BACKGROUND
Payment standards are used to calculate the HAP, or subsidy, that housing authorities (HAs) pay on behalf of families leasing units under the program. Each HA must establish a schedule of payment standard amounts by bedroom size. The range of possible payment standard amounts is based on HUD’s published fair market rent (FMR) schedule for the FMR area within which the HA has jurisdiction. HACCC’s payment standards are based on the FMRs for the Oakland-Fremont, CA Metro FMR area which includes all of Alameda and Contra Costa Counties. FMRs are based on the 40th percentile of rents charged for standard housing in the FMR area. This is the dollar amount below which 40 percent of the standard-quality rental housing units are rented. HAs may set their payment standards amounts from 90% to 110% of the published FMRs without HUD approval. Payment standards can be set higher or lower than this range in response to market conditions with HUD approval.
The level at which the payment standards are set directly affects the amount of subsidy a family will receive, and the amount of rent paid by program participants. If the payment standard amount is too low:
-
Families may need to pay more for rent than they can afford; or
-
Families may have a hard time finding acceptable units or units in more desirable areas; or
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Housing choices will be narrowed and the HA’s efforts to affirmatively further fair housing will be undermined.
If the payment standards amounts are too high, owners may be encouraged to ask for higher than reasonable rents.
As approved by the Board on September 9, 2014, HACCC's payment standards are currently set at 95% of FMR. This was an increase from the previous level of 90% in response to improved funding from HUD and because clients were having a harder time finding units they could afford as rents rose throughout the County.
HUD publishes fair market rents annually. The proposed federal fiscal year 2015 FMRs (effective October 1, 2014) for HACCC’s jurisdiction are as follows:
|
Bedrooms |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
|
FMR/Month |
$1039 |
$1,260 |
$1,585 |
$2,213 |
$2,716 |
$3,123 |
$3,531 |
$3938 |
The current payment standards are as follows:
|
Bedrooms |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
|
PMT STD |
$987 |
$1,197 |
$1,506 |
$2,102 |
$2,580 |
$2,967 |
$3,354 |
$3,741 |
Rents have continued to rise in the County and, because neighboring jurisdictions to the West are seeing even more dramatic increases, it is expected that continued upward pressure on rents will occur in Contra Costa. This pressure can be expected first in already strong rental markets, ones with higher than average rent levels and low vacancy rates. In order to minimize future loss of vouchers in these cities and also in an effort to minimize voucher concentration, staff are proposing that payment standards be raised to 110% for the following Cities: Danville, El Cerrito, Lafayette, Pleasant Hill, San Ramon and Walnut Creek.
If approved, the new unit size payment standards for these areas are shown below:
|
Bedrooms |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
|
PMT STD |
$ 1142 |
$ 1,386 |
$ 1,743 |
$ 2,434 |
$ 2,987 |
$ 3,435 |
$ 3,883 |
$ 4,331 |
All other areas would continue using the payment standards approved by the Board on September 9, 2014.
Attached are charts showing current voucher totals by City in HACCC's jurisdiction along with rental unit data. Staff will review these with the Board.
FISCAL IMPACT (CONT'D)
The proposed payment standards will increase housing assistance payments (HAP) made on behalf of clients by approximately $2.7 million annually. Funding for this increase is provided by the U.S. Department of Housing and Urban Development’s (HUD).
CONSEQUENCE OF NEGATIVE ACTION
Should the Board of Commissioners not approve the proposed payment standards, it is likely that families participating in the HCV Program will face restricted housing choices due to rapidly rising rents and that some voucher families may be displaced from their existing housing as their rent burdens increase to an unaffordable level.
CLERK'S ADDENDUM