Section 8 Small Area Fair Market Rents Give Renters Opportunity

As a former Housing Choice Voucher caseworker, I’ve seen instances where families were awarded Housing Choice Vouchers (Section 8), but could not use them to rent in middle-class neighborhoods where schools are better, grocery stores are closer and the streets are safer for their children.

Only on a few occasions do I recall seeing families successfully use their vouchers to move to better neighborhoods. One occasion that comes to mind, was when the owner of a three-bedroom house in a rich suburban area, substantially lowered the rent to accommodate the Housing Choice Voucher Fair Market Rent (FMR) amount and the family’s income.

Later, I found out the owner did this so one of the teenagers in the family could play football for the local high school. Apparently, the boy was an excellent running back.  But most families don’t have a star athlete to depend on, or an owner willing to take a loss of profit for the sake of winning a state championship.

Many families lucky enough to have Housing Choice Vouchers, cannot move to better neighborhoods, because the family’s portion of the rent would be too high. A calculation based largely on the Fair Market Rent for a particular metropolitan area, determines the portion of rent for which a family using a Housing Choice Voucher, is responsible. The Housing Choice Voucher program rules won’t allow the family to pay more than forty percent of their adjusted monthly income, for the first twelve months of leasing a unit.

HUD defines Fair Market Rent (FMR) for the Housing Choice program, as the 40th percentile of gross rents for typical, non-substandard rental units occupied by recent movers in a local housing market. The local housing market is the metropolitan area. Public Housing Authorities use the FMR to determine payment standard amounts for the Housing Choice Voucher program.

Because of this way of calculating rent, using FMRs for big metropolitan areas, families with less income are forced to use their Housing Choice Vouchers in neighborhoods where rent is cheaper and the quality of the housing stock is marginal.

Metropolitan areas are regions comprised of miles and miles of different types of neighborhoods. A single metropolitan area could include rich suburbs, middle class housing developments and low-income neighborhoods. A one-size-fits-all Fair Market Rent amount blanketing dozens of neighborhoods, could stifle opportunities for families to move to better areas, and ultimately, to improve their lives and the lives of their children.

A few years ago, HUD began looking for a more accurate way to determine Fair Market Rents and settled upon using Small Area Fair Market Rents (SAFMR). The Fair Market Rents would be based on smaller ZIP code areas, rather than big, sprawling metropolitan areas.

Starting in 2011, a demonstration program using SAFMRs was tested with Housing Authorities in Dallas and seven Texas counties. In the fall of 2012, five areas, located in Laredo, Texas, Mamaroneck, New York, Chattanooga, Tennessee, Chicago (Cook County), Illinois and Long Beach, California, were added as demonstration sites. These five Housing Authorities volunteered to use SAFMRS and be part of the demonstration program. A court settlement required the Dallas area PHAs to use SAFMRs.

In August of this year, an interim report, created for HUD, titled A Small Area Fair Market Rent Demonstration Evaluation was released.  The interim report found the following:

Families with Housing Choice Vouchers in the demonstration sites were slightly more likely to live in high-rent ZIP Codes than before the demonstration (20 percent compared with 17 percent).

Families newly admitted to the Housing Choice Voucher program, were slightly more likely to move into higher rent ZIP code areas (14 percent in 2010 to 17 percent in 2015).

Most significantly, families not new to the Housing Choice Voucher program, were more likely to move to higher rent ZIP code areas (rising from 18 percent in 2010 to 28 percent in 2015).

The interim report also claimed that many Housing Choice Voucher families did not leave for better neighborhoods when SAFMRs were used to calculate the rent.

Factors that prevented families from moving to better neighborhoods included lack of public transportation, unfamiliarity with the area and higher childcare costs. Also, persons with disabilities and elderly families tended to remain in the areas in which they were already established, to stay close to their medical providers, family support, and other available services.

HUD chose to require twenty-four Public Housing Authorities, administering approximately 368,000 vouchers, to use SAFMRs, starting October 2017. However, on August 11, 2017, after the interim report was released, HUD decided to stop their plan to use SAFMRs.

In a letter addressed to PHA Executive Directors, HUD announced a two-year suspension of the plan, for twenty-three of the twenty-four designated areas. The SAFMR remained in effect for the Dallas-Plano-Irving area, because of a legal settlement.

HUD based the action to stop the use of SAFMRs, on the need for additional time to analyze the interim report and final findings before adjusting and developing guidance and technical assistance for the PHAs. The final report would not be available until July 2018.

HUD still will allow PHAs to implement the use of SAFMRs, by seeking approval from HUD’s Office of Public and Indian Housing (PIH), through written request, if they choose to do so.  

Suspending the use of SAFMRs for two years, will probably be the nail in the coffin for that program change.

Knowing this, I think back to that family renting the house in the rich suburb. That was twelve years ago. The high school didn’t win the state championship that year or the next.  But the running back’s younger sister was able to attend a good grade school, play outside without fear, and live in a comfortable house… at least until her brother graduated. I wonder if SAFMRs were implemented, how many other children could have the same great opportunities?

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