HUD announced in the August 26 Federal Register the publication of FY17 Fair Market Rents (FMRs). The “Housing Opportunities Through Modernization Act of 2016” (HOTMA) revised the procedure by which HUD publishes annual FMRs. HUD is no longer required to publish a notice of proposed FMRs in the Federal Register prior to publishing final FMRs. Public housing agencies (PHAs) and other interested parties may comment on the FMRs and request reevaluation within 30 days of their publication. Comments or reevaluation requests must be received by September 26. FY17 FMRs will become effective on October 1.
FMRs are used to determine payment standards for the Housing Choice Vouchers (HCV) program, initial renewals for some expiring project-based Section 8 contracts, and initial rents in the Moderate Rehabilitation Single Room Occupancy program. FMRs also serve as rent ceilings for the HOME Investment Partnerships program, and they are used by HUD in the calculation of flat rents in public housing and in maximum awards for Continuum of Care grantees.
FMRs are typically set at the 40th percentile of gross rents in most metropolitan areas, the top end of the price range that movers could expect to pay for the lowest priced 40% of apartments. In select metropolitan areas where voucher holders are concentrated in certain neighborhoods, FMRs are set at the 50th percentile for a three-year time period. The 50th percentile FMRs are intended to expand the range of housing opportunities available to voucher households, enabling them move out of low opportunity areas. In FY17, there will be 17 50th percentile FMR areas: Albuquerque, Baltimore, Bergen-Passaic, Chicago, Denver, Hartford, Honolulu, Kansas City, Milwaukee, Philadelphia, Riverside, San Diego, Spokane, Tacoma, Virginia Beach, Washington, DC, and West Palm Beach.
HOTMA requires HUD to seek comment on any “material changes” in its methods of FMR estimation. HUD made no changes from FY16 in its methodology for FY17 FMRs. HUD also seeks comments on what the agency should consider “material.” For example, what level of potential subsidy redistribution caused by a change in FMR estimation methods should HUD consider in determining whether changes are “material”? Should HUD consider other effects like the number of FMR areas affected or the number of areas where FMRs would change beyond a certain threshold (e.g., 10%)? Should all changes made to the FMR estimation methods rise to the level of a material change? Is that consistent with HOTMA?
Reevaluation requests must be submitted by the end of the comment period. PHAs representing at least half of the voucher tenants in multijurisdictional FMR areas must agree that the reevaluation is necessary. The requestor must be able to supply HUD with data more recent than the 2014 American Community Survey (ACS). On or around October 3, HUD will post a list of areas requesting reevaluations and where FY16 FMRs will remain in effect. Data for reevaluations must be supplied to HUD by Friday, January 6, 2017. HUD will use the data provided to them by January 7 to reevaluate FMRs. The data submission must include a full description of the rental housing survey method used to ensure the data comply with HUD’s rental housing survey guidance. HUD will post a list of areas failing to deliver data and make the FY17 FMRs effective in these areas on January 9, 2017.
Comments and requests for reevaluations must be submitted by September 26 through http://www.regulations.gov/ or by mail to HUD at Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street, SW, Room 10276, Washington, DC 20410-0500. HUD encourages electronic submissions.
The FY17 FMRs are available at: http://bit.ly/2bX49my