urbanized area with at least 50,000 people. (Counties included based on commuting criteria) Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  15. 15. CBSAs in Northern Middle TN and SAs in Northern Middle TN METROPOLITAN MICROPOLITAN METROPOLITAN MICROPOLITAN MICROPOLITAN MICROPOLITAN MICROPOLITAN
  16. 16. Metropolitan areas (cont’d) Consolidated MSA MSA Non-metro or Primary MSA Micropolitan MSA Statistical Non-CBSA Area Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  17. 17. New Metropolitan area Factoids FACTOIDS: Under the old system, 20% of the US land area was classified and considered “metropolitan”, the remaining 80% was considered “non-metropolitan”. Under the new system, 20% of the US land area is classified “metropolitan”, but Of the remaining 75% that is “non-metropolitan”, a further 20% are classified “micropolitan”. Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  18. 18. New Metropolitan area Factoids (cont’d) FACTOIDS: This means that while previously only 848 counties in the US were previously “included” in the MSA definitions, coverage has expanded to 1,779 counties that are somehow “included”: 1089 in MSAs and 690 in mSAs. This expands coverage of the population from 80% of the population nationwide to 93%. Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  19. 19. New Metropolitan area Factoids (cont’d) FACTOIDS: The new definitions alter the social and economic attributes of many metropolitan areas. These new standards provide for a standard choice for analyzing or ranking metropolitan areas across the country, but more significantly: Offer several ways for local analysts to define their area. Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  20. 20. New Metropolitan area Factoids (cont’d) FACTOIDS: This is particularly relevant for Tennessee where we rank 10th in the number of mSAs (n=20) nationwide. This provides for the ability to better use of Census data, which has developed into a key tool for analytical research (regardless of whether or not its original design was intended for this purpose). Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  21. 21. New Metropolitan area Factoids (cont’d) FACTOIDS: State agencies like the Tennessee Housing Development Agency, which rely on the “hard data” provided by the US Census Bureau, can now better design and evaluate programs to serve Tennessee when using MSA data. This significant revision, overdue after 50 years of basically unaltered methodology, better reflect the mosaic that is Tennessee and allow for Census data to be used to better develop a more multi-layered understanding. Source: Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  22. 22. Establishment of Fair Market Rent Section 8 of the U.S. Housing Act of 1937 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 areas. The FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utilities) of rental housing that is: • privately owned • decent, • safe • modest • with suitable amenities.
  23. 23. Uses of Fair Market Rent The primary uses of FMRs are: • To determine payment standard amounts for the Housing Choice Voucher program • To determine initial renewal rents for some expiring project-based Section 8 contracts • To determine initial rents for housing assistance payment (HAP) contracts in the Moderate Rehabilitation Single Room Occupancy program • To serve as a rent ceiling in the HOME rental assistance program.
  24. 24. Current Fair Market Rent The FY2006 Fair Market Rents were proposed on June 2, 2005 and effective on October 1, 2005. The FMRs for FY2006 were based on a change in metropolitan area definitions: the county-based statistical areas as defined by OMB, with some modifications. The only modifications made are to permit OMB-defined metropolitan areas to be divided into more than one FMR area when necessary to minimize changes in FMRs due solely to the use of the new definitions. In general, any parts of old metropolitan areas, or formerly non- metropolitan counties, that would have more than a 5 percent increase or decrease in their FMRs as a result of implementing the new OMB metropolitan definitions are defined as separate FMR areas.
  25. 25. Public Comments on Fair Market Rent During the comment period, which ended August 1, 2005, HUD received 58 public comments on the proposed FY2006 FMRs. • Over one-half of the comments concerned the changes in FMRs as a result of using the new OMB metropolitan definitions. • Other comments opposed reductions in their FMRs as a result of Random Digit Dialing (RDD) surveys. – Low FMRs were cited as a reason for program difficulties. – Most of the public comments received lacked the data needed to support FMR changes. – All RDD results are being implemented with the exception of the reduction for New Orleans.
  26. 26. Justifications for Metropolitan Area Updates to Fair Market Rent The FY2006 FMRs are based on current OMB metropolitan area definitions. These definitions have advantages: • Based on more current (2000 Census) data • Use a more relevant commuting interchange • Generally provide a better measure of current housing market relationships.
  27. 27. Justifications for Metropolitan Area Updates to Fair Market Rent (cont’d) According to the Brookings Institution* “Over the past five decades…the decentralization of both employment and population in many urban areas have served to disperse the ‘core’ well beyond the largest city into smaller clusters of previously ‘suburban communities’.” * Frey WH, Wilson JH, Berube A and Singer A (2004) Tracking Metropolitan American into the 21st Century. The Living Cities Census Series, November 2004, The Brookings Institution.
  28. 28. Clarksville CENSUS COMMUTE 39 miles 24 65 54 min. Time: 25.9 minutes Up 14% from 1990 Hendersonville AVERAGE COMMUTE 18 miles 28 min. Distance: 19.7 miles Time: 29.0 minutes Old Hickory Distance: 26 miles 18 miles Time: 39 minutes 29 min. NASHVILLE 40 Bellevue 14 miles 40 22 min. Brentwood 17 miles Columbia 65 27 min. 24 Murfreesboro 51 miles 37 miles 1h 10min. 50 min.
