1. Small Area Fair Market Rents: Briefing on Proposed HUD Rule

2. New York City’s Voucher Programs
New York City has 3 voucher programs: NYCHA, HPD, DHCR (NY State)
About 120,000 vouchers
Voucher holders:
About half are elderly or disabled households
Most live in the Bronx or Brooklyn
Most earn less than 30% AMI

3. Section 8 Program Overview
Tenant-based and project-based
Tenant pays 30% of adjusted income to landlord
Agency pays balance of rent to the landlord
Maximum amount of rental subsidy amount is called the payment standard.
Payment standard is set between % of the metropolitan fair market rent (FMR)
For New York City, the FMR for a 2-Bedroom is $1,571

4. Example: Rent Payment Calculation
Fair Market Rent: $1,500
Voucher Payment Standard
$1,500
Monthly Rent for Unit
30% of Tenant’s Monthly Income
$300
Agency Rent Subsidy
$1,200
Total Tenant Share

5. Fair Market Rents HUD sets the FMRs annually using Census data
FMR is 40th percentile of median rents in the metropolitan area
NY metro area includes New York City, Putnam and Rockland counties
Problem: FMRs do not reflect differences in the cost of housing within metro areas (e.g., a voucher is worth the same in Park Slope and East New York, even though rents are very different)
HUD’s proposed solution: set rents at the zip code level so that families can access neighborhoods with more opportunities (higher performing schools, quality healthcare, and lower crime rates).

6. HUD’s Proposed SAFMR Rule
FMRs would be set by ZIP codes instead of metro area
31 metro areas would be mandated to use SAFMRs, including NYC
New York City has around 185 residential ZIPs
Idea is that voucher holders will have the ability to move to higher-opportunity, higher-cost neighborhoods
Policy would have a number of unintended negative consequences in New York City

7. Lower FMRs mean lower rent subsidy
When the FMR decreases, the amount of rental subsidy that the agencies can pay also decreases
Tenant may have to pay more rent
FMR & rent subsidy decrease
Tenant portion of rent increases

8. Example of Impact on Tenant’s Rent
Current FMR: $1,500
SAFMR: $1,300
Payment Standard
$1,500
$1,300
Monthly Rent
30% Tenant’s Income
$300
Agency Payment
$1,200
$1,000
Additional Tenant Rent
$200
Total Tenant Share
$500

9. Concerns about SAFMRs in NYC Market
Rental vacancy rate is 3.45% - nowhere to move
FMR data doesn’t keep pace with gentrifying neighborhoods
Housing preservation and new development via project-based vouchers
ZIP codes don’t represent neighborhoods

10. Effect of SAFMRs in NYC
Existing tenants could see an increase of hundreds of dollars in their rent portion. This means they would pay more than 30% of their income in rent to stay in their unit.
55,605 households in New York City may pay more in rent under the proposal.

11. ZIPs with FMR increase or decrease by Borough
65% of ZIPs in the City would have a decrease in FMR (meaning the amount of the rental subsidy decreases)

12. FMR increases & decreases under the proposed rule, relative to current FMR

13. Examples of lower SAFMRs in Gentrifying Neighborhoods
Zip Code
100% SAFMR, 2 BR
100% FMR, 2 BR
Difference
Lower East Side/ Chinatown
10002
$1,130
$1,571
-$441
Central Harlem
10026
$1,270
-$301
Bedford-Stuyvesant
11216
$1,330
-$241
This is a sample calculation of potential rent burden. Impact numbers discussed in previous slides use actual individual level analysis of rent burden.

14. Impact on Existing Tenants: Borough & Bedroom Size
Tenants Impacted by Borough
Borough
Impacted Households
Percentage of Total Impacted Households
Manhattan
4,845 9%
Bronx
31,265
56%
Brooklyn
16,621
30%
Queens
2,208 4%
Staten Island
666 1%
Total
55,605
100%
Tenants Impacted by Bedroom Size
Unit Bedrooms
Impacted Households
Percentage of Total Impacted Households
1,744 3% 1
15,281
27% 2
21,672
39% 3
14,019
25% 4
2,345 4%
5-8
545 1%
Total
55,606
100%

15. Impact on Existing Tenants: Household Type

16. ZIP Codes with Highest Number of Impacted Households
Borough
Zip
Neighborhood
Impacted Households
Bronx
10467
Norwood-Williamsbridge
2,810
10453
Morris Heights
2,797
10458
Belmont-Fordham-Bedford Park
2,757
10468
University Heights-Kingsbridge
2,668
10457
Tremont
2,493
10452
Highbridge
2,273
10456
Morrisania
2,083
Brooklyn
11207
East New York
1,863
10460
West Farms-Crotona Park East
1,815
10462
Parkchester-Van Nest
1,552

17. ZIP Codes with Highest Average Increase in Tenant Share
Borough
Zip*
Neighborhood
Average Increase in Tenant Share
% Median of New Rent Burden
Queens
11693
Hammels-Broad Channel
$403
69%
Bronx
10473
Soundview-Clason Point
$334
51%
10475
Co-op City - Eastchester
$330
59%
11692
Arverne
$313
62%
Brooklyn
11224
Coney Island
$277
55%
10454
Mott-Haven-Port Morris
$268
56%
Manhattan
10030
Central Harlem
$266
31%
10039
$262
52%
10455
Melrose-Longwood
$256
50%
10456
Morrisania
$235
53%
*By zip codes with at least 50 impacted households.

18. H.R (HOTMA)
Newly-passed legislation allows PHAs to keep existing voucher holders at the previous year’s FMR if the new FMR is lower
Example: If FMR was $1,500 in 2016 and $1,200 in 2017, existing voucher holders would still be at the 2016 level
While this protects existing voucher holders from SAFMR impact, it also has budget implications for the housing agencies
No new funding to implement SAFMRs

19. Recommendations to HUD
Exclude NYC based on low-vacancy rate
Revise SAFMR formula for setting rents
Exclude PBVs from SAFMRs
Support alternative mobility models tailored to local needs

20. What happens next?
HPD and NYCHA submitted a joint response to HUD on August 15th (end of official comment period)
After comment period ends, HUD responds to comments and issues a final rule (may or may not be different than proposed rule)

21. Actions
Communicate your concerns to elected officials or other industry leaders
Send letter to HUD Secretary (may submit after Aug. 15th)