Expanding Housing Choice in the HUD Voucher Program: Demonstration That Zip Code Level Data is Available for Local HUD Office Consideration of Exception Payment Standard Rents Up to 120% of FMR.

Update:
I eliminated some inadvertent duplicate zip codes, resorted the Excel file in zip code order, and corrected text below.
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HUD has a regulatory provision (24 CFR 982.503) HERE that allows PHA's to request local HUD field office approval for exception voucher payment standards above 110% and up to 120% of the local Fair Market Rent. (PHA's have direct authority to approve exception payment standards up to 110%, and exception rents above 120% go to HUD HQS).  

This process is intended to foster housing choice in areas outside areas of high poverty. My impression is that this local HUD field office authority is little used, partly because there has been little if any guidance given to HUD field offices. 

The HUD local field office has sole discretion about granting such a PHA request, and of course the PHA is NOT required to make such a request.  

The principal reason that a PHA would elect to NOT request exception payment standards for higher cost areas is because higher payment standards will reduce the total number of families that can be served by the voucher program.  

IF the PHA elects to make the request the regulations require a demonstration that:

1. The area where that exception payment standard is requested exceeds the median gross rent for the FMR area by more than 10%. 
2. Approval of an exception payment standard is  warranted because it would (A) ... help families find housing outside areas of high poverty, or B) ... voucher holders have trouble finding housing for lease under the program within the term of the voucher.
3. The area where the exception rent is being represented does not exceed 25% of the population for the FMR area. 

Oregon SW Washington Demonstration: Data Sources ARE Available to Determine Eligibility for Exception Payment Standards in Higher Cost, Low Poverty Areas.

1. 5 Year ACS 2007-2011 zip code level poverty data was released on December 6th. (The bookmark HERE will return Oregon and Washington zip code level poverty data from ACS).
2. At PDF page 17 of a HUD Section 8 Management Assessment Indicators Report Guide  HERE HUD uses 10% as a low poverty indicator [to evaluate PHA's on their poverty deconcentration efforts]. (SEMAP allows the use of a higher low poverty threshold if the FMR area poverty rate is higher, but for uniformity purposes, my conservative calculation ONLY includes zip codes where poverty is at 10% or below. Note for example that the Portland Metro 5 year ACS poverty rate is higher at 12.6%).
3. HUD has issued FY 2013 zip code level small area rents that are also calculated using ACS median gross rents, the same rent standard required by the HUD exception payment standard regulation.  Note that HUD has only issued these small area rents for METRO areas.

 
RESULTS: 
22 Oregon/SW Washington Metro Zip Codes Have High Rents and Low Poverty That Could Qualify for Local HUD Office Approval of Exception Payment Standards up to 120% of Fair Market Rent.

The 4 page legal sized Excel worksheet HERE includes my listing of all Oregon and Clark County METRO zip codes where the HUD small area rents are above 110% of the area FMR AND shows the poverty rate for that zip code from the 2007-2011 5 Year ACS. [ A PDF version of this worksheet is HERE].

IF an area has a small area rent higher than 110% of FMR BUT poverty exceeds 10%, my formulas would show that the area would NOT qualify for an exception payment standard rent and "N/A" will show in columns to the far right. [ In this demonstration there are a total of 21 higher rent zip codes that would NOT qualify because poverty exceeds my conservative 10% poverty threshold].

In other columns to far right the maximum exception payment standard rent is shown as the ratio that exception payment standard rent has to the area FMR (in no case more than 120%, but in several cases less than 120%).

(I have not completed the population less than 25% of area test required by the regulation but my assessment is that NO combination of these zip codes collectively exceed 25% for any metro area in Oregon).

Notes:

1. I have chosen to focus on zip codes as the area of geography because HUD has published small area rents for zip codes in all metro areas.  While approval is also possible for other geographies like census tracts and cities  (including non metro geographies), it would take more research to extract gross median rents and poverty data from ACS for those geographies and to make the necessary calculations to determine if the area meet the high cost and low poverty requirements.
2. I have eliminated duplicate data if a zip code occurs in multiple counties; if the zip code qualifies for an exception payment standard rent in ONE county, it qualifies in ALL counties. 
3. While local HUD Office approval is NOT guaranteed for any of these zip codes (remember HUD's "sole discretion"), an Oregon PHA or the Vancouver HA could elect to make a request of the Portland HUD Office for an exception payment standard for any of these zip codes with confidence that there is readily available and verifiable data to support their request.
4. Exception rent approval by HUD would NOT mean that all owners in that zip code will receive the exception payment standard for their rental; rents for individual units will continue to be subject to rent reasonableness determinations used for the voucher program.
5. This demonstration required lots of formulas and data manipulation, IF you discover any errors please let me know.
6. IF HUD is interested in expanding voucher choice in metro areas HUD HQS could help field offices out by:

• Publishing a standard checklist to assist local staff in reviewing requests for exception payment standards, including the identification of acceptable data sources that would effectively insure that applicants self evaluate before they submit the application to the local HUD Office.
• Publishing in Excel a zip code level report identifying those metro zip codes with less than 10% poverty, small area rents above 110%, and the maximum locally approvable exception payment standard rent. This can be accomplished by following the process I used: 

• Merging the FMR FY 2013 and Small Area Rent FY 2013 Excel tables, 

• Adding a ACS derived poverty rate field, 

• Adding formulas to calculate the maximum field office approvable rents and those zip codes where the field office might NOT approve exception rents because poverty exceeds 10%. [If national FMR, small area, and ACS poverty data were pasted into the format I have developed, my formulas could be reused to calculate results in columns R-V and X -AI, including the maximum field office approvable exception payment standard rent and the percentage relationship to the area FMR].

Originally created and posted on the Oregon Housing Blog.