Section 8 of the USHA (42 U.S.C. 1437f) authorizes housing assistance to aid lower-income families in renting safe and decent housing. Housing assistance payments are limited by FMRs established by HUD for different geographic areas. In the Housing Choice Voucher (HCV) program, the FMR is the


basis for determining the "payment standard amount" used to calculate the maximum monthly subsidy for an assisted family. See 24 CFR 982.503. HUD also uses the FMRs to determine initial renewal rents for some expiring project-based Section 8 contracts, initial rents for housing assistance payment


contracts in the Moderate Rehabilitation Single Room Occupancy program, rent ceilings for rental units in both the HOME Investment Partnerships program and the Emergency Solution Grants program, calculation of maximum award amounts for Continuum of Care recipients and the maximum amount of


rent a recipient may pay for property leased with Continuum of Care funds, and calculation of flat rents in Public Housing units. In general, the FMR for an area is the amount that would be needed to pay the gross rent (shelter rent plus utilities) of privately owned, decent, and safe rental housing of a


modest (non-luxury) nature with suitable amenities and is typically set at the 40th percentile of the distribution of gross rents. HUD's FMR calculations represent HUD's best effort to estimate the 40th percentile gross rent paid by recent movers into standard quality units in each FMR area. In addition, all


rents subsidized under the HCV program must meet reasonable rent standards.













As of October 2, 2000, HUD required FMRs to be set at the 50th percentile for areas where HUD determined higher FMRs were needed to help families assisted under certain HUD programs find and lease decent and affordable housing (65 FR 58870). On November 16, 2016, HUD published a Final Rule entitled "Establishing a More Effective Fair Market Rent System; Using Small Area Fair Market Rents in the Housing Choice Voucher Program Instead of the Current 50th Percentile FMRs" (Small Area FMR final rule) (81 FR 80567), with an effective date of January 17, 2017. The Small Area FMR final rule eliminates the 50th percentile FMR provisions in the FMR regulations (24 CFR 888.113)¹ and provides that areas currently designated as 50th percentile areas remain 50th percentile areas until their current 3-year eligibility period expires. At the end of the 3-year eligibility period, these areas revert to 40th percentile FMR status. If PHAs in areas converting from 50th percentile FMRs to 40th percentile FMRs meet the deconcentration criteria specified in 24 CFR 982.503(f), available at: https://www.gpo.gov/fdsys/pkg/CFR-2016-title24-vol4/pdf/CFR-2016-title24-vol4-sec982-503.pdf, they may petition HUD to maintain payment standards based on 50th percentile rents on that basis. The following areas completed their 3 years of 50th percentile eligibility in FY 2018 and will revert to 40th percentile FMR status in FY 2020:













FY 2018 50TH-PERCENTILE FMR AREAS REVERTING TO 40TH PERCENTILE FMRS IN FY 2020

Baltimore-ColumbiaTowson, MD MSA.	Philadelphia-CamdenWilmington, PA-NJDE-MD.
Washington, DC-VAMD HUD Metro FMR Area	West Palm BeachBoca Raton, FL HUD Metro FMR Area

The following is a list of FMR areas that retain 50th percentile FMRs for FY 2020, along with the year that they will revert to 40th percentile status:












FY 2020 50TH-PERCENTILE FMR AREAS WITH YEAR OF REVERSION TO 40TH PERCENTILE FMRS

Bergen-Passaic, NJ HUD Metro FMR Area ..................................	2020
Spokane, WA HUD Metro FMR Area ...........................................	2020
San Diego-Carlsbad-San Marcos, CA MSA ..................................	2020

Footnotes:









¹Separately from the Small Area FMR regulations, HUD also calculates and posts 50th percentile rent estimates for the purposes of Success Rate Payment Standards, as defined at 24 CFR 982.503(e) (estimates available at: http://www.huduser.gov/portal/datasets/50per.html), which policy was not changed by the Small Area FMR rule.

Fair Market Rents for metropolitan areas and non-metropolitan FMR areas are developed as follows:

2013-2017 5-year American Community Survey (ACS) estimates of 2-bedroom adjusted standard quality gross rents calculated for each FMR area are used as the new basis for FY2020 provided the estimate is statistically reliable. For FY2020, the test for reliability is whether the margin of error for the estimate is less than 50% of the estimate itself and whether the ACS estimate is based on at least 100 survey cases. HUD does not receive the exact number of survey cases, but rather a categorical variable known as the count indicator indicating a range of cases. An estimate based on at least 100 cases corresponds to a count indicator of 4 or higher.

If an area does not have a reliable 2013-2017 5-year, HUD checks whether the area has had at least minimally reliable estimate in any of the past 3 years, or estimates that meet the 50% margin of error test described above. If so, the FY2020 base rent is the average of the inflated ACS estimates.

If an area has not had a minimally reliable estimate in the past 3 years, the estimate State for the area's corresponding metropolitan area (if applicable) or State non-metropolitan area is used as the basis for FY2020.

HUD calculates a recent mover adjustment factor by comparing a 2017 1-year 40th percentile recent mover 2-bedrooom rent to the 2013-2017 5-year 40th percentile adjusted standard quality gross rent. If either the recent mover and non-recent mover rent estimates are not reliable, HUD uses the recent mover adjustment for a larger geography. For metropolitan areas, the order of geographies examined is: FMR Area, Entire Metropolitan Area (for Metropolitan Sub-Areas), State Metropolitan Portion, Entire State, and Entire US; for non-metropolitan areas, the order of geographies examined is: FMR Area, State Non-Metropolitan Portion, Entire State, and Entire US. The recent mover adjustment factor is floored at one.

HUD calculates the appropriate recent mover adjustment factor between the 5-year data and the 1-year data and applies this to the 5-year base rent estimate.

Rents are calculated as of 2018 using the relevant (regional or local) change in gross rent Consumer Price Index (CPI) from annual 2017 to annual 2018.

All estimates are then inflated from 2018 to FY2020 using a trend factor based on the forecast of gross rent changes through FY2020.

FY2020 FMRs are then compared to a State minimum rent, and any area whose preliminary FMR falls below this value is raised to the level of the State minimum.

FY2020 FMRs may not be less than 90% of FY2019 FMRs.