By Dawn Anastasi, RPA Board Member
Connor Goggans, the Lead Community Intervention Specialist for the Milwaukee County Housing Division, recently shared with RPA the upcoming proposed changes for calculating Fair Market Rents (FMRs).
This is a 17-page document, so to summarize for our members, here are some of the notable points:
The primary uses of FMRs are to determine payment standards for the Housing Choice Voucher (HCV) program, to determine initial renewal rents for some expiring project-based Section 8 contracts, and to serve as rent ceilings for rental units in both the HOME Investment Partnerships Program and the Emergency Solutions Grants Program and a primary rent standard option for the Housing for Opportunities for Persons With AIDS (HOPWA) program. To better determine payment standards and related parameters for HUD programs, HUD proposes changes in how FMRs are calculated in this notice and seeks public comment on the proposed changes.
The primary uses of FMRs are to determine payment standards for the Housing Choice Voucher (HCV) program, to determine initial renewal rents for some expiring project-based Section 8 contracts, and to serve as rent ceilings for rental units in both the HOME Investment Partnerships Program and the Emergency Solutions Grants Program and a primary rent standard option for the Housing for Opportunities for Persons With AIDS (HOPWA) program.
To better determine payment standards and related parameters for HUD programs, HUD proposes changes in how FMRs are calculated in this notice and seeks public comment on the proposed changes.
Interested persons may submit comments electronically through the Federal eRulemaking Portal at http://www.regulations.gov. Comments submitted electronically through the website can be viewed by other commenters and interested members of the public.
Note that in order to submit a comment, you'll need to reference Docket No. FR-6401-N-01.
Back in September 2022, HUD published a similar notice to the above and solicited feedback. Here is some of the feedback they received:
Many commenters expressed that recipients of Housing Choice Vouchers are facing decreasing success rates in finding housing at the current FMR rates due to steep rent increases. Some commenters stated that the gaps between the FMR and market rates are making it harder for assisted families to find affordable housing because FMRs fail to reflect actual rent prices and, as a result, more voucher holders are priced out of local rental housing inventories.
In years past, I also saw the same issue where rent amounts that were allowed by the Section 8 program did not match that of market rents.
Commenters also suggested additional transparency about the use of private data sources when calculating the gross rent inflation adjustment factors. These commenters specifically recommended that HUD publish reports documenting FY2023 FMRs that were adjusted using private sector rental data as well as the geographies and the prior inflation adjustment where the private data are used. One commenter said that the average person cannot understand HUD’s methodology for calculating rent and that rents should be based on advertised housing prices. Another commenter stated that the FMR does not consider actual rent prices and requested that HUD abandon their current FMR calculation method.
Commenters also suggested additional transparency about the use of private data sources when calculating the gross rent inflation adjustment factors. These commenters specifically recommended that HUD publish reports documenting FY2023 FMRs that were adjusted using private sector rental data as well as the geographies and the prior inflation adjustment where the private data are used.
One commenter said that the average person cannot understand HUD’s methodology for calculating rent and that rents should be based on advertised housing prices. Another commenter stated that the FMR does not consider actual rent prices and requested that HUD abandon their current FMR calculation method.
I have to say that I agree with the commenters above. In the past, it wasn't clear how HUD was directing the housing authority to determine the maximum allowed rent since it seemed so far below market rent.
So how does HUD calculate FMR (fair market rent)? Based on the document provided, it's actually a 7 part process. Here's a summary of the parts evaluated:
Base Rent. First, HUD establishes a “base rent” for two-bedroom units from the 5-year 40th percentile estimates of gross rent from the ACS.
Recent Mover Adjustments. HUD then adjusts the base rent using a “recent mover adjustment factor” that is based on the ratio of the estimate of gross rent paid by recent movers from the 1-year ACS (American Community Survey) to the estimate of gross rent paid by all renters from the 5-year ACS for the smallest level of geography containing the FMR area that contains statistically reliable 1-year data.
Inflation Adjustment. HUD then accounts for inflation from the ACS year by applying a “gross rent inflation factor,” which is calculated from the Consumer Price Index (CPI) as produced by the Bureau of Labor Statistics (BLS).
Trend Factor. Because it calculates FMRs ahead of each fiscal year, HUD provides a further inflation adjustment in the form of a “trend factor.” The trend factor represents the expected future level of the gross rent CPI for the upcoming fiscal year compared to the most recent actual gross rent CPI.
State minimum FMRs. Additionally, HUD calculates state minimum FMRs based on the median FMR for non-metropolitan portions of each state.
Bedroom Ratios. HUD calculates FMRs for unit sizes other than two bedrooms by applying “bedroom ratios” calculated from the relationships between rents for units of different sizes according to the 5-year ACS.
Limit on Decreases. Finally, HUD does not allow an area’s FMR to decline by more than 10 percent.
