HUD has published an interim rule codifying statutory changes made by the FY15 HUD appropriations bill to public housing flat rents, as well as new guidance to implement the interim rule. The interim rule goes into effect on October 8, with a 60-day public comment period to inform the development of the final rule.
The FY15 HUD bill and the new interim rule amend changes Congress made to the flat rent policy in the FY14 HUD appropriations bill. The FY14 HUD bill required PHAs to develop a new base for flat rents. As of June 1, 2014, the flat rents were to be no less than 80% of the Fair Market Rent (FMR) for the area in which a PHA is located. The FY14 Act also required a phasing in of any flat rent increases greater than 35%.
The new interim rule provides more flexibility to PHAs by offering them different options for setting flat rents. Under the interim rule a PHA can:
- Continue to set flat rental amounts at 80% of the current FMR,
- Switch to an FMR that more accurately reflects current market conditions and is based on an area geographically smaller than the one that would otherwise be used, or
- Apply to HUD for an exception if they propose to set flat rents lower than the first two options based on a market analysis.
The rule states that HUD “is not mandating PHAs use the flexibility authorized by the new statutory language, but is rather allowing PHAs the option to utilize new authority if they so choose.”
PHAs will still be required to adjust flat rents downward to account for tenant-paid utilities and to revise flat rents within 90 days of HUD issuing FMRs. PHAs may not increase a family’s rent by more than 35% in a single year as a result of the new flat rent rule. The interim rule does remove the requirement that PHAs document the method by which they set flat rents unless they are requesting an exception from HUD.
The Interim Rule can be viewed at http://www.gpo.gov/fdsys/pkg/FR-2015-09-08/pdf/2015-22022.pdf
HUD’s Guidance can be viewed at http://portal.hud.gov/hudportal/documents/huddoc?id=PIH201513FlatRentNotice.pdf