GAO questions Fair Market Rent estimates

Out today from the General Accountability Office (GAO): a report saying "HUD Can Improve Its Process for Estimating Fair Market Rents." A number of housing officials and other advocates have argued, on somewhat different grounds, that the estimation process for 2005 especially leaves room for improvement. HUD's most recent responses and revisions were published in the Feb. 28 Federal Register (warning: large file of 6.8 MB), and HUD provides an ongoing Fair Market Rents data page at HUDUSER.

Most local housing authorities are now required to use Fair Market Rents in determining their "payment standards" -- the highest local rents they are willing to subsidize. However, the current Section 8 "flexibility" proposals (see below) could reduce the Fair Market Rents' importance by allowing local officials to base their subsidy amounts on other data.

So how about some comments from readers who know this subject well? Is the GAO report fair to the process? Did the investigators pick up on the right issues?