Study Examines First-Year Implementation of Small Area Fair Market Rents

A report published by the Poverty & Race Research Action Council, “Measuring Fidelity to HUD’s Small Area Fair Market Rents (SAFMRs) Rule: Lessons from First Year Implementation,” evaluates the implementation of the SAFMR rule in its first full year. The authors argue that public housing agencies (PHAs) could implement the rule in ways that better advance the goal of expanding housing access for Housing Choice Voucher (HCV) recipients in high-rent neighborhoods.

The Small Area FMR (SAFMR) rule reforms voucher payment standards. Whereas traditional Fair Market Rents determine a single rent standard for an entire metropolitan region, SAFMRs set varying rent standards in different U.S. Postal Service ZIP codes in a metropolitan region (see Memo, 11/14/16). This method of setting payment standards can help voucher recipients move to higher-opportunity neighborhoods where rents are higher than the average for a metropolitan region. The SAFMR rule was implemented in April 2018 by mandate in 24 metropolitan areas (see Memo, 5/14/18). Under the rule, PHAs retain flexibility to set payment standards between 90% and 110% of an SAFMR, to account for recent changes in rental markets. That flexibility also allows PHAs to pursue aggressive strategies for expanding access: they could encourage more movement into higher-opportunity neighborhoods by paying more than the SAFMR in those areas.

The authors examined the implementation strategies of 180 PHAs in the 24 metropolitan areas by looking at payment-standard data. The authors classified an implementation strategy as having “high fidelity” to the rule’s goal of increasing access to higher-opportunity neighborhoods if the PHA used its discretion to set higher voucher payment standards (closer to 110% of SAFMR) in high-opportunity areas and lower standards (closer to 90%) in low-opportunity areas. The authors found find that, in aggregate, PHAs in the 24 metropolitan areas did not implement the rule in this fashion. Although PHAs generally maintained an overall average payment standard of 100% of SAFMRs, payment standards were consistently higher than 100% of published SAFMRs in low-opportunity neighborhoods and consistently below 100% of published SAFMRs in high-opportunity neighborhoods. The authors also found that PHAs gave landlords more detailed information about the goals of the change than they gave tenants.

The authors offer three recommendations. First, HUD should invest more resources in educating PHAs, tenants, and landlords about the goals of the rule change and how setting voucher payment standards relates to those goals. Second, HUD should provide guidelines that are more explicit about the value of setting low payment standards in low-rent areas and high payment standards in high-rent areas. Finally, HUD should collect PHAs’ administrative plans, payment standards, and communications with tenants and landlords, to create a central, public repository of those materials.

NLIHC strongly supports the SAFMR rule to the extent that it gives voucher holders more residential options and access to higher-rent neighborhoods. In comments to HUD, NLIHC advocated for provisions holding voucher households harmless, since many may wish to stay in their current homes and neighborhoods for a variety of reasons. PHAs should consider renters’ preferences when deciding whether to lower payment standards.

The full report can be read at: