An Application of Evidence-Based Policymaking

An Application of Evidence-Based Policymaking

Brian J. McCabe, Deputy Assistant Secretary for Policy Development in the Office of Policy Development and Research (left) and Peter B. Kahn, Associate Deputy Assistant Secretary for the Office of Policy Development (right).

One of the most important tasks of Office of Policy Development and Research (PD&R) is to collect, synthesize, and evaluate research to inform the policy process. Recently, PD&R, alongside colleagues from the Office of Public and Indian Housing (PIH), engaged in that task to evaluate Small Area Fair Market Rents (SAFMRs).

At the end of 2016, PD&R and PIH published “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,” a rule requiring public housing agencies (PHAs) in certain metropolitan areas to operate their Housing Choice Voucher (HCV) programs using SAFMRs. The SAFMRs are calculated at the ZIP Code level while the standard fair market rents are calculated at the metropolitan area level. The rule aims to expand opportunity within the voucher program by ensuring that units affordable to voucher holders are available in every neighborhood in a metropolitan area.

Based on a set of criteria outlined in the original rule, HUD identified 24 metropolitan areas where it would require PHAs to use SAFMRs in their voucher programs. PHAs in these areas began using SAFMRs as of April 1, 2018. The rule also required HUD to evaluate new data every 5 years to determine whether additional metropolitan areas met the requirements for the mandatory use of SAFMRs.

Because the first cohort of metropolitan areas began using SAFMRs in 2018, the time has come for HUD to evaluate new data. As part of our commitment to evidence-based policymaking, PD&R and PIH are taking a three-pronged approach to gathering evidence about the potential expansion of the use of SAFMRs in the HCV program.

First, we conducted listening sessions to learn from PHAs that were required to implement SAFMRs. We gathered a wealth of information on topics related to SAFMRs, including payment standard settings, landlord negotiations, interactions among PHAs operating within the same jurisdiction, and software challenges. Understanding PHAs’ experiences with program implementation and administrative burden is important, especially if we ask more PHAs to transition to the use of SAFMRs.

Second, our team engaged external researchers studying the effects of SAFMR implementation. In April 2023, PD&R hosted several research teams with data licenses from HUD who were studying the effects of SAFMRs on locational outcomes, success rates, and program costs. Although this body of evidence will continue to grow, HUD’s outside research partners can provide early insight into the effects on tenants in the program.

Third, the PD&R team will complement this work with further analyses of administrative data. Although the SAFMR program is relatively new, these analyses help HUD and PHAs understand how SAFMRs are reshaping the experience of the HCV program.

Based on this research, HUD will be better positioned to determine whether it should expand the SAFMR program to additional metropolitan areas; adjust the program to better meet the needs of PHAs, tenants, and landlords; or leave the program untouched.

PD&R and PIH staff are now assembling the information learned from PHAs, external researchers, and our internal analysis of HUD administrative data to make a policy recommendation to senior leadership. Our recommendation will outline the potential merits of expanding the required use of SAFMRs, the optimal timing of such an expansion, and the training materials needed to assist PHAs in implementing SAFMRs in the future.

This process ensures that HUD is making the best evidence-based policy decisions concerning the use of SAFMRs in the HCV program.