What are Small Area Fair Market Rents?
What is the Housing Choice Voucher program?
According to HUD, The HCV program “is the federal government's major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market.”
HUD's Rule on Small Area Fair Market Rents
More information is available through our Opportunity 101 Toolkit.
As part of an effort to increase housing choices for families using the Housing Choice Voucher (HCV) Program, the U.S Department of Housing and Urban Development (HUD) published a new regulation that established Small Area Fair Market Rents (SAFMRs) on November 16, 2016. Prior to this rule, there was a cap on program rents based on a calculation that considered rent levels of the greater metropolitan area. According to HUD's research, these rent caps, known as Fair Market Rents (FMRs), artificially inflated rents in lower opportunity areas, while still leaving units in higher opportunity areas out of reach (for more on opportunity mapping, click here). This contributed to poverty concentration in struggling towns and cities. The new Small Area Fair Market Rents (SAFMRs) attempt to address this issue by using the rent levels of each individual zip code instead of the greater metropolitan area. This, in turn, provides a more accurate determination of monthly rent prices not just between towns, but between neighborhoods.
Do we need greater choices for HCV families?
HCV families in Connecticut are highly segregated in lower opportunity areas with high rates of poverty and crime and under-resourced schools. This is due to a combination of factors including insufficient program rents, a dearth of affordable housing, and a lack of the kind of full information about housing choices made possible by mobility counseling.
86% of households using the HCV program live outside of areas with the state's highest performing schools.
|The goal of opportunity mapping is to identify opportunity-rich and opportunity isolated communities. With a basic understanding of the geography of opportunity we can then better determine who has access to opportunity resources and how to remedy opportunity inequality.|
Will Small Area Fair Market Rents mean people living in lower opportunity areas will see their rent go down?
If a family stays in the same unit in a lower opportunity area their rent will not decrease because of the new SAFMR rule. However, if a family moves they will be subject to the new SAFMR in the area they find housing. For more on this see Housing Opportunity through Modernization Act of 2016, Section 107(b).
Will SAFMRs increase access to opportunity in Connecticut?
In Connecticut, SAFMRs are initially required to be used in only the Hartford metropolitan statistical area (list of towns here). However, any public housing agency (PHA) may opt-in to using them, and in certain areas of the state, doing so would greatly increase housing choices for HCV families.
Open Communities Alliance conducted a rent study to determine the impact of SAFMRs in Connecticut. Based on a reviewing rental opportunities in a sampling of communities around the state from October through December of 2016, we found that hundreds of additional units in high opportunity areas would become available if SAFMRs are adopted statewide, but this varies significantly from town to town and the new rent policy would be more meaningful parts of the state where it will not be mandated by HUD.
In the high opportunity town of Fairfield, for example, where 79 rental units were identified as available and listed at less than $3,500, only 6 units fell under the FMR cap. Using SAFMRs, the number of available units jumps to 29. In Westport the number of available units would increase from 0 to 21, and Milford would see an increase from 12 to 48.
Unfortunately, the study revealed a lower impact on those higher opportunity towns in the Hartford region where the new SAFMR policy is mandatory. In Glastonbury, for example, the housing availability for families with an HCV only increases by 2 units with the use of SAFMRs; Farmington would increase by 1; and, West Hartford would only add 6 units to its availability. To address this issue, PHAs have the option of raising payment standards to 110% of the SAFMR without the need for HUD approval. Taking advantage of this option to increase
How do SAFMRs compare to the State’s Rental Assistance Program?
Interestingly, the state-funded Rental Assistance Program (RAP) run by DOH provides rent subsidies that are even higher than SAFMRs in almost every town, which should allow the program to provide families with even more access to housing in high opportunity towns. Even with RAP’s higher subsidies, however, the program remains highly segregated, with 93% of RAP certificate holders living in lower opportunity areas of the state.
For this rent study, our team searched for units on Apartments.com & Zillow.com, limited this search to the higher of the HUD & RAP rent caps for each town (rounding up to the nearest 500), and compared official 2017 FMRs, hypothetical SAFMRs, & RAP rates with rent prices of each apartment listing to determine availability.
- Both HCV and RAP are exceptionally segregated, functionally prohibiting families from accessing higher opportunity communities with the State’s highest performing schools.
- Based on our assessment, it is clear that SAFMRs will have a somewhat limited impact on the towns and cities currently designated to use them, but they would make quite a meaningful difference in those areas not required to adopt them. Fortunately, PHAs in designated towns have the ability to raise payment standards up to 110% of the SAFMR, and those towns not designated can opt-in to using them.
- In almost all cases, RAP rent subsidies are higher than SAFMRs, which should allow for much greater availability of units in higher opportunity areas. This demonstrates that the State is very much aware of the existing disparity and the need for higher rent subsidies for struggling families. The program, however, remains even more segregated than the current HCV program run by the federal government.
Housing Authorities & the Department of Housing should adopt SAFMRs where helpful. In order to affirmatively further fair housing, housing authorities not required by HUD to adopt SAFMRs should do so where FMRs are too low. Moreover, these housing authorities should consider going above the SAFMR if RAP subsidies are higher or if their HCV recipients are struggling to find housing in higher opportunity areas.
Fully Fund Mobility Counseling for Families. The State should fully fund mobility counseling – an innovative and highly effective way of ensuring that RAP and HCV recipients know about housing opportunities all around the state. This includes the use of choice-enhancing tools, like the compilation of geographically diverse lists of housing units distributed to recipients. To serve families with children participating in these programs at a rate of 7% per year, mobility counseling would cost about $1.5 million. This is a drop in the bucket compared to the economic impact of improved educational and health outcomes.
- Fund Security Deposit Guarantees for Families. The Security Deposit Guarantee program is a state service that provides a pledge to cover the security deposit for families receiving government housing subsidies like RAP and HCV and are unable to save such a large expense. Many families are prevented from moving to fully-resourced communities because they cannot pay the security deposit, as it can frequently cost over $2,000. To cover families with children participating in RAP and HCV at a rate of 7% per year, it would cost about $800,000.