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AGENDA RECOMMENDATION |
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Economic Development Authority
- Meeting Date:
- 09/09/2024
Agenda Item:
Resolution adopting the payment standard schedule for the Mankato EDA Section 8 Housing Choice Voucher Program.
Recommendation/Action(s):
Adoption of attached resolution.
Summary:
The Housing Choice Voucher program’s regulations recognize that some flexibility is required to allow the EDA to adapt the program to local conditions. The payment standard sets the maximum subsidy payment a family can receive from the EDA each month. Payment standards are based on fair market rents (FMRs) published annually by HUD. FMRs are set at a percentile within the rent distribution of standard quality rental housing units in each FMR area. For most jurisdictions, FMRs are set at the 40th percentile of rents in the market area.
The EDA establishes a payment standard within a HUD approved basic range of between 90 and 110 percent of the published FMR for each unit size. Current payment standards continue in this acceptable range and staff recommend payment standards as adjusted to reduce negative impacts on program participants.
The PHA reviews the appropriateness of the payment standards on an annual basis when the new FMR is published, and at other times as determined necessary. In addition to ensuring the payment standards are always within the “basic range”, the PHA considers the following factors when determining whether an adjustment should be made to the payment standard schedule:
- Funding Availability: The PHA reviewed the budget to determine the impact projected subsidy adjustments will have on funding available for the program and the number of families served. The PHA compared the number of families who could be served under revised payment standard amounts with the number assisted under current payment standard amounts. The change in payment standards reflects an increase in each bedroom size. Staff determined there is adequate funding to support the payment standard with these adjustments.
- Rent Burden of Participating Families: Rent burden was determined by identifying the percentage of families, for each unit size, that are paying more than 30 percent of their monthly adjusted income as the family share. When families, for any given unit size, are paying more than 30 percent of the adjusted monthly income as the family share, the PHA considers increasing the payment standard. In evaluating rent burdens, the PHA did not include families choosing to rent a larger unit than their family unit size.
- Quality of Units Selected: The PHA reviewed the quality of units selected by participant families when making the determination of the percent of income families are paying for housing, to ensure that payment standard increases are only made when needed to reach the mid-range of the market. Staff complete rent reasonableness at lease up, encourage leasing outside areas of low-income census tracts, and monitor rental rates through regular housing studies.
- Changes in Rent to Owner: The PHA may review a sample of the units to determine how often owners are increasing or decreasing rents and the average percentage of increases/decreases by bedroom size. Staff are not seeing decreases in rents and rents were assessed with increases ranging between 5-17%.
- Unit Availability: The PHA reviews the availability of units for each unit size, particularly in areas with low concentrations of poor and minority families. 1 BR availability continues to be limited.
- Lease-up Time and Success Rate: The PHA does consider the percentage of families that are unable to locate suitable housing before the voucher expires and whether families are leaving the jurisdiction to find affordable housing. Households are taking 2–3 months to secure housing which is within their voucher time limit.
Changes to payment standard amounts will be effective on December 1 of every year unless, based on the proposed FMRs, it appears that one or more of the PHA’s current payment standard amounts will be outside the basic range when the final FMRs are published. In that case, the PHA's payment standards will be effective October 1 instead of December 1.
Flat rents are also reviewed each year for Public Housing and are generally set at 80% of Fair Market Rents. The EDA must determine flat rents annually and have them approved by HUD at 80-100% of the Fair Market Rents. This year’s submission of flat rents are between 81-83% of the Fair Market Rents.
Current Payment Standards project an increase for each bedroom size between 102% to 108% of the Fair Market Rent provided by HUD. These Payment Standards will be effective December 1, 2024. The board is asked to approve by resolution the Payment Standards as revised. |
Attachments