FY14 Proposed Fair Market Rents (FMRs) are now available for comment, as announced in an August 5 Federal Register notice. FMRs are used as the basis for determining payment standards in the Housing Choice Voucher (HCV) program and appropriate rents for project-based programs. If the proposed FMRs are implemented, the FMRs in 61% of FMR areas will be higher than they were in FY13, with an average increase of $27, and they will be lower in 38% of FMR areas, with an average decline of $33. There are no proposed changes in 16 FMR areas. Comments on the proposed FMRs are due back to HUD by September 4, 2013.
While most FMRs are set at the 40th percentile of rents, FMRs are set at the 50th percentile in selected areas where voucher tenants are concentrated in high-poverty areas. The FY14 proposed FMRs show 19 FMR areas at the 50th percentile (compared to 20 in FY13); Bergen-Passaic, NJ “graduated” as its voucher tenant concentration decreased below what is required to be eligible for a 50th percentile FMR status. All other 50th percentile areas remain the same.
The FY14 FMRs were based on 5-year, 2007-2011 American Community Survey (ACS) data. The rents were then updated from 2011 to 2012 utilizing the Consumer Price Index (CPI) and then from 2012 to April 2014 with an effective trend factor of 3.365%. The proposed FY 2014 FMR areas are based on 2009 Office of Management and Budget (OMB) metropolitan area definitions with some HUD modification. HUD expects that the OMB updated definitions (announced in February 2013) will be incorporated into the FY15 or FY16 proposed FMRs, depending on when the Census Bureau is able to integrate these into ACS tabulations.
One significant difference in methodology for the FY14 proposed FMRs concerns Puerto Rico. For the first time, HUD is using the 2007-2011 Puerto Rico Community Survey (collected through the ACS). While there are concerns about the adequacy of this survey, when HUD updates the OMB definitions in FY15 or FY16, it will have no choice but to use these survey results. Thus the Department opted to introduce these data now instead of implementing their use at the same time as the new definitions.
The notice for the proposed FY14 FMRs, the county level data file, and the Individual Area Proposed FY14 FMR Documentation are available at: http://bit.ly/aOU9v3