To: Honorable Chair and Commissioners
From: Steve Potter, City Manager
Prepared By: Kasey Lyons, Housing Supervisor
TITLE:
Title
Section 8 Housing Choice Voucher Program Payment Standards
LABEL
RECOMMENDED ACTION:
Recommendationle
Adopt a resolution approving updated Section 8 Housing Choice Voucher Program Payment Standards.
Body
DISCUSSION:
The Section 8 Housing Choice Voucher Program (the “Voucher Program”) utilizes Payment Standards to establish the maximum amount of rental assistance the Housing Authority may pay on behalf of voucher holders. Payment Standards are based on the annual Fair Market Rents (“FMRs”) established by the U.S. Department of Housing and Urban Development (“HUD”). HUD typically publishes FMRs annually for implementation at the beginning of each federal fiscal year.
Following HUD’s release of the 2026 FMRs, the Housing Authority conducted a local rent study and submitted a request to HUD to re-evaluate the FMRs for the Napa Metropolitan Statistical Area. The study was submitted in January 2026 and accepted by HUD in April 2026. HUD subsequently published revised FMRs, which became effective May 21, 2026.
As a result of the revised FMRs, several of the Housing Authority's existing Payment Standards now fall below HUD's required basic range of 90% to 110% of the applicable FMR. Accordingly, the Housing Authority is required to adopt revised Payment Standards within three months of the revised FMR effective date. While Payment Standards are typically updated later in the calendar year, the revised FMRs effective May 21, 2026 necessitate a mid-year update to the Payment Standards.
The Payment Standard directly affects the amount of rental assistance provided to voucher holders, the portion of rent for which voucher holders are responsible, and the availability of rental units that can be accessed through the Voucher Program. If the Payment Standard is set too low, voucher holders may experience increased rent burdens or difficulty finding suitable rental units within the applicable Payment Standard.
Based on an analysis of both market rents and rents paid under the Voucher Program and the Section 8 program’s funding, staff recommends setting the Payment Standards at:
90% of FMR for zero-bedroom units (studios) at $2,058
91% of FMR for one-bedroom units at $2,300
90% of FMR for two-bedroom units at $2,984
90% of FMR for three-bedroom units at $3,800
90% of FMR for four-bedroom units at $4,448
90% of FMR for five-bedroom units at $5,115
90% of FMR for six-bedroom units at $5,783
In developing the Payment Standard recommendations, Staff considered current rental market conditions and the impact of Payment Standards on voucher holder affordability. The vacancy rate for rental units in Napa County remains low, and voucher holders often experience difficulty locating rental units with rents that fall within the applicable Payment Standard.
Staff also evaluated the impact of the recommended Payment Standards on voucher holder cost burden. When a landlord increases rent above the applicable Payment Standard, the voucher holder may either relocate to another eligible unit or remain in the unit and pay the difference between the Payment Standard and the contract rent. In some cases, this additional rent responsibility results in voucher holders becoming cost burdened, which HUD defines as paying more than 30% of household income towards housing costs.
Under the current Payments Standards, 19% of all voucher holders are cost burdened. Ninety-three percent of all voucher holders occupy one-, two-, and three-bedroom units. Under the recommended Payment Standard, cost burden would be eliminated for voucher holders in studio units. The share of cost burdened voucher holders would decrease to less than 15% in one- and three-bedroom units and to less than 20% in two- and four-bedroom units. Overall, the recommended Payment Standards are expected to reduce the percentage of cost burdened program participant households to 11%.
A recent search of available rental units indicates that many market-rate rents exceed both the current and proposed Payment Standards. To make a substantially greater number of units affordable to voucher holders, the Payments Standards would need to exceed HUD’s regulatory limit of 110% of the applicable FMR.
Staff recommends increasing the Payment Standards based on the opportunity to reduce rent burden for voucher holders, maintain programmatic compliance, and make additional rental units accessible to voucher holders.
FINANCIAL IMPACTS:
Staff estimates the proposed updated Payment Standards will result in an annual increase of approximately $18,000 in rental assistance payments.
For Fiscal Year 2026/27, the increase in Payment Standards can be absorbed within the Housing Authority’s existing Section 8 budget.
CEQA:
The Executive Director has determined that the Recommended Action described in this Agenda Report is not subject to CEQA, pursuant to CEQA Guidelines Section 15060 (c).
DOCUMENTS ATTACHED:
ATCH 1 - Resolution
EX A - Summary of Fair Market Rents and Payment Standards
NOTIFICATION:
Notice of this agenda item was publicly posted 72 hours before the meeting.