On Sept. 1, HUD published in the Federal Register a notice announcing the new Fair Market Rents for 2023. Fair Market Rents (FMRs) are used by the Housing Choice Voucher (HCV) program to determine the payment standard, which is used to calculate the amount of rental assistance a family in the program may receive in a certain area. Certain other programs also use FMRs. In calculating these FMRs, HUD altered their methodology to use additional private-sector data. The Department previously asked for comment on their new methodology and NAHRO responded with comments.
Housing agencies that are interested in reevaluating their area’s Fiscal Year (FY) 2023 FMRs must submit a reevaluation request to HUD by Oct. 3, 2022. The requestor must also submit data to HUD more recent than the 2019 American Community Survey (ACS) data used in calculating the FY 2023 FMRs. The Department requires data on “gross rents paid in the FMR area for occupied standard quality rental housing units” and the data “must be sufficient for HUD to calculate a 40th and 50th percentile two-bedroom gross rent.” Requestors may also gather this data through the use of surveys. This data must be submitted by Jan. 6, 2023.
The FMRs are effective on Oct. 1, 2022.
The FY 2023 FMRs along with other FMR-related information can be found here.
The Federal Register notice can be found here.
HUD’s Press Release on the new FMRs can be found here.
Earlier today, HUD published in the Federal Register proposed changes to the methodology for calculating fair market rents (FMRs). The notice is titled “Proposed Changes to the Methodology Used for Calculating Fair Market Rents.” Fair market rents are used to determine payment standards for the Housing Choice Voucher (HCV) program and also impact certain other federal programs.
Currently, HUD calculates FMRs through a seven-step process. First, HUD establishes a two-bedroom base rent from American Community Survey (ACS) 5-year data. HUD then updates this base rent with a “recent mover adjustment factor” based on one-year ACS data. This adjusted data is then inflated by a “gross rent adjustment factor” and then trended forward through the use of a “trend factor.” HUD then adjusts the rents for other unit sizes by applying “bedroom ratios” calculated from the relationships between different size units in the five-year ACS data. There is also a regulatory limit to how much HUD will allow an FMR to decline from one year to the next (i.e., an FMR cannot fall below this percentage “floor” in the span of one year). Finally, HUD also calculates minimum FMRs for each state based on the median FMR for non-metropolitan portions of each state.
The Department is proposing certain changes to the calculation of FMRs—primarily the use of private sector data in two steps during the calculation process in certain instances. First, due to the pandemic, there is a lack of ACS 1-year data. To correct for this, there is a special tabulation of the five-year ACS data for 2020 of rents paid by people who moved in 2020 or 2019. This special tabulation will be updated by private data sources in certain situations where the data sources are accurate and there are three private data sources. HUD would like to estimate the “recent mover adjustment factor” from these sources. When one-year ACS data becomes available again, HUD would like to use it again, while still considering augmenting it with private sector data. Second, HUD would like to use private data sources along with its standard Consumer Price Index (CPI) data in calculating the average gross rent inflation factor in certain instances. These changes would impact the calculation of Small Area FMRs also.
The Department is seeking comment on the appropriateness of using these private sector data sources. Additionally, HUD is seeking comment on whether HUD should continue to use these private rent data sources for FMR calculation after fiscal year 2023.
Comments are due Aug. 12, 2022.
The full Federal Register notice can be found here.
On June 10, 2022, from 2 pm to 4 pm ET, HUD will host a webinar to aid PHAs in “understanding and using payment standards, exception payment standards, Fair Market Rents (FMRs), and Small Area FMRs (SAFMRs).” In addition to learning what these items are, webinar participants will also learn best practices and tools to use them.
Webinar registration can be found here.
After the webinar has been complete, a recording will be found here.
As previously reported by NAHRO, HUD has now officially extended the deadline to April 1st for submitting a request for an expedited waiver. The new notice, Notice PIH 2022-04, states the following:
“This notice amends PIH-2021-34 solely by extending the submission deadline in Section 5 of the notice from March 1, 2022 to April 1, 2022. No additional submission extensions will be issued.”
