FY 2009 Income Limits Documentation System

Median Family Income Calculation Methodology

FY 2009 estimates take advantage of the 2007 American Community Survey (ACS) 3-year data published by the Bureau of the Census. While HUD's FY2009 median family income (MFI) estimates are still updates of 2000 Census data, the 2009 HUD update factors are similar to the methodology employeed to generate FY2008 update factors; however, FY 2009 estimates use 3 year ACS data because more areas are covered by the 3 year estiamtes. In general:

• FY2009 estimates are based on local area ACS 2007 surveys for places of 20,000 or more, where such surveys have been published.

• Estimates for all other areas now reflect the state-level change between the 2000 Census state and 2007 ACS state estimates.

HUD's FY 2009 MFI estimates make more extensive use of ACS data than previous years. All estiamtes are projected forward from 2007 to April 1, 2009, using an annual trend factor of 3.0 percent. Except for minor modifications, HUD continues to use the same area definitions used in FY2006.

Overall there are increases in estimated HUD family incomes between 2008 and 2009. Lastly, since the ACS responses where delivered between 2005 and 2007, the impact of the recession which began in 2008 on family incomes is not measured by these data.

Boston city, MA is part of the Boston-Cambridge-Quincy, MA-NH HUD Metro FMR Area. Consequently all information presented below applies to all of the Boston-Cambridge-Quincy, MA-NH HUD Metro FMR Area.

Boston city MA, has published local area 3 year 2007 ACS Survey results.

The step-by-step procedures used to develop FY 2009 estimates for Boston city are as follows:

1. The 2000 Census was used to estimate what are treated as mid-1999 local median family income estimates.

2. The 2000 Census estimates are updates from mid-1999 to end-2007 using the following formula:

   (1 - 10*MoER)* ACS Local Median 2007 Census Local Median 2000

   +

   (10*MoER)* ACS State Median 2007 Census State Median2000

   Where MoER is the "margin of error ratio." The MoER is defined as the margin of error of the 2007 ACS local MFI estimate divided by the 2007 ACS estimate of local MFI. The weight assigned to the change in local median family income from the ACS is the larger of 1 minus 10 times the MoER or zero and the weight assigned to the change in state MFI is ten times the local MoER, or one, whichever is smaller.
   NOTE:ACS estimates are based on samples drawn throughout the survey years that ask about income for the previous 12 months, thereby reflecting income over a 47 month period. All responses are then adjusted by the Bureau of the Census to "annual" values for the survey year using the average of the sum of the CPI indexes for the 12 months before the survey date over the annual CPI index for the year of the survey response. See "Income, Earnings, and Poverty from the 2005 American Community Survey", August 2005 page 2 for a discussion of inflation adjustments made by Census for the ACS. The Census Bureau further updated each response in a multi-year estimate (in this case 3-year estimates) to the final year of survey period (2007). HUD makes a further adjustment to these values by moving the "as of" date to December of the publication year, again using CPI indexes. Specifically, HUD adjusts the 2007 multi-year estimate to December using the seasonally adjusted December 2007 CPI (211.680) over the 2007 annual CPI (207.342). All 2007 ACS data are adjusted to December of 2007 in this way.

3. Median family income estimates for April 1, 2009, are then estimated as follows:

   Step 1 median family income
   * Step 2 adjusted local update factor
   * 1.03 (3.0% annual trending) ^{1.25 years}
   = FY 2009 Median Family Income estimate

Although HUD is revising its median family income estimates to use the new 3-year ACS data, it is continuing its hold-harmless policy with respect to income limits for FY 2009. That is, HUD will continue to set income limits at the higher of normal income limit calculations or at the previous year's income limits.

The results of the Median Family Income Step by Step Process

Boston city Results

1. The following are the 2000 Census Median Incomes (as of 1999) for:

   Area	2000 Census Median Family Income
   Boston city, MA	$68,488

   NOTE: Since HUD uses area definitions based on the calculation of Fair Market Rents, the 2000 Census Median shown above will not match Census publications as HUD uses special tabulations of Census data specific to HUD's area definitions.

2. The mid-1999 to end-2007 update factor is calculated as follows:

   Area	ACS Local Median2007	Confidence Interval	MoER	Year End 2007 Update Factor	Census Local Median2000	Local Factor Calculation	Weight (1-10*MoER)	ACS State Median2007	Census State Median2000	State Factor Calculation	Weight (10*MoER)	Result
   Boston city, MA	85,053*	758	758 / 85,053 = 0.0089	(211.680 / 207.342) = 1.0209	68,488	(85,053 * 1.0209) / 68,488 = 86,832 / 68,488 = 1.2678	0.911	77,409	61,663	(77,409 * 1.0209) / 61,663 = 79,029 / 61,663 = 1.282	0.089	(0.911 * 1.2678) + (0.089 * 1.282) = 1.155 + 0.1141 = 1.269

   ^*The 2007 ACS Local Median shown here was derived from a special tabulation generated for HUD specific to HUD's area definitions.

3. The FY 2009 median family income is estimated as follows:

   Area	Step 1 2000 Census Area Median Family Income	Step 2 Adjusted Local Update Factor	Trending 3.0% for 1.25 years	FY2009 Area MFI Estimate
   Boston city, MA	68,488	1.269	1.031.25 = 1.03764	(68,488 * 1.269 * 1.03764) = 90,182.61

4. In keeping with HUD policy, the MFI Estimate is rounded to the nearest $100:

   Area	Unrounded FY 2009 MFI Estimate	Rounded FY 2009 MFI Estimate
   Boston city, MA	$90,182.61	$90,200