LANDLORD-TENANT RELATIONS; HOUSING FINANCE; HOUSING (GENERAL);

HOUSING - FINANCE;

You asked if the federal Housing and Urban Development Department (HUD) determines fair market rent (FMR) areas by town or region, how HUD calculates FMRs, what role FMRs have for Section 8 voucher holders, and what the FMRs for towns in Northeastern Connecticut are.

SUMMARY

In Connecticut, HUD determines FMR by county or region, based on federal Office of Management and Budget (OMB) definitions of metropolitan areas. It uses this methodology for most regions in the U. S. OMB defines metropolitan areas as those comprising a large population center and the neighboring communities that are highly integrated with the center. OMB definitions generally correspond with housing markets, according to HUD.

FMRs are gross estimates of the rent a person would need to pay, including utilities, in a certain area for a privately owned apartment that meets HUD standards.

Connecticut towns fall into one of 14 HUD-designated FMR regions, eight metropolitan and six non-metropolitan. Brooklyn, Eastford, Hampton, Killingly, Pomfret, Putnam, Scotland, Sterling, and Woodstock fall into HUD’s non-metropolitan region entitled Windham. But Thompson falls into HUD’s metropolitan region entitled Worcester, MA-CT.

The FMR for a two-bedroom apartment for towns in HUD’s Windham region is $ 717. But it is $ 785 for Thompson (see Table One).

OMB METROPOLITAN AREAS AND FMR

HUD uses OMB definitions of metropolitan areas and differentiates between metropolitan and non-metropolitan areas to determine FMR regions. HUD does so because OMB categories correspond with housing markets, according to a report at HUD's website. Attachment 1 is a copy the report. (HUD uses the term “county” for its FMR areas, but we use the term “region” to avoid confusion, as HUD’s county labels do not entirely correspond with Connecticut’s former county designations. )

According to an OMB Report from 2000, OMB defines metropolitan areas as those that encompass a large population center and the neighboring communities that are highly integrated with the center. As Betty Jones, Program Coordinator of HUD’s Office of Public Housing in Hartford, explained, a town would be included in a particular FMR region because many people commute from that town to a particular region’s population center, for example.

CALCULATING FMRs

FMRs are gross estimates of the rent that a person would need to pay, including utilities, in a certain region for a privately owned apartment that meets HUD standards. HUD gets data for its FMRs from the Census, American Housing Surveys (conducted by the Census Bureau for HUD to revise rent amounts between censuses), and random telephone surveys.

HUD calculates FMRs from this data, using renter households who lived in standard-quality (i. e. , meeting HUD standards) apartments and have moved in the past 15 months. It estimates the dollar amount below which 40% of those rental units were rented, referred to as “40^th percentile rent. ” (HUD designates some areas as 50th percentile rent areas, but none in Connecticut. ) HUD excludes public housing and new units (less than two years old) from its estimates. It publishes FMRs annually, which are open to comment and become effective October 1. See attachment 1 for more information.

FMR and Section 8 Vouchers

People eligible for Section 8 vouchers must rent an apartment at or below the FMR for the area where they want to live. The voucher covers a portion of the rent and the tenant pays the rest, up to 40% (but usually 30%) of his gross income. But HUD regional offices may authorize vouchers for rents that are up to 120% of an area’s FMR, if the need exists. If rents in a particular area are prohibitively high, HUD’s Washington, DC, office may authorize Section 8 vouchers for rents above 120% of the region’s FMR, according to Jones. Additionally, after the first year of a lease, a Section 8 tenant may choose to pay more than the 40% of his or her income toward rent if the rent increases, Jones said.

Attachment 2 is a copy of OLR Report 2002-R-0414, which contains more information on the Section 8 program.

NORTHEASTERN CONNECTICUT FMRs

Table 1 lists the FMRs for towns is HUD’s Windham area and Thompson, which falls into HUD’s Worcester, MA-CT Region.

Table 1: 2003 FMRs in Northeastern Connecticut

For a list of all of Connecticut FMR areas and amounts, see attachment 3 or click

http: //www. huduser. org/Datasets/FMR/FMR2003F/fmr2003ct. pdf.

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