Whew! Did you get all that? Now I can understand the statement "One commenter said that the average person cannot understand HUD’s methodology for calculating rent and that rents should be based on advertised housing prices."
Interested in reading the full document? Click here to visit HUD's website.
Do you have any tenants on Section 8 / Rent Assistance?
Have you faced any of the issues described above?
Share your experiences in the comments below!
Milwaukee County is making their "last call" for applications for ERA (Emergency Rental Assistance) funds. In just one week, submitting new applications will be put on hold while existing applications are processed, to see if there will be any funds left to continue.
The Emergency Rental Assistance (ERA) fund was funded by the federal government. Milwaukee County has spent about $70 million of what it was allocated since 2021. Just $8 million remains. "It is for households that were experiencing hardships during the pandemic," said Community Advocates CEO Andi Elliot. Elliot said now is the time for people to be proactive about their home circumstances. "My advice would be looking at your current situation and thinking about it now. This is maybe the time that you need to move on to something that's a little bit more affordable," she said.
The Emergency Rental Assistance (ERA) fund was funded by the federal government. Milwaukee County has spent about $70 million of what it was allocated since 2021. Just $8 million remains.
"It is for households that were experiencing hardships during the pandemic," said Community Advocates CEO Andi Elliot.
Elliot said now is the time for people to be proactive about their home circumstances.
"My advice would be looking at your current situation and thinking about it now. This is maybe the time that you need to move on to something that's a little bit more affordable," she said.
See full article here
By Attorney Heiner Giese
This is per Directive issued by Chief Judge Carl Ashley.
Note that the form must be attached to the summons and complaint copy being served on the tenant/defendant and that it must be printed on yellow paper.
You can download the form here.
An article recently appeared in the Biz Times by Milwaukee-area rental property owner Berrada Properties.
In it, Berrada Properties writes:
Evictions cost money, and not only in court costs. In many cases, evictions also result in unrecoverable rent payments and/or property damage to the apartment itself. It is truly in the landlord’s and the tenant’s best interest to avoid eviction.
Compiled by Dawn Anastasi, RPA Board Member
Here are a couple recent articles relating to Wisconsin based housing news.
Bipartisan Housing Bills Aim to Close Wisconsin’s Massive Affordable Housing Gap
To address its growing shortage of affordable housing, Wisconsin needs to build 120,000 additional rental units, Elmer Moore Jr., CEO of the Wisconsin Housing and Economic Development Authority (WHEDA), told an Assembly committee at a public hearing Thursday.
In an effort to encourage the massive increase in construction of affordable and workforce housing that is required to close that gap, a bipartisan group of legislators introduced a package of bills last week that would provide low or zero interest loans for several types of housing projects and take steps toward making it easier for developments to be approved at the local level.
The set of four bills establishes programs meant to increase the state’s housing stock but does not include any appropriations to fund those programs. Rep. Robert Brooks (R-Saukville), the chair of the Assembly Committee on Housing and Real Estate and an author of all of the bills, said at Thursday’s hearing that he was hoping the budget-writing Joint Finance Committee would allocate up to $850 million for the programs in the bill package.
$80 Million Emergency Rent Assistance Goes To 22,600 Households
The Milwaukee County Housing Division was the local government agency that passed the money along to organizations like Community Advocates to disburse to residents.
County residents could apply for assistance to pay back rent or to make future rent payments. Residents could meet the criteria for assistance if they or someone in their household qualified for unemployment, lost income or experienced financial hardship due to the pandemic.
But, unfortunately, the funding for the program is running out. The funding came from two pandemic stimulus bills passed in 2020 and 2021 respectvely. Funds from the first bill expired at the end of 2022 and it’s expected that the county will exhaust funds from the second bill by the end of August, Mathy said. The division will primarily focus on responding to applications that have already been filed and disbursing funds using until the money is gone.
Earlier today I met with two individuals from Milwaukee County Housing Services:
They shared information about Rent Assistance Programs and what you need to know as a landlord.
Here is a summary of this information:
Federally subsidized, tenant-based rent assistance: how does it work?
Tenant is responsible for a maximum of 30-40% of their monthly, gross, adjusted income towards rent
Housing Assistance Payment covers rest of rent amount via direct payment to landlord (monthly)
Main Types of Tenant-Based Rent Assistance (TBRA)
Typical Process for Landlords for TBRA
General Perks of Utilizing Rent Assistance
Tips for Best Utilizing Rent Assistance
Make the following clear when advertising unit availability:
Request pre-screening of your available units before completing and submitting paperwork to rent assistance program
Prepare units for Housing Quality Standards inspections prior to initial inspection
Complete and submit any rent assistance paperwork as quickly as possible, and electronically, if an option (pics are fine)
Reach-out with any issues with non-payment, lease violations, issues, etc. ASAP
Helpful Links
Milwaukee County Housing Services
HUD Housing Choice Voucher (Section 8) Landlord Resources Page
Impact 2-1-1 (Crisis Resource Hub for Available Services)
Key Contacts
Milwaukee County Section 8 - Damir Djidic
Milwaukee County My HOME - Jessica Shriver
Milwaukee County Housing First - Shaunton Harris
By Atty Heiner Giese
I had an interesting case before Judge Davis in Milwaukee County.
