The August 15, 2014 Federal Register published the Proposed FY15 Fair Market Rents (FMRs) for public comment. The FMR reflects the estimated 40th and 50th percentile rent levels for an entire metropolitan area, an amount needed to pay the gross rent (shelter plus utilities) for decent, safe, and modest private rental housing. 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 Proposed FY15 FMRs are based primarily on American Community Survey (ACS) five-year data (2008-2012) and are trended forward to April 1, 2015 using the Consumer Price Index and a trend factor based on the annualized change in national median gross rent from 2007 to 2012. Instead of ACS data in 13 areas for 2012 or 2013, HUD used survey data collected by HUD or public housing agencies (PHAs). These surveys were conducted if a PHA sought adjustments its FMRs that it thought to be significantly inaccurate. HUD no longer has funding to conduct FMR surveys, therefore any future surveys must be paid for by PHAs. HUD provides some guidance in the Federal Register notice on how to conduct FMR surveys.
Each year, FMRs are set at the 50th percentile in selected areas based on the geographic concentration of affordable housing units and voucher tenants within portions of metropolitan areas. The purpose is to provide tenants with a broader range of housing options in higher-rent areas that do not have concentrated voucher use. Designation lasts for three years. At the end of three years HUD may continue a 50th percentile designation, but only if a measure of voucher concentration is less than a benchmark measure set in the initial year of the three-year period. If at the end of a three-year period a designated area fails to meet the deconcentration test, the area will not be eligible for designation for another three years.
In FY14, there were 19 areas designated as 50th percentile FMR areas. Of these 19 areas, 13 completed three years of program participation; nine of the 13 areas did not show deconcentration over the previous three-year period, so will not be eligible for 50th percentile status again until 2018. An additional six areas that failed to de-concentrate in 2012 will once again become eligible to be 50th percentile areas.
There will be 16 FMR areas with 50th percentile designation in FY15: Albuquerque, NM, Chicago, IL, Fort Lauderdale, FL, Honolulu, HI, Milwaukee, WI, Philadelphia, PA, Riverside, CA, Virginia Beach, VA-NC, Baltimore, MD, Denver, CO, Hartford, CT, Kansas City, MO-KS, New Haven, CT, Richmond, VA, Tacoma, WA, and West Palm Beach, FL.
FMRs continue to be based on Office of Management and Budget (OMB) Metropolitan Area Definitions as updated on December 1, 2009 because updated metropolitan area definitions released in 2013 were not incorporated in the 2012 ACS tabulations by the Census Bureau. However, HUD is soliciting comments on the impact of integrating the new metropolitan area definitions and anticipates that new OMB area definitions will be incorporated in the FY16 FMRs.
HUD is also soliciting comments on efforts to reduce the concentration of voucher holders, including alternatives to the current 50th percentile FMR program and the methodology used to calculate Small Area FMR rent ratios. Small Area FMRs (SAFMRs) are based on rents in a zip code rather than an entire metropolitan area. The only PHAs managing their voucher programs using Small Area Fair Market Rents (SAFMRs) are PHAs in the Dallas (TX) metro area, the Housing Authority of the County of Cook (IL), the City of Long Beach (CA) Housing Authority, the Chattanooga (TN) Housing Authority, the Town of Mamaroneck (NY) Housing Authority, and the Laredo (TX) Housing Authority.
Comments on the proposed FMRs are due September 15.
The Federal Register notice is at http://1.usa.gov/1pytsKX .