July 29, 2008

Office of General Counsel

Rules Docket Clerk

Dept. of Housing & Urban Development

451 Seventh Street SW

Washington, D. C. 20410-0001

Re.: Docket No. FR-5223-N-01

Dear Rules Docket Clerk:

As Executive Director of the agency that administers the HOME program
for the State of Vermont, I am writing to comment on the proposed
Section 8 Fair Market Rents published on June 12, 2008. As you are
aware, HOME program rent limits are capped at the fair market rent. In
addition, many units in HOME funded projects are leased to households
with Section 8 vouchers. The financial health of these properties,
comprising a large percentage of Vermont's affordable housing portfolio,
is greatly impacted by the level of the fair market rent.

The proposed FMRs for Vermont call for an average increase of over 9%.
Unfortunately, this increase is inadequate to account for the
precipitous increase in the cost of heating fuel within the past few
months as well as the effect of the increase in the price of gasoline on
operating costs such as snow plowing, trash removal, and yard
maintenance. Attached is a graph that dramatically demonstrates the
increase in the cost of heating oil. Approximately 60% of Vermont's
affordable housing developments heat with either oil or propane, both of
which cost significantly more than they did a year ago. Unfortunately,
in the month and a half since this chart was developed, the price of
heating oil has increased by an additional 18-20%. According to the data
used to create this chart and based on Vermont's portfolio of affordable
housing units, during the first six months of this year, the price of
heating oil increased by 67% compared to 2007. The increase since 2003
is over 400%.

Most HOME funded apartments in Vermont have heat included in the rent.
Given the current trends, property owners have no choice but to raise
the rent to cover the increased cost of fuel, but because HOME rent
limits are capped at the FMR their ability to do so is governed by the
fair market rent level. For residents with tenant based vouchers, if
actual shelter costs exceed the voucher payment standard residents are
forced to pay the difference out-of-pocket. Over half of the residents
who live in our affordable housing developments have incomes below 50%
of area median. Without a doubt, low income tenants will struggle with
these rent increases and arrearages, evictions and turnover will
increase - all circumstances that will impact the financial viability of
the development. If fair market rents don't keep pace with operating
costs, the ability to maintain HOME funded properties as well as
properties with tenant and project based vouchers - all essential
components of Vermont's affordable housing stock - will be jeopardized.

We urge HUD to adopt Fair Market Rents for Vermont that accurately
reflect the cost of utilities.

Thank-you for the opportunity to comment.

Sincerely,

Gus Seelig

Executive Director

Enclosure

c.c.: Vermont Affordable Housing Coalition

Senator Patrick Leahy

Senator Bernard Sanders

Rep. Peter Welch

**Vermont Affordable Housing Portfolio**

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