National Housing Law Project Housing Law Bulletin

HUD Publishes Section 8 Fair Market Rents for Comment

The proposed FMRs are lower than the existing ones for 11 areas: four in Puerto Rico, as well as Danbury, Connecticut; Portland, Maine; Portsmouth, New Hampshire; Lafayette and St. Martin Parishes in Louisiana; Orange County and Riverside-San Bernardino Counties in California. The increases for two-bedroom apartments were less than $10 in many places and $5 or less in Los Angeles, California; Hartford, Connecticut; Baltimore, Maryland; Albany, Rochester and Syracuse, New York; Providence, Rhode Island; and Burlington, Vermont.

Adequate FMRs are essential for the Section 8 programs, especially for the very poorest participants. If the FMRs are too low, landlords will choose not to participate in the certificate program. In the voucher program, the FMR does not have such a direct effect, because landlords can charge more than the payment standard and tenants will have to pay the excess out of their own pockets. However, if the payment standard, which cannot exceed the FMR or HUD-approved community-wide exception rents, is too low, the very lowest income voucher-holders will be adversely affected. They will have trouble making up the difference between the payment standard and the actual rent. In addition, many landlords will not take the risk of renting to them when the excess rent will make their rent burdens so high.

Beyond these normal concerns, FMRs are taking on new importance as various project-based Section 8 contracts expire. This year, Congress gave HUD authority to renew those contracts at the present rent levels, but for contracts that expire after October 1, 1996, Congress set a rent cap at the Section 8 Existing FMR. In addition, much of the discussion about long-term solutions to the problem of expiring Section 8 contracts has included proposals to cap the rents in renewed contracts at the Existing Housing FMR.

To secure adequate FMRs, it is important to review HUD's proposed levels and make a judgment whether they will work in a particular locality. Each year HUD does make some adjustments in response to the comments it receives. Comments submitted by or in conjunction with the local housing authority or a local government are much more likely to be effective, both because the data can be gathered and presented more effectively and HUD is more likely to consider the comments of a governmental body.

HUD does require that the comments include survey data to support any proposed higher FMRs, and mandates that the survey methodologies produce statistically reliable, unbiased results. It encourages the use of professionally conducted random digit dialing telephone surveys, which it states cost from $10,000 to $12,000 each. Such costs are justified in HUD's view, as long as the area has 500 or more Section 8 units. Given the required reliability of the survey data and the costs associated with collecting and analyzing it, working with the local public housing authority is vital.

1. 61 Fed. Reg. 20,982 (May 8, 1996).