The Small Area FMR Demonstration

AbstractFair Market Rents (FMRs) are used to define payment standards that govern the amount of assistance that Housing Choice Voucher Program (HCVP) participants receive. The U.S. Department of Housing and Urban Development (HUD) cunently publishes a single FMR for each HUD metropolitan FMR area. To provide program participants with wider access to opportunity areas, the Department developed Small Area Fair Market Rents (SAFMRs). SAFMRs represent a fundamentally different way of operating the HCVP in metropolitan areas; therefore, HUD is testing SAFMRs through a demonstration program to better understand the programmatic effects.Fair Market Rents (FMRs) are primarily used to determine payment standard amounts for the Housing Choice Voucher Program (HCVP). Local administrators of the HCVP set the payment standards that are used to calculate the value of the housing subsidy for each voucher holder. FMRs are gross rent estimates: they include the shelter rent plus the cost of all tenant-paid utilities, except telephones, cable or satellite television service, and internet service. The U.S. Department of Housing and Urban Development (HUD) sets FMRs to assure that a sufficient supply of rental housing is available to program participants. To accomplish this objective, FMRs must be both high enough to permit a selection of units and neighborhoods and low enough to serve as many low-income families as possible. Currently, a single FMR1 is produced for each metropolitan area and for each nonmetropolitan county in the country.At the direction of HUD Secretary Shaun Donovan, the Office of Policy Development and Research (PDR therefore, HUD is testing SAFMRs through a demonstration program to better understand the programmatic effects. The purpose of the SAFMR Demonstration is twofold: (1) to evaluate the effectiveness of the SAFMR in improving tenants' housing choices in areas of opportunity and the effect on tenants in areas with SAFMRs that are less than the metropolitan FMR, and (2) to understand and evaluate the administrative and budget effects of converting to operating the HCVP using SAFMRs.Rather than the SAFMR Demonstration being fully voluntary, public housing authorities (PHAs) were selected at random from a pool of eligible PHAs to be invited to participate. …