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. 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. 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. 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. 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. 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. METROPOLITAN AREAS, 1981
1983
Knoxville MSA is expanded to include Grainger,
Jackson MSA is created and includes Madison County
Jefferson, and Sevier Counties

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. METROPOLITAN AREAS, 1993
NEW METROPOLITAN AREAS
Now, with MICROPOLITAN areas!

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. 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. 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. 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. 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. CBSAs in Northern Middle TN
and SAs in Northern Middle TN
METROPOLITAN
MICROPOLITAN
METROPOLITAN
MICROPOLITAN
MICROPOLITAN
MICROPOLITAN
MICROPOLITAN

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Nashville-Davidson-Murfreesboro MSA

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. 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. FAIR MARKET RENT JUMPERS
Group 2
These 20 counties were assigned the floor FMR:
“the median county rent for all non-metropolitan counties.”

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. 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. 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. 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. 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