Department of Housing and Urban Development December 11, 2015 – Federal Register Recent Federal Regulation Documents

Section 8(c)(1) of the United States Housing Act of 1937 (USHA) requires the Secretary of HUD to publish FMRs periodically, but not less than annually, adjusted to be effective on October 1 of each year. The primary uses of FMRs are to determine payment standards for the Housing Choice Voucher (HCV) program; to determine initial renewal rents for some expiring project-based Section 8 contracts; to determine initial rents for housing assistance payment contracts in the Moderate Rehabilitation Single Room Occupancy program; and, to serve as rent ceilings for rental assistance units in the HOME Investment Partnerships program. FMRs are used in the calculation of maximum award amounts for Continuum of Care grantees and are used in the calculation of flat rents in Public Housing units. Today's notice provides final FY 2016 FMRs for all areas that reflect the estimated 40th and 50th percentile rent levels trended to FY 2016. The FY 2016 FMRs use rent data collected by Bureau of the Census by the American Community Survey (ACS). This rent data is collected over a five-year period, from 2009 through 2013. These data are updated by one-year 2013 ACS data for areas where statistically valid one-year ACS data is available. HUD continues to use ACS data in different ways according to the statistical reliability of rent estimates. The Consumer Price Index (CPI) rent and utility indexes are used to further update the data to 2014. These values are then trended forward to FY 2016. Based on the comments received and as way to estimate FMRs more accurately, HUD has replaced the historical-based annualized change in gross rent trend factor with a forward-looking forecast for these final FY 2016 FMRs. The national trend factor for the final FY 2016 FMRs uses a model that forecasts national rent and utility CPI indices based on economic assumptions used in the formulation of the President's Budget. The FY 2016 FMRs incorporate a change in the level of statistical reliability that allowed for an ACS estimate to be used in the calculation of FMRs. Previously, if the error of the estimate was less than the estimate itself, HUD used the estimate. The FY 2016 FMRs use ACS estimates where the size of the error is limited to half of the estimate. An additional change to the FY 2016 FMRs is the incorporation of the February 28, 2013, Office of Management and Budget (OMB) metropolitan area definition update based on the 2010 Decennial Census data. The 2013 ACS data are the first to use the new area definitions in the compilation of the ACS data. Bedroom ratios (comparing zero-, one-, three- and four-bedroom rents to the two-bedroom base rent) were updated from the 2010 estimations using a three-year average of five- year ACS data.