Fair Market Rents and Small Area Fair Market Rents (SAFMRs)
Fair Market Rents (FMRs) are calculated by HUD and represent median rents for a particular area. When FMRs for a particular area are set at too low a level (which is often the case because FMRs are set based on rents in an entire region), families face tremendous barriers to finding housing in areas of high opportunity, and often end up living in disinvested, impoverished neighborhoods. Despite a public housing authority’s federally-mandated duty to affirmatively further fair housing by fostering mobility to higher opportunity areas, many public housing authorities have turned their backs on this issue and their low FMRs feed the ongoing cycle of racial segregation and geographic poverty divides.
Small Area Fair Market Rents (SAFMRS)
In 2016, Department of Housing and Urban Development (HUD) finalized a rule that would change the way FMRs are calculated in some areas. The key features of the HCV program are housing choice and mobility. Voucher families, however, often find themselves limited to certain neighborhoods based on the subsidy amount provided by the local PHA. The amount of the subsidy (payment standard) is based on HUD’s Fair Market Rents (FMRs). Traditionally, HUD sets one FMR for a large geographic region, resulting in a subsidy level that does not match the local rental market. Small Area FMRs, in contrast, calculate the value of a voucher based on zip codes and therefore capture more granular discrepancies in rents across neighborhoods. SAFMRs allow voucher families to move to lower poverty neighborhoods, giving voucher holders access to communities that are more likely to have quality jobs, reliable transportation, and high performing schools. Communities that voucher families would be unable to afford if the PHA applies traditional FMRs.
When HUD published its proposed SAFMR rule, NHLP performed an extensive analysis and found that the proposed rule would help new voucher tenants move to areas of opportunity but would negatively impact thousands of current voucher families. NHLP submitted comments to HUD highlighting these adverse consequences but generally supported the rule.
HUD finalized the SAFMR regulations in the federal register on November 16, 2017 and subsequently distributed a memo to explain key aspects of the final rule.
On Friday, August 11, 2017, HUD suspended the mandatory implementation of SAFMRs. HUD sent letters to public housing agencies (PHAs) in 23 of the 24 jurisdictions who originally were required to use SAFMRs and informed the PHAs that use of SAFMRs would be discretionary. Several civil rights groups file a lawsuit challenging the two-year delay of SAFMR. On December 23, 2017, the United States District Court for the District of Columbia issued a preliminary injunction, requiring HUD to implement the SAFMR rule because the agency delayed implementation arbitrarily and without fair reasoning. PHAs in the 24 mandatory implementation jurisdictions received guidance from HUD to begin implementation as soon as possible, but no later than April 1, 2018.