The case had been settled with a stip in May 2022 providing for dismissal based on tenant paying $100 per month extra to catch up on $900 arrears. We consented to the sealing requested by Legal Aid attorney.
Tenant paid for a while, then fell behind in November and December, we got a writ in early January based on noncompliance, tenant moved out before writ was executed. In March we got a $1000 judgment for back rent (negotiated with Legal Aid though $1300 was due).
Then we moved to unseal her name. She also has several prior evictions with unsatisfied judgments.
The Legal Aid attorney argued against it, citing "inherent power of the court" and that the tenant's name was still searchable on the judgment docket.
Judge Davis went through her usual analysis about when a case can be sealed (public open records interest vs. private interest of tenant to find new housing, etc.), ultimately ruling in our favor to unseal the tenant's name. But at one point it sounded like she was going leave it sealed, noting that plaintiff had not objected, had in fact consented, when the first cause of action was dismissed.
The lesson is this: If you agree to sealing before the case is completely settled, if there is a pay-and-stay stip or if there is a date for future hearing on 2nd & 3rds you should specify that your consent or "no objection" to sealing is conditioned on the tenant living up to their end of any stipulated settlement. That will serve as an additional inducement for the tenant to live up to the stip so they don't lose the benefit of having the case sealed.
The Metropolitan Milwaukee Fair Housing Council is offering a free fair housing training seminar for owners and managers of rental properties in the City of Milwaukee! Whether you've been managing properties for decades, or are new to the rental industry, this seminar will offer important, up-to-date information about how to comply with fair housing laws.
Online registration
The seminar will cover a wide range of fair housing topics, including:
While the seminar is free, attendees must register in advance.
If you need materials in alternate formats or other accommodations to access our services, please call 414-278-1240. This material presented during the seminar is intended for general information purposes only and does not constitute legal advice. Recording of the seminar is not permitted.
Compiled By Dawn Anastasi, RPA Board Member
Here are some recent Wisconsin-based housing news articles:
Why Madison rents are rising so fast and won’t slow down
“When I talk about Madison experiencing a housing crisis, this is what I mean,” said Mayor Satya Rhodes-Conway, who made city incentives to develop more rental units a staple of her reelection platform this spring. “We are seeing symptom after symptom of years of failing to produce enough housing and, in some ways, this is the inevitable result.”
Research shows Badger State is short on houses, developers fight to keep up with demand
According to the Wisconsin Counties Association and Forward Analytics, 140,000 homes need to be built by 2030 to keep up with demand for folks under 65. It's a staggering number to avoid a state-wide housing shortage. Researchers aren't optimistic, but developers said they think it's doable.
"This is something that's been coming for a long time," Dale Knapp said. Knapp's the research director for the Wisconsin Counties Association and Forward Analytics. Over the last several years, he and his team tracked housing numbers across the state, finding supply simply isn't meeting demand.
"The shortage is being driven by the large baby boom that is retiring and essentially leaving the workforce, but like other generations, staying in their homes and they'll continue to," Knapp explained.
Knapp said this is a problem because the baby-boom generation is 20 percent larger than previous generations, leaving fewer homes for people in the workforce.
Rent increases in Wisconsin cities among the steepest in the US
According to data sets from two rental-listing aggregator businesses, average monthly costs for 1- and 3-bedroom rentals in Wisconsin have jumped by as much as 25% since 2021.
In the United States as a whole, annual rent increases have remained under 10%, said Jonas Bordo, CEO and cofounder of rental marketplace Dwellsy, which provided national-level and Wisconsin city-level data for this analysis. That’s still twice a pre-covid era annual rate increase of around 4-5%.
50 New Homes For Early-Childhood Educators
A new partnership aims to build 50 affordable, owner-occupied homes for early-childhood educators that will help the future owners build wealth, while chipping away at the minority homeownership gap, improving neighborhoods and encouraging more workers to pursue a career in child care.
The homes, 1,000-square-foot, single-story structures, would be built on vacant lots near five early childhood centers. Each house would have three bedrooms, one full bathroom and a full basement.
According to a financing model included in the RFP, the funding will be allocated as a $109,000-per-home grant to a developer to close the gap between the estimated $209,000 cost to develop and build the house and the resulting $101,850 sale price.
The new homeowners would go through homebuying counseling and have an $87,000 30-year mortgage at 4% interest. The monthly mortgage payment, inclusive of taxes and insurance, is estimated to be $736 per month. Appliances are to be provided, as is a $15,000 downpayment.
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