Small Area Demonstration Rents

HUD is embarking on an intriguing experiment to change the size of Fair Market Rent areas. Fair Marekt Rent is the rent standard used for the Section 8 Voucher program, the HOME program, and some other programs. It is pegged to the 40th percentile of the standard rental units. In other words, it's set at the dollar amount of 40% of the recent rents (within the past 15 mins prior to publication of FMR).

Historically, the income and the fair market rents have been determined by the county or the metro area. In the case of Milwaukee-Waukesha-West Allis metro area (which includes Washington & Ozaukee Counties), the income disparity between the City of Milwaukee and the City of Waukesha (not to mention other communities in Waukesha County) has created problems. For instance, Waukesha residents with vouchers have a difficult time finding a place that is affordable due to Waukesha's higher rents, but their voucher amounts are dragged down by the influence of rent in Milwaukee. HUD is seeking to remedy that by creating smaller Fair Market Rent areas within metro areas.

HUD is doing a demonstration, and have created a sample listing following zip codes.

Currently the Fair Market Rent in the metro area is $602 for studio/efficiency, $718 for 1-bedroom, $858 for 2-bedroom, $1,081 for 3-bedroom, and $1,114 for four-bedroom.

53186 zip code in the City of Waukesha would have a rent of $625(studio/efficiency), $750(1-bdrm), $900(2-bdrm), $1,125(3-bdrm), and $1,150(4-bdrm). (Note the map in the link is centered near Stevens Point(!)-you need to drag the map to Waukesha to see the zip code boundary.)

Compare this with the lowest FMR which would be $425, $500, $600, $750, and $775 for the zip codes of 53025 and 53233 which cover the areas west of downtown from North Ave. down to Menonomonee Valley.

The highest FMR is in Brookfield's west side (53045) with rents of $825, $1,000, $1,200, $1,500, and $1,525.

So what effect would this Small Area FMR have? It would make it easier for voucher-holders to migrate toward higher-rent areas, to be able to live closer to their jobs, to be able to have their children attend better schools, etc. It'd reduce the effect of NIMBYism because of the greater mobility of vouchers. But on the minus side, it'd likely make some vouchers more expensive for the Public Housing Authority, and possibly reduce the voucher amount for urban housing authorities (such as Milwaukee's). People in higher-poverty areas wouldn't be able to afford (relatively) nicer buildings with their voucher amount.

This seems to fit with HUD's goal of reducing poverty by increasing the ability of voucher holders to move toward areas of better opportunities and education even while they work to improve circumstances in high-poverty neighborhoods.

Update: Sentence removed that was not entirely correct.