Leasing up Resources - Welfare to Work Vouchers

FMR Rule Updates

In September 2000, former Housing and Urban Development Secretary Andrew Cuomo announced a new policy designed to help hundreds of thousands of low-income families keep pace with America's booming economy. For the past five years, Fair Market Rents (FMRs) were based on rents for units that were at or below the 40th percentile for standard rental housing. In certain rental hot spots, HUD now will increase rental subsidies to voucher-holders by raising the Fair Market Rent (FMR) to the 50th percentile. As a result of this increase, more than 1.4 million additional apartments (25%) will become affordable to families receiving Section 8 rental assistance nationwide.

Housing Vouchers and FMR

The Section 8 Housing Choice voucher program is the largest of HUD's three programs that assist low-income families with affordable rental housing. More than 1.4 million families receive Section 8 vouchers, which they can use to find housing in the private market. Under Section 8, most Housing Choice voucher-holders pay no more than 30 percent of their income toward rent, with the federal government paying the balance.

Over the past three years, rents have risen more than one-and-a-half times faster than inflation and twice as fast in some markets. While the nation is experiencing unprecedented economic prosperity, a record 5.4 million very low-income families either pay more than half of their income for housing or live in severely substandard conditions, including a growing number of families working full-time. According to HUD's State of the Cities 2000 report, "rather than benefiting from the surging economy, low-income renters are left to compete for a dwindling supply of affordable rental housing on the private market." Some recipients are being forced to return their vouchers because they cannot find an apartment that qualifies under HUD's current rent guidelines.

Recent Changes to FMR Rules

Recent changes in the FMR will affect areas where the rental climate has been particularly challenging for low-income voucher-holders. Some of these communities have high concentrations of poverty because residents cannot find landlords outside their neighborhoods willing to accept their vouchers. As a result of HUD's new policy, more families will be able to use their rental vouchers in neighborhoods of their choice and to move closer to areas with job opportunities.

Notification of Rule 24 CFR Part 888 [Docket No. FR-4589-N-04]. Fair Market Rents -- 50th Percentile and 40th Percentile Fair Market Rents for Fiscal Year 2001

Effective Date: The 50th percentile FMRs published in this notice became effective on January 2, 2001. The 40th percentile FMRs became effective on October 1, 2000.

HUD has published its notice of Fair Market Rents (FMRs) for Fiscal Year 2001. This notice establishes final FMRs that reflect the 50th percentile rent levels for 39 metropolitan areas. These FMRs were determined by applying the criteria specified in HUD's interim rule, which amended HUD's regulation on establishing FMRs for existing housing (24 CFR 888.113). This notice also re-publishes the 40th percentile rents for all other areas so that the Fiscal Year 2001 FMRs are included in a single publication.

For more information, view the rule in its entirety, or contact Gerald Benoit, Director, Real Estate and Housing Performance Division, Office of Public and Assisted Housing Delivery, at (202) 708-0477. For technical information on the development of schedules for specific areas or the method used for the rent calculations, contact Marie L. Lihn, Economic and Market Analysis Division, Office of Economic Affairs, at (202) 708-0590, Extension 5866.

For guidance on how to implement the October 2, 2000 Interim Rule on increased FMRs and higher payment standards, view the implementation notice (PIH 2001-1). You can also access the data set of the 50th percentile FMRs on HUD's PDR data page.

Interim Rule 24 CFR Parts 888, 982, 985 [Docket No. FR-4606-I-01]. Fair Market Rents -- Increased Fair Market Rents and Higher Payment Standards for Certain Areas

Effective Date: December 1, 2000.

This interim rule implements HUD's new fair market rent (FMR) policy. The new FMR policy targets relief to areas where higher FMRs are needed to help families assisted under HUD's Housing Choice Voucher or other programs, find and lease decent and affordable housing. Where applicable, the policy is designed to ensure that families with housing vouchers have access to at least half of all available units in their area. The new FMR policy includes two targeted approaches:

1. First, the new FMR policy increases FMRs to the 50th percentile in 39 metropolitan areas where an FMR increase was determined to be most needed to promote residential choice, help families move closer to areas of job growth, and de-concentrate poverty. These areas were selected because they have both a concentration of voucher recipients and few rental units at or below the 40th percentile FMR. The increased FMR applies to all the HUD programs that use FMRs in those metropolitan areas.
   
   
2. In addition, those PHAs not covered by the new 50th percentile FMR continue to have discretion in their Housing Choice Voucher Program to set voucher payment standard amounts anywhere between 90 and 110 percent of the current published 40th percentile FMR. However, the new policy further allows these PHAs to request HUD approval of higher "success rate payment standard amounts" if they have less than a 75 percent voucher holder success rate in finding and leasing units and they meet the following criteria:

1. Establish their payment standards at 110 percent of the 40th percentile FMR for a period of at least six months, and
2. Establish a policy granting automatic extensions of voucher terms to at least 90 days.

To view important guidance on implementing the October 2, 2000 Interim Rule and requesting higher "success rate payment standards," view the implementation notice. For more information about the interim rule, view the rule in its entirety or contact Gerald Benoit, Director, Real Estate and Housing Performance Division, Office of Public and Assisted Housing Delivery, at (202) 708-0477.