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Industry Weighs In (Again) on HUD Proposal to Change Fair Market Rents

On August 15, NAA/NMHC provided detailed feedback to HUD on a proposed rule that would change how Section 8 Housing Choice Voucher (HCV) Program Fair Market Rents (FMRs) are set in many areas nationwide. The proposal calls for certain areas to set FMRs by ZIP code – what HUD calls Small Area Fair Market Rents (SAFMRs) – instead of the current metropolitan area-wide standard with an adjustment for high-cost areas.

Specifically, the apartment housing industry joined with a coalition of industry groups in a comment letter outlining our continued support for the HCV program overall. However, we also restated our concerns from meetings with HUD officials and related comment letters, including:

• Reiterating that a ZIP code does not represent a real estate market;
• Voicing our continued concerns that the SAFMRs proposal is based on a single study of one geographic area; and
• Emphasizing the limited evidence that SAFMRs are more effective in deconcentrating poverty than raising FMRs to 50th percentile rents across a metro area.

If HUD’s proposed rule goes into effect, it could have large impacts on voucher holders and property managers. For example, the ZIP code where the revitalized NoMa neighborhood in DC is located is slated to see an almost $500 per month decline in FMRs under the proposed methodology.

The Section 8 program uses FMRs to establish maximum allowable rents the government will pay to a private apartment owner who rents to a family with a voucher. It is not a cap on the rent a private apartment owner can charge, but a cap on the amount HUD will pay. The voucher holder would be responsible for paying the remaining difference between the payment standard and the private owner’s rent.

Provided by NMHC as part of the NAA/NMHC Joint Legislative Program