HUD announced the release of the final FY15 Fair Market Rents (FMRs) on October 3, following a period of public comments on the proposed FY15 FMRs (see Memo, 8/18). The FMR represents the amount that would be needed to pay the gross rent (shelter plus utilities) for decent, safe, and modest private rental housing, based on the estimated 40th or 50th percentile rent level for an area.
FMRs are used to determine payment standards for the Housing Choice Voucher (HCV) program, and initial renewal rents for some expiring project-based Section 8 contracts. FMRs also serve as rent ceilings in the HOME Investments Partnership program, and are used to calculate maximum award amounts for Continuum of Care grantees. The final FY15 FMRs were effective as of October 1, 2014.
Sixty-seven percent of FMR areas will have an increase in two-bedroom FMRs from FY14 to FY15, with an average increase of $30. FMRs are lower in 32% of FMR areas, with an average decrease of $30. There are no changes in 17 FMR areas. FMRs for Bennington, Windham, and Windsor counties in Vermont were updated to incorporate the results of surveys received after the publication of the proposed FY15 FMRs.
The FY15 FMRs are calculated starting with standard quality rent data from the 2008-2012 American Community Survey (ACS). These 5-year rents are updated by one-year recent-mover rents from the 2012 ACS. Then the Consumer Price Index rent and utility indices are used to update the data from 2012 to the end of 2013, and then a trend factor based on the annualized change in median gross rents from 2007 to 2012 is applied to produce FMR estimates for April 1, 2015.
There were 64 public comments regarding the proposed FY15 FMRs. The majority of the comments argued against specific decreases, suggesting that FMRs remain at the FY14 level or that changes be capped by a certain percent year-to-year. Some comments called for surveys to be conducted. HUD’s response explained that none of the comments requesting changes to FMRs provided statistically valid data to warrant such an action. HUD also wrote that it is statutorily required to use the most recent available data to determine FMR changes, and thus caps and other limits cannot be incorporated into FMR methodology. The statute needs to be changed in order for HUD to institute caps or floors to FMRs. In the absence of a statutory change, HUD suggests the use of emergency payment standards up to 135% of the FMR for the Section 8 voucher program in areas impacted by natural resource exploration or in presidentially declared disaster areas. HUD does not have the funding to conduct any surveys in FY15, but provides some guidance to those wishing to conduct their own surveys.
The Federal Register notice about the final FY15 FMRs, county level files, guidance on conducting rent surveys, and FY15 FMR Documentation are available at http://bit.ly/aOU9v3