Establishing a More Effective SAFMR System: The Cost and Benefits of HUD’s 2016 Small Area Fair Market Rent Rule

This Note analyzes the new HUD rule finalized in November 2016, which dramatically changed the structure of the Housing Choice Voucher program in select metropolitan areas. In August 2017, HUD suspended automatic implementation of the rule until 2020 for twenty-three of the twenty-four selected metropolitan areas, but in December 2017, a preliminary injunction was granted requiring HUD to implement the rule as of January 1, 2018. The rule as written changes the method for calculating the vouchers from using a metropolitan area-wide average to calculating a separate level for each zip code. Such a change could greatly deconcentrate poverty and reduce economic and racial segregation; a result that the current status quo has failed to accomplish. The new rule, however, is not without its flaws. This Note offers a number of recommendations for changing the rule to address these flaws: (1) tweaking metro area selection criteria to include large, highly-segregated areas; (2) granting public housing agencies flexibility in implementing the rule; (3) including new protections for gentrifying neighborhoods and additional funding for landlord outreach and mobility counseling; and (4) revising methodology to increase accuracy. Despite the problems with the new rule, as long as HUD is truly committed to implementing it, its benefits are likely to outweigh its flaws.