From NAHRO’s discussions with HUD staff, NAHRO was able to learn that even after the deadline, PHAs will be able to apply for these waivers, but post-deadline requests will not go through the expedited waiver process. In addition, the simplified payment standard waiver process in the expedited waiver notice will remain in place after the deadline. Additional details on that process remaining in place will be explained in a future notice.
The full notice extending the deadline to April 1st can be found here.
On Jan. 5, HUD published a notice in the Federal Register titled “Regulatory and Administrative Requirement Waivers and Flexibilities Available to HUD Public Housing and Section 8 During CY 2022 and CY 2023 to Public Housing Agencies To Assist With Recovery and Relief Efforts on Behalf of Families Affected by Presidentially Declared Disasters.” The notice provides an expedited process for PHAs to apply for certain waivers and flexibilities when faced with a Presidentially Declared Disaster (PDD) for the calendar years (CYs) 2022 and 2023. The notice is effective from Jan. 1, 2022 to Dec. 31, 2023.
This notice lists the waivers and flexibilities that are available to PHAs, notes that it will consider certain exceptions, and provides instructions on how to submit waiver, flexibility, and exception requests. The following flexibilities and waivers may be requested (please note that the list below is summarized—see the full notice to read the complete descriptions of the waivers):
- Operating Subsidy Flexibility in Approved Vacancies – a PHA is eligible to receive funding for vacant public housing units that are vacant because of a declared disaster, subject to HUD approval. Eligible units will be considered approved for 12 months.
- Uniform Financial Reporting Standards; Filing of Financial Reports; Reporting Compliance Dates – HUD may approve delays to certain financial reporting requirements.
- Public Housing Assessment System – HUD may consider waiving the physical inspection and scoring of public housing projects.
- Cost and Other Limitations; Maximum Project Cost; TDC Limit – HUD may waive total development costs (TDC) and housing cost cap limits for all work funded through the Capital Fund until the next issuance of TDC limits.
- Cost and Other Limitations; Types of Labor – HUD may allow PHAs that are not high-performing to use force account labor for modernization-only activities even with not included in the PHA’s 5-year action plan. This waiver will not exceed a period of 12 months.
- Capital Fund Formula; Replacement Housing Factor to Reflect Formula Need for Projects With Demolition or Disposition Occurring on or After October 1, 1998 and Prior to September 30, 2013 – HUD may allow unexpended Capital Fund Replacement Housing Factor Grants to be used for public housing modernization. This waiver will not exceed a period of 12 months.
- Tenant Selection Policies and Administrative Plan – HUD may waive requirements that a PHA’s Board of Commissioners approves revisions to tenant selection policies and a PHA’s administrative plan if the revisions are temporary, do not exceed a period of 12 months, are not significant amendments, and comply with the PHA’s plan or state law.
- Waiting List; Opening and Closing; Public Notice – HUD may waive the requirement that it must provide public notice when opening and closing its waiting list by posting in a local newspaper of general circulation. It would replace that requirement by an alternative one requiring the PHA to post notice to its website. The waiver will not exceed a period of 12 months.
- HUD Approval of Exception Payment Standard Amount – HUD may approve an exception payment standard that is higher than 110% of the Fair Market Rent.
- Housing Quality Standards; Space and Security – HUD may waive the requirement that units have at least 1 bedroom for every 2 people to house families displaced by natural disasters. The waiver will be in effect for the initial lease term.
- Occupancy of Home – HUD may allow families participating in the homeownership program to continue receiving housing assistance payments even if displaced from their homes.
- Contract of Participation; Contract Extension – HUD may consider authorizing a PHA to extend a family’s contract of participation in a Family Self Sufficiency program for up to 3 years. Any waiver will be in effect for a request made to the PHA during a period of up to 12 months.
- Section 8 Management Assessment Program (SEMAP) – HUD may consider a request to carry forward a PHA’s last SEMAP score.
