HUD HCV Guidebook § 2.1

A designated SAFMR PHA is an agency that directly administers HCV assistance to a family that resides in a
metropolitan area where the use of SAFMRs is mandatory. HUD sets SAFMRs for certain metropolitan FMR
areas for use in the administration of tenant-based rental assistance under the HCV program. HUD
established the selection values used to determine those metropolitan areas through a Federal Register
notice on November 16, 2016, and may update the selection values through a Federal Register notice,
subject to public comment. Currently, the selection criteria used to determine those metropolitan areas are:14
       •    The number of vouchers under lease in the metropolitan FMR area;
       •    The percentage of the standard quality rental stock, within the metropolitan FMR area is in small
            areas (ZIP Codes) where the SAFMR is more than 110 percent of the metropolitan FMR area;
       •    The percentage of voucher families living in concentrated low-income areas;
       •    The percentage of voucher families living in concentrated low-income areas relative to the
            percentage of all renters within these areas over the entire metropolitan area; and
       •    The vacancy rate for the metropolitan area.
Every five years, at the beginning of the federal fiscal year, HUD designates metropolitan areas where the use
of SAFMRs is mandatory. The first such areas were designated in 2016 for Federal fiscal year 2018.15 In
2023, 41 new metropolitan areas were designated effective federal fiscal year 2025.16 A list of the

9
  24 CFR 982.503(a)(1)(i); 24 CFR 982.503(a)(1)(ii); 24 CFR 982.503(a)(1)(iii)
10
   The applicable FMR for a PHA that has adopted exception payment standards based on the SAFMR but
administers in a metropolitan FMR area is the metropolitan FMR.
11
   The applicable FMR for a PHA that has adopted exception payment standards based on the SAFMR but
administers in a non-metropolitan county is the non-metropolitan county FMR.
12
   Please note that HUD designates metropolitan areas as Small Area FMR under 24 CFR 888.113(c)(4). PHAs
located in those areas are considered “mandatory SAFMR” PHAs. The term “designated” and “mandatory” may
be used interchangeably.
13
   PHAs administering in a metropolitan or non-metropolitan area that have adopted exception payment
standards based on the SAFMR are not considered “opt-in” PHAs.
14
   24 CFR 888.113(c)(1)
15
   “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; Final Rule,” published in the Federal
Register on November 16, 2016 (81 FR 80567).
16
   “Small Area Fair Market Rents in the Housing Choice Voucher Program Metropolitan Areas Subject to Small
Area Fair Market Rents,” published in the Federal Register on October 25, 2023 (88 FR 73352)

metropolitan areas where the use of SAFMRs is mandatory as of Federal fiscal year 2018 and 2025 can be
found in Appendix A of Notice PIH 2023-32.
Mandatory SAFMR PHAs must use SAFMRs for any part of its jurisdiction located in the SAFMR area.17 For
example, a statewide PHA may operate in a designated SAFMR area, and in areas subject to the published
metropolitan and non-metropolitan county FMR. This PHA is required to use SAFMRs only for the portion of its
jurisdiction designated as mandatory SAFMR. Non-metropolitan counties will not be designated as mandatory
SAFMR areas.18
The regulations at 24 CFR 888.113 discuss “voluntary” adoption of the SAFMRs, which is also known as “opt-
in.” PHAs located in metropolitan and non-metropolitan counties may opt-in to using the SAFMR. An opt-in
SAFMR PHA refers to PHAs that are not required to use SAFMRs in an FMR area within its jurisdiction but
choose to do so voluntarily. PHAs not located in a designated SAFMR area may voluntarily “opt-in” to SAFMRs
for one or more of the FMR areas in which the PHA administers vouchers.19 In other words, a PHA that
exercises this option in one metropolitan area or non-metropolitan county is not required to exercise this
option in other metropolitan areas or non-metropolitan counties. A PHA that voluntarily uses SAFMRs for the
entire jurisdiction, even if that jurisdiction consists of only one ZIP Code, or for an entire FMR area, is
considered an “opt-in SAFMR” PHA.
For a PHA that has fully opted in to the SAFMRs, the “applicable FMR” is the SAFMR.20 This is distinct from a
PHA that only uses SAFMRs as exception payment standards (see section 3.5 for information on SAFMRs as
exception payment standards).
As a best practice, when considering whether to opt-in to SAFMRs, PHAs should consider a variety of factors
such as:
       • Whether adoption of SAFMRs is likely to have a positive or adverse effect on the availability of
            rental housing that is both affordable and available to program participants and applicants
       • The effect of SAFMR adoption on family rent burdens, and whether to adopt the hold harmless or
            gradual reduction in subsidy options
       • Areas where the SAFMR is lower than the published FMR by 10 percent21 and opt-in will therefore
            trigger the need for rent reasonableness determinations22
       • Whether to apply SAFMRs to the PBV program, if applicable
An agency that chooses to adopt SAFMRs must submit a written notification to HUD in accordance with Notice
PIH 2024-34, or its successor notice. The notification must indicate the PHA’s proposed effective date. Prior
to implementing SAFMRs, the opt-in PHA must amend its Administrative Plan, stating that the PHA will
establish payment standards based on SAFMRs and include any policies the PHA has adopted with respect to
SAFMRs (e.g., applying SAFMRs to its PBV program and hold harmless policy when the payment standard
amount decreases during the HAP contract term).
Exception payment standards that were approved prior to the adoption of SAFMRs may remain in effect,
subject to the conditions in the approval letter. In some cases, the amounts previously approved may now fall

17
   24 CFR 888.113(c)(3)
18
   24 CFR 888.113(c)(3)
19
   24 CFR 888.113(c)(3)
20
   24 CFR 982.503(a)(1)(i)(B)
21
   81 FR 80567 (November 16, 2016) limits the annual decrease in Small Area FMRs to no more than 10 percent of
the area’s FMR in the prior fiscal year.
22
   24 CFR 982.507(a)(2)(ii)

within the SAFMR basic range, and therefore, will no longer be exceptions. Any amounts that remain above
the basic range must be maintained unless an agency subsequently elects to reduce its payment standards or
otherwise seeks to establish a higher payment standard, in which case another waiver must be requested and
approved before the new, higher payment standard may be adopted. This includes amounts previously
approved as a reasonable accommodation for a household that includes a person with disabilities.
PHAs that opt-in to SAFMRs may subsequently opt out, returning to the use of the published FMR, through
revision of the Administrative Plan and written notification to HUD in accordance with procedures in PIH Notice
2024-34 after taking into consideration any potential disruptions to its program, families, and owners.