Announcing a Small Area FMR Demonstration

In the past, HUD has not had the means to maintain and update a Fair Market Rent (FMR) system for small areas. In late 2010, the Census Bureau will release 5-year aggregations of American Community Survey data for the areas with populations below 20,000, which will enable HUD to update FMR estimates in smaller geographic areas. HUD intends to use this data to establish small area FMRs for metropolitan areas, based on ZIP Codes with sufficient rental units. To determine how best to implement such a program, HUD will operate small area FMR demonstration projects for the Housing Choice Voucher program.

Small area FMRs will alter some responsibilities of Public Housing Authorities that administer housing voucher programs, but the net effects are unclear. For example, small area FMRs may require less time to determine whether rents are reasonable. While the requirement to determine rent reasonableness based on the condition and characteristics of individual units will remain, less comparative data may be needed, since local area baseline rents will largely be embedded in the small area FMR. Small area FMRs will also increase the number of payment standards used in a metropolitan area. HUD expects that small area FMRs will provide Section 8 tenants with greater ability to move into opportunity areas, where jobs, transportation, and educational opportunities exist, and prevent undue subsidy in lower-rent areas.

A notice announcing HUD's intention to administer the small area FMR demonstration program in selected metropolitan areas beginning with the publication of Fiscal Year 2011 FMRs was published in the Federal Register on May 18, 2010. The notice also solicits comments on certain aspects of the procedures for developing small area FMRs and on elements of the structure of the demonstration program. A system for looking up FY 2010 Equivalent Small Area Rents is available at https://www.huduser.gov/portal/datasets/fmr/smallarea/index.html.