SAFMR Demonstration Evaluation and Section 8 Eligibility of Students Guidance

Tomorrow, HUD will publish in the Federal Register two notices dealing with the Housing Choice Voucher (HCV) program. The first is a proposed information collection highlighting a series of interviews for landlords and tenants in areas served by the five PHAs that participated in the Small Area Fair Marker Rents (SAFMR) Demonstration. The second is guidance for the rule that excludes certain individuals enrolled in an institution of higher education from receiving Section 8 funds.

  • Small Area Fair Market Rent Demonstration – HUD is evaluating the SAFMR demonstration. To assist in this evaluation, HUD is looking at how “voucher holders and landlords perceive the shift from traditional area-wide FMRs to SAFMRs.” HUD will interview 70 tenants and 35 landlords in the areas served by the five PHAs in the SAFMR demonstration.
  • Eligibility of Independent Students for Assisted Housing Under Section 8 of the U.S. Housing Act of 1937; Additional Supplementary Guidance – Prior appropriations acts stated that if a college student “is under the age of 24, is not a veteran, is unmarried and does not have dependent child” or is ineligible or has at least one parent that is ineligible for assistance, then no Section 8 assistance can be provided for that student. This notice updates the list of items that PHAs, owners, and managers “are required to verify when determining whether a student’s income alone should be used to determine Section 8 eligibility.” The notice also reduces “barriers for vulnerable youth to receive assistance and continue their education.”

The SAFMR Demonstration pre-publication notice can be found here.

The Eligibility of Independent Students for Section 8 Assistance Guidance pre-publication notice can be found here.

FY 2017 FMRs Published

HUD has published its FY 2017 FMRs on its website. While we are still in the process of going through the notice announcing the publication of the FMRs, here are some of the main takeaways:

  • After the passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA), HUD is no longer required to publish FMRs in the Federal Register, but may now publish them on its website, while announcing the postings in the Federal Register.
  • After HOTMA, FMRs shall be effective no earlier than 30 days after the date of publication of the announcement notice in the Federal Register.
  • HOTMA requires that HUD publish proposed “material changes” to the methodology for comment. The notice asks for public comment on “defining the scope of material changes that will trigger notice and comment in future calculations of FMRs.”
  • The methodology for calculating the FY 2017 FMRs will remain the same as the methodology used to calculate the FY 2016 FMRs, except that updated data will be used.
  • There are no geography changes, but “several areas have been renamed to avoid confusion.”
  • The effective date of the FMRs will be October 1, 2016.
  • HUD has established a procedure “for PHAs and other interested parties to comment on such fair market rentals and to request, within a time specified by [HUD], reevaluation of the fair market rentals in a jurisdiction before such rentals become effective.”

Read the full pre-publication notice here.

[8/26/16 UPDATE: The Federal Register publication can be found here. Comments are due by September 26, 2016.]

The FY 2017 FMRs can be found here (scroll to FY 2017). The PDF tables can be found here.

FMRs, SAFMRs, and Volatility

Our friends at the National Housing Conference (NHC) and the Public Housing Authorities Director’s Association (PHADA) have written a blog post with a series of beautiful maps on historical Small Area Fair Market Rent (SAFMR) volatility on NHC’s Open House Blog. Here’s a map from the blog post on the Washington-Arlington-Alexandria HUD Metro Fair Market Rent (FMR) area.

https://nahropolicyblog.files.wordpress.com/2016/08/d5a51-washington-arlington-alexandria252c2bdc-va-md2bhud2bmetro2bfmr2barea.jpg?w=406&h=287

I recommend looking at the blog post to read their take on SAFMRs and volatility and to see the other maps.

Here are a couple of points that I would like to note to further this conversation.

The methodology for calculating Fair Market Rents (and SAFMRs) is changing

In calculating the final FY 2016 FMRs HUD switched from a “historical-based annualized change in gross rent trend factor [to] a forward-looking forecast . . . [that] uses a model that forecasts national rent and utility [Consumer Price Index] indices based on economic assumptions used in the formulation of the President’s Budget.”[1] Since the methodology has changed, we need a time horizon of a few years to see if the volatility remains as bad a problem as before the methodological change.

Additionally, Peter Kahn, the Director of HUD PD&R‘s Economic Market Analysis Division, has stated the following:

We are looking at ways throughout the proposed ’17 FMR process of addressing that . . . variability in general. When the proposed ’17 FMRs are out, the . . . you can read that preamble and see that we are trying to take steps to address that variability. (See the YouTube clip where he said that here.)