  29. 29. Steps used in Developing and Updating the Final FY 2006 FMRs • Formation of the final FY 2006 FMR areas • The 2000 Census benchmark • Incorporating information from Revised Final FY 2005 FMRs, and • Updating to FY 2006 including information from local RDD survey data
  30. 30. Formation of the final FY 2006 FMR areas • HUD examines the new metropolitan areas to see if they are different from FY 2005 FMR areas • HUD compares the 2000 Census 40th Percentile Base Rents for each part of the new metropolitan area against the 2000 Census 40th Percentile Base Rent for the entire new area (called “evaluated Metro FMR Areas”)
  31. 31. Evaluating the 2000 Census benchmark • If any of the evaluated Metro FMR Areas have Base Rents that differ from the Base Rent for entire area by at least 5%, HUD establishes them as separate “HUD Metro FMR Areas (HMFA)” within the new metropolitan area and assigns them their own 2000 Census Base Rent • If an evaluated Metro FMR Areas does not differ from the entire metropolitan area 2000 Census Base Rent by at least 5%, then it gets the 2000 Census Base Rent for the entire metropolitan area
  32. 32. An Concrete Example • Nashville-Davidson-Murfreesboro, TN MSA is expanded due to 2003 changes to MSA definitions. • The change adds five previously excluded counties (Cannon, Hickman, Macon, Smith and Trousdale) not previously within in the old MSA. • According to methodology, each new addition has to be individually checked against the 2000 Census 40th Percentile Base rents to see if it differs by at least 5%.
  33. 33. An Concrete Example (cont’d) • Because Cannon and Trousdale Counties have an insufficient 2000 Census 2-bedroom recent movers (renters), necessary to set their own individual FMR, their FMRs were unable to be effectively and reliably established. Therefore they were merged into the Nashville-Davidson-Murfreesboro, TN HUD Metro FMR Area. • But for Hickman, Macon, and Smith Counties RDD surveys were able to produce reliable data resulting in each county becoming a separate, HUD-defined metropolitan FMR Area.
  34. 34. An Concrete Example (cont’d) • The Nashville-Davidson-Murfreesboro, TN HUD Metro FMR Area is a HUD-defined metropolitan FMR that is made up of the following counties: Cannon, Cheatham, Davidson, Dickson, Robertson, Rutherford, Sumner, Trousdale, Williamson, and Wilson Counties, becoming part of the larger Nashville-Davidson-Murfreesboro, TN MSA. • The larger Nashville-Davidson-Murfreesboro, TN MSA includes also Hickman, Macon, and Smith Counties, each as their own HUD-defined metropolitan FMR Area.
  35. 35. Nashville-Davidson-Murfreesboro MSA
  36. 36. FAIR MARKET RENT CHANGES, 2005-2006 Counties highlighted in RED gained at least 14% in FMR Counties highlighted in YELLOW gained from 6- 13% in FMR
  37. 37. FAIR MARKET RENT JUMPERS Group 1 These four counties were included in their Respective MSA due to a lack of recent mover,s making the RDD survey unreliable.
  38. 38. FAIR MARKET RENT JUMPERS Group 2 These 20 counties were assigned the floor FMR: “the median county rent for all non-metropolitan counties.”
  39. 39. What to take home • The new MSA definitions are not perfect, but they are much improved and more reflective of the complexities of urban development, nationwide and in Tennessee. • These improvements will allow agencies, like THDA, that need to understand housing in Tennessee, both across the state and a the local level, a stronger footing upon which to stand, and move forward. • But change is not easy at the state level.
  40. 40. What to take home (cont’d) • Fair market rents have changed across the state. • For some areas the change has been significant. • The changes, based in the metrocentric, new MSA definitions now used, are closer to representing accurately conditions across the state of Tennessee. • But change is not easy at the MSA and mSA level.
  41. 41. What to take home (cont’d) • Efforts to build upon the Census 2000 reporting, through Random Digit Dialing surveys to more accurately reflect true changes in Fair Market Rent are utilized whenever possible to do so. • But the results are far from perfect. • And change is not easy at the local level, particularly when budgets are thin, programs are strained, and the need is great.
  42. 42. What to take home (cont’d) • Some counties, for nothing more than a lack of recent movers, have been included in CBSAs that might less- than-accurately reflect their true conditions. (For example: Trousdale and Cannon Counties) • But other counties, have been substantially, significantly and positively redefined, the Micropolitan Areas. • These go a long way towards bridging the gap between the old MSA definitions which defined 80% of America as “non-metropolitan” towards recognizing the complexity of micro- and extra-urban areas.
  43. 43. Thank you very much for your attention. PAUL HENKEL, Chief of Research Tennessee Housing Development Agency Phone: 615-741-9658 E-mail: paul.henkel@state.tn.us

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