- Verification of the Social Security – HUD may consider a request to transmit form HUD-50058 within 90 days, instead of the usual 30 days, of the receipt of the applicant’s social security documentation.
- Specific Criteria for HUD Approval of Demolition Requests – for certain Section 18 demolition requests, HUD will accept certain environmental reviews.
- Approval of Demolition – HUD may waive the requirement for a list of specific and detailed work items for certain Section 18 demolition requests.
A PHA may also request an exception to a requirement that is not listed. HUD will consider these requests subject to statutory and regulatory limitations.
To request waivers, if in a Presidentially Declared Disaster area, a PHA should complete Appendix A of the notice and email the completed appendix with supporting documentation to PIH_Disaster_Relief@hud.gov.
The full notice can be accessed here.
HUD will host a webinar on Jan. 12, 2022 at 1:30 pm ET titled “HCV Utilization Webinar – Payment Standard Waiver and Two-Year Tool Overview.” The webinar will discuss best practices to maximize voucher utilization. The webinar will also discuss the new Fair Market Rent (FMR) waiver that will allow many PHAs to increase their payment standard to 120% of the FMR. (See NAHRO’s discussion of PIH 2021-34.) Finally, the webinar will discuss the Two-Year Tool and provide examples of how the tool can help program administrators manage their programs.
Registration for the webinar can be found here.
- Prior Webinars Can Be Found Below (Click to watch a recording):
On Dec. 9, HUD published a notice titled “Expedited Regulatory Waivers for the Public Housing and Housing Choice Voucher (including Mainstream and Mod Rehab) Programs” (Notice PIH 2021-34). This notice provides information on flexibilities that HUD will continue to provide for the public housing and Housing Choice Voucher (HCV) programs, even though most regulatory and statutory waivers related to the COVID-19 pandemic will expire at the end of the year. The COVID-19 waivers for the public housing and voucher programs were published because of authority given to HUD through the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Additional information on the expiration of these waivers can be found in HUD’s guidance for winding down CARES Act waivers; PIH 2021-14 (providing revised waivers for public housing and the HCV program); PIH 2020-20 (providing waivers for the Mod. Rehab. program); and PIH 2020-22 (providing waivers for Mainstream vouchers).
This notice divides the additional potential flexibilities into three categories. First, there are flexibilities that will continue with no waivers needed. Second, there are regulatory waivers that PHAs may request and which HUD will review through a streamlined process. Third, there are additional regulatory waivers which PHAs may request, but which HUD will review through its normal waiver review process. None of the statutory waivers provided through CARES Act authority will be extended. In general, HUD lacks the authority to waive statutory program requirements, so PHAs should not request waivers for statutory requirements.
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Over the weekend, HUD published a list of fiscal year (FY) 2021 Fair Market Rents (FMRs). The FMR is the basis for defining the payment standard amount in the Housing Choice Voucher (HCV) program. The Department also uses FMRs for certain other HUD programs. A FMR is “the amount that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a modest (non-luxury) nature with suitable amenities.” It set at a level to estimate the 40th percentile gross rent (i.e., it is set at a level to allow a program participant to be able to rent a unit from 40 percent of the appropriate available stock in the area). Comments on FMR methodology or requests for FMR reevaluation must be submitted by Sept. 30, 2020. New FY 2021 FMRs will become effective on October 1, 2020.
The Department uses a several step process to calculate the FMRs. First, HUD begins with the U.S. Census Bureau’s 5-year American Community Survey (ACS) data collected between 2014 and 2018. The Department then updates this base year rent data with a 1-year recent mover factor based on the 1-year 2018 recent mover gross rent. The data is only updated if the recent mover factor increases the base year rent data. For both the base year data and the recent mover trend factor, alternative methods may be used for areas that do not have statistically reliable data. The Department then updates this data by using the annual change in gross rents measured through the Consumer Price Index (CPI) from 2018 to 2019. Finally, the Department trends forward the data using one of three models to bring the data from a 2019 estimate to a 2021 forecast. The model used to trend forward the data is based on which model “generates the lowest Root Mean Square Error (RMSE) statistic.”
