HUD’s Office of Multifamily Housing Programs (Multifamily) is proposing changes to the Rent Comparability Study (RCS) guidance included in Chapter 9 of its Section 8 Renewal Policy Guidebook. Multifamily’s intent is to ensure that Housing Assistance Payment (HAP) contracts with the owners of private, Section 8-assisted properties align with market rents. Another purpose is to streamline transactions when HAP renewals are required. A cover Memorandum invites input regarding a number of the proposed changes. The proposed revised Chapter 9, as well as a “redline” version identifying proposed changes in the text, are available on the Multifamily Housing Policy Drafting Table. Stakeholders have until May 23 to submit comments via email at [email protected]. Multifamily plans to hold a listening session during the last week of the comment period.
The proposed revision to Chapter 9 explains that a Rent Comparability Study (RCS) is used to determine contract rents for each unit type covered by a project-based Section 8 HAP contract. Contract rents are estimated based on rents paid at comparable properties, which are properties that (1) are not receiving project-based assistance; (2) are in the same market area as properties with project-based assistance; and (3) are similar to properties with project-based assistance “as to neighborhood (including risk of crime), type of location, access, street appeal, age, property size, apartment mix, physical configuration, property and unit amenities, utilities, and other relevant characteristics.”
Some of the proposed changes Multifamily requests stakeholder input about include:
- Revising the option to renew a HAP contract without an RCS by replacing the rent cap of 75% of the Fair Market Rent (FMR) with a cap of 90% of the Small Area FMR (SAFMR). Multifamily believes this option would be more appealing to owners, especially owners of smaller properties.
- Allowing an owner to update an old RCS by submitting a letter from an RCS appraiser indicating that current rents are not lower than in the original RCS.
- Clarifying that the valuation of services and amenities must take into account whether similar services and amenities are available in the surrounding community, assuring that the valuation is in line with the market appeal to tenants.
- Allowing RCS appraisers to use properties subject to rent control if rent control is widespread in the market area.
- Allowing the inclusion of internet service in comparability analysis, if supported by actual comparables in the market area.
Read the proposed revised Chapter 9 of the Section 8 Renewal Policy Guidebook at: https://bit.ly/3vZaDrR
The “redline” version of the proposed revised Chapter 9 can be found at: https://bit.ly/3ycOpFx
Access Multifamily’s Section 8 Renewal Policy Guidebook at: https://bit.ly/3LFJ2m7
Read more about Project-Based Rental Assistance on page 4-67 of NLIHC’s 2022 Advocates’ Guide.