Will HUD be successful in addressing this volatility? I don’t know, but it’s good that they’re aware of the problem and are taking steps to address the issue.

The passage of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) may give PHAs a tool in managing volatility of payment standards based on both FMRs and SAFMRs

HOTMA has a provision that allows PHAs to hold harmless households that live in areas that receive lower FMRs. Section 107(b) of HOTMA states that “no public housing agency shall be required as a result of a reduction in the fair market rental to reduce the payment standard applied to a family continuing to reside in a unit for which the family was receiving assistance . . . at the time the fair market rental was reduced.” It is NAHRO’s understanding that this provision will apply to payment standards based on FMRs and SAFMRs.

The chart below shows how if a provision allowing for payment standards to be held harmless was in place between 2010 and 2016, then volatility may have been reduced in some instances. The blue line shows the actual Washington-Arlington-Alexandria FMR for 2 Bedroom units. The orange line shows what a payment standard based on that FMR would have been, had it been held harmless.

WashDCHoldharmlessFMRChart-2010-2016

The HOTMA provision has the ability to reduce volatility in certain instances, though holding FMR payment standards harmless may have budget implications. Another point to remember is that when the payment standard starts being held harmless matters. In the chart above, if the payment standard starts being held harmless in 2013, then the volatility that results from increases in the FMR will still occur.

Although the chart above shows a payment standard based on a FMR being held harmless, the same principle would apply to payment standards based on SAFMRs.

[1] – 80 Fed. Reg. 77,124 (December 11, 2015).

NAHRO submits Small Area FMR Comments

NAHRO has submitted comments on HUD’s notice titled “Establishing a More Effective Fair Market Rent System; Using Small Area Fair Market Rents in Housing Choice Voucher Program Instead of the Current 50th Percentile FMRs.”

HUD’s proposed rule would mandatorily impose the use of Small Area Fair Market Rent (SAFMR) areas in 31 metropolitan areas, if it were implemented as currently written.

In NAHRO’s comments, we stated that PHAs should have the discretion to use either SAFMRs or FMRs depending on what made sense in a PHA’s rental housing market. NAHRO’s reasons to oppose the mandatory imposition of SAFMRs in certain areas can be divided into three broad categories: tenant welfare concerns; tenant choice concerns; and administrative burden concerns. NAHRO also noted that additional research needed to be done before mandatorily implementing SAFMRs and responded to specific solicitations about the rule from HUD.

Read NAHRO’s SAFMR comments here.

Read the proposed rule here.

Read NAHRO’s prior post on HUD’s SAFMR proposed rule here.

NAHRO meets with HUD PIH Leadership

Georgi John HUD 16-8-9

NAHRO’s Acting CEO, John Bohm, and the NAHRO Policy Team members; Georgi Banna, Eric Oberdorfer and Tushar Gurjal; along with PHADA and CLPHA met with HUD’s Public and Indian Housing Principal Deputy Assistant Secretary (PDAS), Lourdes Castro-Ramierz, and many of the PIH department leadership.

Among the topics discussed were the priorities for implementing the Housing Opportunities Through Modernization Act (HOTMA/HR 3700); upcoming HUD rules such as Smoke-Free Housing, Small Area Fair Market Rents (SAFMRs), HCV Administrative Fee Formula; Moving to Work (MTW) Expansion; and Triennial Recertifications; and the current priorities of NAHRO, PHADA, CLPHA and HUD. NAHRO and CLPHA were also thanked for their current and continued work in affordable housing and education and the improvement of educational outcomes for the children our members serve.

NAHRO is committed to keeping open and productive lines of communication and will continue to share the thoughts and concerns of our members with HUD.

Voucher Mobility Debate at the Furman Center

The Furman Center has published a discussion on their website about voucher mobility. The discussion centers around HUD’s proposed Small Area Fair Market Rents rule, which would require certain metropolitan areas to use zip code level fair market rents. There are four written pieces, each with a unique viewpoint:

Here’s a quote from Rachel Fee’s essay:

HUD’s proposal is made without a Section 8 budget increase, so housing “opportunity” for some low-income families will come at the expense of others.  Families who choose to stay in their current homes in high poverty areas or those who are unable to move, will literally pay the price of higher rents for families using their voucher in more expensive neighborhoods.

While NAHRO is still in the process of writing its comment letter on the proposed rule, NAHRO’s initial concerns about the Small Area FMR proposed rule include concerns about tenant welfare, limiting the choice of tenants, and administrative burdens. NAHRO also believes that additional research should be done before implementing HUD’s rule and that additional funding is required to properly implement it.