HUD PD&R Thoughts on Implementing Small Area FMRs

HUD has published a short piece by Acting General Deputy Assistant Secretary for Policy Development and Research (PD&R) Todd Richardson in both HUD’s blog–the HUDdle–and on the HUDUser website as a piece titled “Message From PD&R Senior Leadership.” The piece notes that the decision to suspend the implementation of Small Area FMRs was a result of research. It goes on to note that “[w]e now have some preliminary results from a just-published interim evaluation that provides information on . . . program impacts such as changes to the availability of affordable units, average Housing [Assistance] Payments, and tenant rent burden.”

Additionally, the post offers great information on how to implement Small Area FMRs, for those PHAs which choose to implement Small Area FMRs now. The relevant information is reproduced exactly below except for some minor formatting changes.

  • Know your market.
    • Do your own market research. Does this change make more or fewer units available? Will this change cause you to have higher or lower average Housing Assistance Payments (HAP)? PHAs that operate only in high cost areas will experience a significant increase in their average HAP. PHAs that operate mostly in low cost areas may see a decrease in their average HAP, although the Housing Opportunity Through Modernization Act of 2016 (HOTMA) allows PHAs to grandfather payment standards for tenants that remain in place. The final rule implemented the HOTMA provision and provides additional flexibilities for PHAs in setting payment standards for families currently receiving assistance in areas where the FMR decreases.
    • Do the leg work to determine how you would set payment standards around the Small Area FMR before you have to do it. This is a major work item.
    • Think about recruiting new landlords.
    • Ideally you are ready to implement Small Area FMRs when market conditions are favorable. A soft rental market is your friend.
  • Get the back office ready.
    • This does increase your administrative costs — both one-time costs for information technology (IT) changes and the development of new procedures as well as ongoing operations costs. Start planning your administrative budget.
    • Upgrade your IT now.
    • Be prepared for a spike in moves among existing tenants. You may need to temporarily increase your capacity to conduct inspections.
    • Talk to your front-line staff about implementation before and during the process. Be quick to address misunderstandings and retrain as needed.

The Interim Small Area FMR report can be found here, while the final Small Area FMR rule can be found here.

The entire post can be found either here or here.

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