View Rule

Section 8(c)(1) of the United States Housing Act of 1937 (USHA) requires the Secretary to publish Fair Market Rents (FMRs) periodically, but not less than annually, adjusted to be effective on October 1 of each year.  Currently, HUD calculates FMRs based on the 40th percentile of the distribution of gross rents for standard quality units occupied by recent movers.  In some large metropolitan areas where voucher tenants are highly concentrated, however, HUD sets the FMRs at the 50th percentile to provide tenants with additional subsidy to expand the portion of the FMR area in which they can find suitable units.  HUD has determined that setting FMRs at the 50th percentile is not an effective tool for deconcentrating voucher tenants and is difficult to administer for areas moving in and out of 50th percentile status. HUD has instituted a Small Area FMR (SAFMR) demonstration as part of a court settlement to ascertain the efficacy of FMRs set at the ZIP Code level with metropolitan areas instead of metropolitan area-wide FMRs.  This rule proposes removing the 50th percentile FMR rule and replacing it with a SAFMR rule. To determine which voucher programs would operate under SAFMRs, HUD would couple a measure of voucher concentration in high poverty neighborhoods with a measure of the variation in rents across the metropolitan area to ensure that SAFMRs would be meaningfully enough different from available voucher program flexibilities to be an effective voucher deconcentration tool.