On September 28, 2004, HUD published final FY2005 Fair Market Rents (FMRs) for the Section 8 Housing Choice Voucher Program. In releasing the new FMRs, HUD announced that it would continue to use the same FMR area boundaries as in the past, rather than redrawing them along county lines as it proposed on August 6th when it first published the proposed FY2005 FMRs. The decision came after it received 375 comments on the proposed FMRs published in August (compared to 21 in FY2004), including 148 from New England.

The new figures go into effect on October 1, 2004 in most areas (housing agencies in the Springfield region have the option to continue using FY2004 FMRs until HUD completes a new random-digit-dialing rent survey there and issues revised final FY2005 FMRs for the area).

The new FMRs will have quite varied impacts - with significant drops in some parts of the state compared to FY2004, small changes in others, and notable increases in a few areas. The biggest drops are in the Boston and New Bedford PMSAs, where 2-BR FMRs are dropping by $153 (11%) and $146 (18%) respectively. Two-bedroom FMRs for Nantucket and for the non-metropolitan parts of Hampden and Worcester counties are also dropping by 11-15% ($111-$165). By contrast, 2-bedroom FMRs will rise by 25% in the Fall River metro area. Four bedroom FMRS will drop in almost all areas (17 of 19 FMR areas).

FMR cuts will also hurt pipeline development projects using HOME or project-based vouchers in some areas, especially New Bedford, because they are below the rents developers had expected to be able to charge. The new FMRs also bring significant administrative burdens for local housing agencies because they will have to redetermine rent reasonableness for every unit size where FMRs dropped by more than 5% (in six regions, PHAs will have to do this for more than half their units).

In most areas, the drops in two-bedroom FMRs are due to "rebenchmarking." based on 2000 Census data. This is because HUD generally estimates FMRs using the most recent decennial Census data, plus annual inflation adjustments. It resets the baseline when new decennial data becomes available. The FY2005 FMRs reflect this reset baseline for the first time. In the Boston and Providence-Fall River PMSAs, however, HUD used data from recent random digit dialing (RDD) rent surveys it conducted in August 2004, to calculate the FY2005 FMRs. This rent survey data led to the 11% drop in the drop in the Boston PMSA two-bedroom FMR and the 25% increase in the Fall River area two-bedroom FMR (absent the survey data, the two-bedroom FMR would have risen by 2% in the Boston area and fallen by 2% in the Fall River area).

It is possible that FMRs could be revised again later this year because HUD is required to accept comments and new rent data until November 5th. It is unclear, however, how receptive HUD will be to new comments because the agency chose not to make many of the changes requested by many of the 375 commenters in the first month. Those commenters asked HUD to delay implementation by several months (as it did in FY94 when it last rebenchmarked) to give local areas more time to review likely impacts and present alternative rent data. They also asked HUD to revise its methodology for 3- and 4-bedroom FMRs, given the widespread and unexplained large FMR drops for those units sizes nationwide. Finally, housing groups asked HUD to issue a directive, as it did in FY94, holding current voucher holders harmless from subsidy cuts due to FMR changes as long as the family remained in their current unit.

The new FMRs for Massachusetts are posted on CHAPA's web site.

Home Modification Program to Receive Funding in FY 2005

Supporters of the Home Modification Loan Program won a victory this week. After the disability housing bond bill passed in July, the Executive Office of Administration and Finance failed to provide the Department of Housing and Community Development with adequate bond cap. Despite new funding that was authorized by the bill for the Home Modification Loan Program, the administration allocated no money in FY 2005. CHAPA, the Independent Living Centers, and a variety of disability advocates made a strong argument for the program. Earlier this week, DHCD announced that the Home Modifications Program will receive $2 million this year.

Governor Signs Supplemental Budget: Public Housing Funded & Cape Communities Increase CPA Access

Earlier this month, Governor Romney signed a supplemental budget for FY 04. The budget includes $1.65 million for the public housing operating subsidy account (7004-9005), down from the $5 million that the administration requested in June. It also includes various outside sections regarding Cape Cod communities and the Community Preservation Act (Sections 129-133).

In June, a bill was signed that allows any of the 15 municipalities in Barnstable County to adopt CPA in place of the Cape Cod Land Bank. The municipalities may, individually, vote to replace their land bank property tax excise with a CPA surcharge. The supplemental budget changes the legislation that passed just three months ago and is of great concern to the members of the Community Preservation Coalition. First, it allows the towns to receive a state match before they collect the CPA property tax surcharge . Second, Cape communities would be exempted from the mandatory 10% set-aside for affordable housing and historic preservation. Finally, the towns that leave the Land Bank could use the local CPA surcharge to pay off debt service on previously authorized Land Bank debt regardless of when that debt was incurred (the bill passed in June allowed such a use only if the debt was incurred prior to June 30, 2005).

The Legislature also included a new housing program in the supplemental budget. This was a new teacher home loan program (1599-4575) calling upon MassHousing to grant zero interest loans on a first come first serve basis, for down payment and closing costs assistance, to teachers purchasing their first home. This section was vetoed by the Governor.

Hadley Rate Development Zoning Bylaw Unconstitutional

The Massachusetts Supreme Judicial Court (SJC) recently declared a rate of development zoning bylaw unconstitutional. In this case, a landowner challenged the town of Hadley zoning bylaw that limited the number of single family homes that could be built each year. CHAPA participated in the amicus curiae brief that supported the legal challenge.

The landowner wanted to develop a sixty-six acre parcel zoned agricultural-residential. She could build forty detached one-family dwellings as of right; however, under the bylaw, only four homes could be built each year. The landowner sued claiming that it was not economically feasible to build the homes over a ten year period. The Land Court ruled against the town, and the SJC upheld the decision of the Land Court.

In its decision, the SJC said, "absent exceptional circumstances . . ., restrictions of unlimited duration on a municipality's rate of development are in derogation of the general welfare and thus are unconstitutional." The Court also said that a town may "slow the rate of its growth within reasonable time limits" but it may not limit "the rate of growth for an indefinite or unlimited period." Finally, the Court pointed out that, "In their intent and in their effect, rate of development bylaws reallocate population growth from one town to another, and impose on other communities the increased burdens that one community seeks to avoid."

The case is Martha W. Zuckerman v. Town of Hadley.