HUD Seeks Input Regarding Small Area FMRs

On June 2, in a Federal Register notice, HUD announced its intention to amend Fair Market Rent (FMR) regulations for the Housing Choice Voucher program. The notice seeks public comment regarding the use of small area FMRs (SAFMRs) in certain metropolitan areas. HUD proposes to use SAFMRs in the Housing Choice Voucher program instead of the current 50th percentile FMRs.

FMRs are gross rent estimates that are used to calculate the maximum subsidy HUD provides families receiving rental assistance, including the 2.2 million households assisted through the Housing Choice Voucher program. These households generally contribute 30 percent of their adjusted monthly income toward their rent with the rental subsidy paying the rest. FMRs are usually set at the 40th percentile of all rents charged in an entire metropolitan area, although in 2000, HUD began to set this rent standard to the 50th percentile in areas where voucher families were highly concentrated within the FMR area.

The main objective of the 50th percentile program was to provide a broader range of housing choices that would enable voucher holders to move to areas of higher opportunity. But research indicates that rather than motivating voucher holders to move to higher opportunity neighborhoods, most of the additional subsidies provided through 50th percentile FMRs appear to accrue to landlords in the form of higher rents. HUD is now exploring how to use FMRs calculated by Zip codes within metropolitan areas as a mechanism to expand choices these households have.

HUD is only considering using SAFMRs for the Housing Choice Voucher program and not for other programs that use FMRs. Before publishing a proposed SAFMR rule, HUD is seeking public comment on a number of issues, including what poverty rate and concentration of voucher holders should be used to determine which areas are targeted for SAFMRs and whether SAFMRs be applied to future project-based vouchers.

Comments on the proposed change will be accepted through July 1, and you can submit them at www.regulations.gov.