Today, HUD published a proposed rule titled “Establishing a More Effective Fair Market Rent System; Using Small Area Fair Market Rents in Housing Choice Voucher (HCV) Program Instead of the Current 50th Percentile FMRs” in the Federal Register. The proposed rule would replace the current policy of basing payment standards on 50th percentile fair market rents (FMRs) in certain areas in order to deconcentrate poverty with a policy of using small area fair market rents (SAFMRs) in certain metropolitan areas according to criteria set by HUD. Comments to HUD on the proposed rule are due by August 15, 2016. Previously, NAHRO has voiced concerns about the impact of SAFMRs on tenants, some of whom will have lower payment standards; on landlord participation rates; and the administrative costs, among other concerns.

There are several major changes that this rule would institute. The proposed rule would end the current 50th percentile rent system. In its place, it would institute a system where rents are determined on the basis of SAFMRs. It would define SAFMR areas as the U.S. Postal Service ZIP code areas within a designated metropolitan area. The proposed rule would impose a set of criteria for determining which areas would use SAFMRs. These criteria are the following:

  1. There are at least 2,500 Housing Choice Vouchers (HCVs) under lease in the area;
  2. At least 20 percent of the standard quality rental within the metropolitan area is in zip codes where the SAFMR is more than 110 percent of the metropolitan FMR; and
  3. The measure of the percentage of voucher holders living in concentrated low-income areas relative to all renters within these areas over the entire metropolitan exceeds 155 percent.

Under this proposed rule, all PHAs administering HCV programs in areas that meet the above criteria, including small PHAs, would be subject to the requirement to use SAFMRs. PHAs that are not based in metropolitan areas may still use SAFMRs after seeking approval through written request to their local HUD field office.

For those PHAs that are using SAFMRs because they are in a designated metropolitan area or have opted to use SAFMRS, the proposed rule would also apply to project-based vouchers (PBVs) where a notice of owner selection was made after the effective date of SAFMR designation. All previous PBV voucher projects will be allowed to use the current metropolitan-wide FMR unless the owner and the PHA mutually agree to use the SAFMR.

For those areas that are currently using 50th percentile FMRs and have been designated for SAFMRs, they will transition to the SAFMRs upon the effective date of the SAFMR designation. Fiftieth percentile areas that are not designated to transfer to SAFMRs will remain under the 50th percentile FMRs until the expiration of their three year period at which time they will revert to the standard (40th percentile areas).

The Department is soliciting feedback on a number of issues. Some areas that HUD is requesting feedback on include whether PBVs that are still in the pipeline should continue to use metropolitan FMRs; whether new proposed PBVs post SAFMR designation should use SAFMRs; whether SAFMR area selection criteria be codified in regulatory text or be published in annual FMR notices; whether there are additional policies or requirements that would mitigate the impact of large and abrupt decreases in the FMRs for certain ZIP code areas for families currently using a housing assistance payment (HAP) contract; whether the final rule should limit the potential decline in the FMR for a ZIP code area resulting from the implementation of SAFMRs to ensure that sufficient housing opportunities remain available to voucher holders; whether there are specific vulnerable groups in the voucher population for which different policies should apply; whether there are specific groups for which this policy would be burdensome; additional or different criteria for selecting which areas would be subject to SAFMRs; and how to reduce administrative burdens for PHAs.

The proposed rule would apply to the following HUD Metropolitan FMR Areas:

  1. Atlanta-Sandy Springs-Marietta, GA;
  2. Bergen-Passaic, NJ;
  3. Charlotte-Gastonia-Rock Hill, NC-SC;
  4. Chicago-Joliet-Naperville, IL;
  5. Colorado Springs, CO;
  6. Dallas-Plano-Irving, TX;
  7. Fort Lauderdale-Pompano Beach-Deerfield Beach, FL;
  8. Fort Worth-Arlington, TX;
  9. Gary, IN;
  10.  Hartford-West Hartford-East Hartford, CT;
  11.  Jackson, MS;
  12.  Jacksonville, FL;
  13.  Monmouth-Ocean, NJ;
  14.  Nassau County-Suffolk County, NY;
  15.  New York, NY;
  16.  North Port-Bradenton-Sarasota, FL;
  17.  Oakland-Hayward-Berkeley, CA;
  18.  Oxnard-Thousand Oaks-Ventura, CA;
  19. Palm Bay-Melbourne-Titusville, FL;
  20.  Philadelphia-Camden-Wilmington, PA-NJ-DE-MD;
  21.  Pittsburgh, PA;
  22.  Sacramento–Arden-Arcade–Roseville, CA;
  23.  San Antonio-New Braunfels, TX;
  24.  San Diego-Carlsbad-San Marcos, CA;
  25.  San Jose-Sunnyvale-Santa Clara, CA;
  26.  Tacoma-Lakewood, WA;
  27.  Tampa-St. Petersburg-Clearwater, FL;
  28.  Honolulu, HI;
  29.  Virginia Beach-Norfolk-Newport News, VA-NC;
  30.  Washington-Arlington-Alexandria, DC-VA-MD; and
  31.  West Palm Beach-Boca Raton-Delray Beach, FL.

Additional Resources:

  • The full proposed rule can be found here.
  • HUD’s press release on the rule can be found here.
  • NAHRO’s previous comments on the HUD’s Advance Notice of Proposed Rulemaking (ANPR) on SAFMRs can be found here.

Questions? Contact Tushar Gurjal at tgurjal@nahro.org.

 


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