HUD’s Office of Public and Indian Housing (PIH) published a Federal Register notice on October 25 announcing that public housing agencies (PHAs) in 41 metropolitan areas must use Housing Choice Voucher (HCV) payment standards based on Small Area Fair Market Rents (Small Area FMRs, or SAFMRs) by January 1, 2025. These 41 metropolitan areas will join 24 other metropolitan areas that were required to use Small Area FMRs by a November 16, 2016 final rule. According to a HUD media release, PHAs in the 41 new metro areas have more than 440,000 households using HCVs, while the original 24 metro areas have 370,000 voucher households, covering a total of 45% of all households in the voucher program. The final rule requires HUD to make new metropolitan area designations every five years. (The original 24 metro areas began using SAFMRs on April 1, 2018.) The original 24 metropolitan areas are listed in Appendix A of Notice PIH 2018-01.
Small Area FMRs reflect rents for U.S. Postal ZIP Codes, while traditional Fair Market Rents (FMRs) reflect a single rent standard for entire metropolitan regions, which can contain many counties. The value of an HCV is determined by the “payment standard” chosen by a PHA, which in general is between 90% and 110% of the FMR. SAFMRs are used to provide voucher payment standards that are more in line with neighborhood-level rental markets, resulting in relatively higher subsidies in neighborhoods with higher rents and greater opportunities, and lower subsidies in neighborhoods with lower rents and concentrations of voucher holders. Using Small Area FMRs can help households apply vouchers in more well-resourced areas with lower poverty rates, thereby reducing voucher concentrations in high-poverty areas.
While formal implementation of the notice begins on October 1, 2024, PHAs do not have to align their HCV payment standards with SAFMRs until January 1, 2025. The intent of this delay is to provide PHAs time to change their IT systems, train staff, revise materials and briefings for tenants, and educate landlords. PIH will provide technical assistance, peer-to-peer training with PHAs that have been using Small Area FMRs, and more program materials. PIH will automatically provide PHAs in newly designated mandatory SAFMR areas with $10,000 in special administrative fee to offset transition costs (see page 18 of PIH Notice 2023-07 Revision 1). PHAs may decide to implement SAFMRs before January 1, 2025, but most follow the “Opt-in” provisions of the 2016 rule. SAFMRs for all ZIP Codes are updated each year by HUD’s Office of Policy Development and Research (PD&R).
The policies of the 2016 rule are not changed by the notice. To identify the second cohort of 41 metropolitan areas, PD&R adopted the same criteria used to identify the first cohort of 24 metro areas.
Read the October 25 Federal Register notice at: https://tinyurl.com/mtypcw3p
Read HUD’s media release at: https://tinyurl.com/ms4zks4b
Find a list of all 65 metro areas required to use SAFMRs at: https://tinyurl.com/2nxk8c6w
Explore HUD’s Small Area FMR webpage at: https://tinyurl.com/mrxche5m
Find additional SAFMR information at: HUD Exchange
PIH makes available an SAFMR dashboard showing which PHAs are using SAFMRs and how many HCV units are impacted for each PHA. The dashboard is updated monthly.
Information about the Housing Choice Voucher program is on page 4-1 of NLIHC’s 2023 Advocates’ Guide.