HUD HCV Guidebook § 3.4

PHAs may request approval from HUD to establish payment standards below 90 percent of the published FMR
for any unit size. PHAs experiencing financial difficulties may request that HUD approve the request for good
cause, such as the inability of a PHA to avoid terminating the HAP contracts of current participants without the
proposed reduction in payment standards.
At HUD’s sole discretion, HUD may approve a PHA’s request to establish a payment standard lower than the
basic range.38 In determining whether to approve the PHA request, HUD will consider appropriate factors,
including rent burden of families assisted under the program. Unless it is necessary to prevent termination of
program participants, HUD will not approve a lower payment standard if the proposed payment standard
would cause the family share for more than 40 percent of participants with tenant-based rental assistance to
exceed 30 percent of adjusted monthly income, based on analysis of currently available data.

35
   24 CFR 982.503(c)(3)
36
   89 FR 38224 (May 7, 2024)
37
   Please note that success rate payment standards are not exception payment standards and are never used for
determination of rent to owner in the PBV program.
38
   24 CFR 982.503(e)

PHAs requesting a payment standard lower than the basic range must submit its request in accordance with
instructions in Notice PIH 2024-34.
The PHA’s request should, at a minimum, include an explanation or reasoning for the request and include the
calculation used to arrive at the projected shortfall in funding and cost-savings measures the PHA has already
taken or will take in the future. Requests should include an analysis by the PHA on the impact the reduction
in payment standards below the basic range will have on a family’s opportunity to lease units throughout the
PHA’s jurisdiction. As part of this analysis, PHAs are encouraged to provide to HUD the following information
as part of the request to expedite review:
       •    Applicable FMR and payment standard for the prior three years for the areas for which the PHA is
            requesting to establish payment standards below 90 percent of the applicable FMR;
       •    Rent burden percentage estimate for the whole program after applying the proposed payment
            standard;
       •    Current rent burden percentage (percent of families paying over 30 percent of adjusted monthly
            income) in the area where the PHA would like to set payment standards below 90 percent;
       •    Future rent burden in those areas if those payment standards were used;
       •    The PHA’s success rate in these areas;
       •    Number of current families this change will impact;
       •    PHA’s policy for decreases in the payment standard; and
       •    Any rental market data that would support the payment standard to be set lower than 90 percent
            of the applicable FMR.
In addition, as a condition of the approval, HUD may require the PHA to raise payment standards and apply
the new payment standards at such time that the PHA receives additional funding.