Fair Market Rents Criticized
WASHINGTON, Oct. 20-Cape Cod’s affordable housing situation is anything but ordinary, thanks to the generous tourist industry that revs up rental prices only during certain seasons of the year.
The anomaly, regional housing advocates say, makes the government’s annual calculation of their community’s fair market rent an ever-evolving, headache-rendering uncertainty.
And, they say, recent changes in how the federal government calculates its share of housing aid-based on these changing fair market rent values-are only sharpening that pain.
The U.S. Department of Housing and Urban Development announced earlier this month that it was revising for a second time its benchmark aid figures for the nation’s Section 8 housing voucher program.
At stake for both Cape residents and affordable housing-users nationwide is the possibility of low-income residents being forced from their homes, particularly if they are already struggling to pay the rent, and a diminishing reliance on the Section 8 housing program.
Under the program, low-income families are required to pay 30 to 40 percent of their income for rent. The federal subsidy covers the rest, but only up to the limit determined by the fair market rent.
Last August, when HUD released its proposed fair market rent figures for 2005, Marjorie Sanson, director of the leased rental department of the Cape’s Housing Assistance Corporation, joined others who argued the figures did not accurately represent the actual rental prices across New England, and in particular, on Cape Cod.
Sanson said her organization, which promotes affordable housing for low-income Cape residents, sees the change as “another assault on low-income people housing needs”.
The fair market rent figures are calculated annually by HUD based on U.S. census data and metropolitan statistics from the White House’s Office of Management and Budget.
This year, the budget office changed the way it considered geographical areas used for those calculations, a move that had ripple effects for the housing program. The changes were significant enough in some areas to prompt affordable housing proponents and low-income residents to speak out against the manner in which the fair market rent was calculated.
HUD received more than 350 comments from August to October, many of which were concerned with what they believed was an inaccurate portrait of the actual fair market rent figures for their area.
HUD reacted, announcing on Oct. 1 that it had revised its figures for fair market rents by going back to the previous geographical areas used by the Office of Management and Budget. It still maintained the most recent census data calculations, as is required by law.
“The goal of FMR’s [fair market rents] is to help ensure HUD’s resources reflect community needs,” HUD Secretary Alphonso Jackson said.
But Sanson said the opposite is happening in Cape Cod. “It’s just ridiculous,” she said. “We’re not seeing any benefit from the action HUD took.”
While many of the communities surrounding Boston saw a positive change under the revisions, Cape Cod communities saw little difference, Sanson said, mainly because the Cape is comprised of only two geographical areas; a metropolitan and non-metropolitan region.
In both the August proposal, and the Oct. 1 revisions, both areas will see a drop in voucher values come next year.
And Sanson says there are also discrepancies for nearby Cape islands: While the fair market rent for Martha’s Vineyard went down, the numbers for Nantucket went up. “You gotta wonder what kind of data they are getting,” she said.
The numbers are important because they directly affect the amount of assistance that HUD will provide to low-income renters in each community.
Low-income families pay 30 to 40 percent of their income for rent and the federal subsidy pays the rest, but only up to the limit determined by the fair market rent.
In Falmouth in 2004, for example, a voucher for low-income individuals applying for a two-bedroom apartment capped at $960. Next year, that cap will be $909.
For the same-sized apartment in Yarmouth, a voucher capped at $969 in 2004, but will be down to $919 in 2005.
“We believe that the market has been softening a little bit,” Sanson admitted, “but not at the percentage that we see here.”
Sanson said the changes can be significant for those families who are already struggling under their current rent situations. The altered figures might force them to find other means of assistance when renewing their lease, or cause them to move out to a more affordable home, possibly into another community.
Of most concern, she said, are the figures pertaining to rentals for multiple-bedroom units. Vouchers for Falmouth residents applying for a four-bedroom apartment in 2004 maxed at $1,347, but in 2005 they will be limited to $1,131.
“The three and four bedrooms take the biggest hits across the state, and we are wondering, what kind of message does that send?” she said. “It’s the families with kids who are affected.”
The Center on Budget and Policy Priorities, a nonpartisan group that conducts research and analysis on fiscal policy and public programs that affect low- and moderate-income families and individuals, released a report last week that focused on the hardships three- and four-member families might face under these new guidelines.
“These families already are struggling to support themselves,” Barbara Sard, head of the housing policy at the center and an author of the report, said in a statement. “HUD’s decision puts them in a deeper hole when it comes to affordable housing.”
The group reported that in the past, HUD has calculated assistance for multiple-bedroom apartments in a way that would give bigger families the same opportunities as smaller families, by allowing them a certain percentage of fixed increased assistance, above the fair market rent. It said that this year the percentage increase has diminished.
But Donna White, spokesperson for HUD’s office in Washington, said in an interview Tuesday that the center’s claims are incorrect. “We are still instituting that policy,” she said, adding that any decreases are “just a reflection in some cases of what the market has done.”
She also said communities and local and state governments can still submit information and supporting data in order to appeal the 2005 calculations, if they feel the area’s rental values have been misrepresented.
Beth Bresnahan, spokesperson for the Massachusetts Department of Housing and Community Development, said on Tuesday that her agency plans to do that.
The department has enlisted the help of the Donahue Institute, an outreach and economic development unit of the president’s office at the University of Massachusetts, and will present a report to HUD by the end of the month.
“We want to make sure that the numbers HUD has proposed, whether the initial or the revised, reflect what the fair market rent actually is in these areas,” she said. “We are hoping to get the information from the institute by the end of the month.and we are pretty positive it will be different from what HUD has presented.”