Once the data has been forecast to FY 2021, the Department takes additional steps. First, the Department adjusts the data, which is typically for two-bedroom units, to create FMRs for other unit sizes. Second, the Department limits the amount of decrease an FMR may have from one year to the next. The current year’s FMR may be no less than ninety percent of the prior year’s FMR. Additionally, the FMRs are subject to the lower of a state or national floor for the FMR.
Small Area FMRs have a distinct methodology employed when being calculated, including their own alternative methods if the data for an area does not meet a statistical check.
Public housing agencies may request that HUD recalculate their FMRs for specific areas. Agencies may fund local surveys of rent and may use their administrative fees to fund these surveys. For a recalculation, a PHA must supply HUD with data more recent than the 2018 ACS data used in calculating FY 2021 FMRs. In early October, HUD will post a list of areas requesting reevaluations. Data for the reevaluations must be submitted by Friday, January 8th. The Department will then post revised FMRs. Data submitted after January 8, 2021 will be incorporated into FY 2022 FMRs.
The full notice can be found here.
The FY 2021 FMRs can be found here.
[1/29/2020 – Links to the summary have been updated to reference an updated version of the summary. The original summary has been removed from HUD’s website.]
The Department of Housing and Urban Development has published a summary of the Housing Choice Voucher (HCV) program landlord listening sessions it conducted in late 2018. The summary lists the qualities of the HCV program which both attract and drive off landlords from participating in the program. A brief outline of them is presented below.
- Qualities of the HCV program that attract landlords:
- Helping people who need housing;
- Receiving a stable, reliable source of income from HUD;
- Required by law in some jurisdictions to accept vouchers; and
- Existence of damage mitigation programs which help landlords repair tenant-caused damages;
- Qualities of the HCV program that drive off landlords:
- No single point of contact for landlords and other communication deficiencies;
- Delays in the inspection process;
- Lack of consistency between inspections;
- Not being informed of changed appointment times by inspectors;
- Too few inspectors;
- Not being informed of cancelled appointments in a timely manner;
- Tenant damages;
- Lacking a mechanism of collecting on tenant-caused damages;
- Lacking a way to remove damage-causing tenants;
- Requirements to repair a unit;
- Unknown tenant-caused damages cause units to fail inspections;
- Application and Move-in;
- Concerns about
- approved rent amounts;
- length of time for application approval; and
- Voucher and Approved Rent amount;
- Lack of clarity about required amenities and conditions of units;
- Fair Market Rents (FMRs) not keeping pace with the local market;
- Administrative delays;
- Lack of being able to submit paperwork electronically;
- Lack of staff that could approve cases during holidays and vacation times;
- Confusion over widely varying rent amounts in areas that use Small Area FMRs;
- Annoyance at the different paperwork and rules for each PHA, in areas where there are multiple PHAs with overlapping jurisdictions;
- Cumbersome process to access damage mitigation funds in those areas which use them; and
- The requirement to treat voucher holders differently by requiring a one-year lease initially, when the norm in the market is month-to-month leases.
While the causes of landlord dissatisfaction are multi-faceted and may vary by jurisdiction, NAHRO believes that fully funding the administrative fee account will help PHAs address many of these issues.
The above is a brief outline of the report and excludes details for added brevity. The full summary can be found here.
Tomorrow, HUD will publish the Fair Market Rents (FMRs) for Fiscal Year (FY) 2020 on its website. A pre-publication copy of the notice was published today in the Federal Register–titled “Fair Market Rents for the Housing Choice Voucher Program, Moderate Rehabilitation Single Room Occupancy Program, and Other Programs Fiscal Year 2020.” These FMRs will become effective on October 1, 2019. Comments for these FMRs (or requests for reevaluation for specific FMRs) are due within 30 days of their official publication.
Click below to read more.
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