Noteworthy RAD Developments
RAD Preserves 100,000 Public Housing Units! - HUD’s Summary Graphic on 100k Milestone
RAD 1st Component - Latest Data on Closings, CHAPS Awarded, Current Applicants/Wait List & More
Wait List - Due to the RAD public housing cap increase, "RAD Waitlist" updates are no longer applicable, however, the new "Applications Under Review" list is now available including data through August 8, 2018.
RAD 2nd Component - Closed Transactions (as of 2.12.19)
All 2nd Component Rent Supp Properties All Converted! - Rent Supp Wind Down
RAD Initial Reports- HUD released reports on the RAD program
RAD Case Studies- HUD produced case studies
RAD Notices and Authority- Recent HUD notices & legislation
New Tools & Helpful Info
New RAD Myths & Facts—Updated 4.15.19
Regrettably, a few publications that have recently reported on limited RAD implementation issues related to relocation, resident processes and HUD oversight, among others, have also mis-characterized various features of RAD in the process. All practitioners should be concerned about and work together to eliminate any aberrant implementation practices. It is unfortunate, however, when misunderstandings and/or myths about RAD cloud reported practice issues and—more importantly—what may or may not be needed to effectively address them.
Along with HUD, PHAs and their partners, the Collaborative has begun to reach out to these publications to promote a better understanding of how RAD works. To help with this effort, we have pulled together, updated and tried to sort clear facts from a range of myths that continue to circulate, which can be found here. We will periodically update this compilation as needed. Please send along suggestions for what would be helpful to include in future updates by sending an email to: email@example.com .
New Enhanced RAD Rents for Public Housing Announced
On December 18, 2018, HUD published the new RAD Rents going forward. Based on determination of final FY 2018 public housing funding levels—which are a combination of operating, capital and tenant rent contribution formulas—the new RAD rents are available for any new awards starting January 1, 2019, as well as for already-issued CHAPs if PHAs opt for the updated rent levels and seek a simple amendment to their CHAPs.
New Streamlined Online RAD Application Form
HUD also announced on December 18 a new streamlined and easier to use RAD application for public housing conversions that is now fully online in a web-based form. Applicants no longer need to complete an Excel-based application. But remember to issue RAD Information Notices (RINs) to residents, hold at least two resident meetings, and secure board approval prior to submitting an application.
New Davis-Bacon No Longer Required for RAD2 PBRA Conversions
HUD announced on December 11, 2018 that it has eliminated the requirement to use Davis-Bacon wages in transactions involving project-based rental assistance (PBRA) in RAD 2nd component transactions (Rent Supp/RAP and Mod Rehab conversions only). See the brief notice here HUD Notice H-2018-11/PIH 2018-22 .
Previously, HUD required both PBV and PBRA RAD2 transactions to adhere to the March 9, 2015 Federal Register Notice requiring Davis-Bacon wages for all projects that constitute “development” within 18 months, prior or after, HAP contract execution. That notice defined “development” as “work that…alters the nature or type of housing units in a PBV project, reconstruction, or a substantial improvement in the quality or kind of original equipment and materials,” but not “replacement of equipment and materials rendered unsatisfactory because of normal wear and tear by items of substantially the same kind.”
New 2019 OCAF Increases Published
On 11/23/18 HUD published the 2019 OCAF increases by state for eligible Section 8 Multifamily developments including RAD conversions to both PBRA and PBV platforms in 2018 and prior years. Find your state’s 2019 OCAF increase here.
Recap Office & SAC Leaders Discuss New Notice & Guidance in RC Telecon 9/14
Find the materials discussed by Greg Byrne and Will Lavy of the Recap Office along with Jane Hornstein, SAC Director, in the Collaborative’s teleconference on September 14, 2018 about smart strategies in using the recent RAD notice, supplemental guidance and Section 18 changes, by clicking here.
Notice & Supplemental Guidance on RAD's New Authorities & Tools
HUD published on July 2, 2018 a new notice and supplemental guidance with important new information for implementing changes to RAD’s new authority in the FY18 Appropriations Act, along with details on 5 new innovative tools to simplify RAD conversions while extending its reach to additional public housing developments. Significant flexibilities were also outlined for the remaining Rent Supp, RAP and Mod Rehab properties yet to convert to long-term Section 8 contracts under RAD. (Information on converting Section 202 PRAC properties under RAD will be detailed in a forthcoming notice expected in the Fall).
The July 2 RADblast! offers a good summary of these changes, along with direct links to the new notice and guidance, revised FY16 RAD Rent table for the balance of FY18 and a version of the Revision 3 RAD Notice reflecting these changes. To access all this information, click here, along with an initial batch of FAQs on blending these new authorities.
On July 9, 2018, HUD hosted a live webinar on the provisions of both notices. The webcast of that session can be accessed at the RAD Resource Desk. The presentation outline used in the webinar can be found here.
Reno & Cavanaugh has prepared a concise summary of the new provisions. Also, Dominion Due Diligence (D3) recently offered a helpful orientation to combining RAD and the new Section 18 provisions, with materials from the session available here.
RAD Extended in FY 2018 Omnibus. Key points in the Omnibus bill include:
RAD Public Housing Cap raised to 455,000 units. Plus RAD’s sunset will now be extended to 2024, potentially giving breathing room to the building flow of portfolio and multiple project conversions.
RAD now covers the Section 202 PRAC inventory. Now ~120,000 units of senior housing at risk of being lost from the inventory will have a viable preservation path. The language also offers helpful subordination language for capital advances. And, it gives the Secretary authority to direct funding from accounts for “Housing for the Elderly” in support of PRAC conversions.
Flexibility for Rent Supp & RAP conversions. A further provision provides flexibility for adjusting Rent Supp & RAP rent levels in high-cost areas.
HUD will now prepare a revised RAD notice to fully address how the additional authority will be allocated for both public housing and the RAD’s multifamily component.
Beyond RAD-specific provisions in the Omnibus, the Affordable Rental Housing ACTION coalition reported on two key provisions to strengthen and expand the Housing Credit:
A 12.5% increase in 9% LIHTC allocation, effective for four years (2018-2021).
A provision authorizing income averaging in Housing Credit properties, on a permanent basis upon enactment of this bill. Allows Housing Credit units to serve households earning up to 80 percent of area median income (AMI), offset by deeper targeting in other units to maintain average affordability in the development at 60 percent AMI. The 60 percent AMI ceiling would apply to the average income limit for all apartments in a development rather than each individual Housing Credit apartment.
Section 18 Demo-Dispo Notice Offers PHAs New Flexibilities. HUD recently released revisions to the Section 18 Demo-Dispo program. With many new flexibilities for public housing dispositions and demolitions urged by CLPHA and others, the notice is also designed to broaden and deepen RAD’s reach. A helpful summary from Reno & Cavanaugh can be accessed here. Key RAD-related provisions include:
PHAs converting 75% of a project’s newly constructed or substantially rehabilitated public housing units through RAD will be allowed to dispose of the remaining units—up to 25%—and replace them with project-based Tenant Protection Vouchers (TPVs) as long as the project is not also using 9% LIHTCs. This effectively broadens and deepens the reach of RAD conversions using 4% LIHTCs and tax-exempt bonds and/or other forms of debt financing. Plus, if awarded TPVs are converted to PBV contracts, the PBV units will not count under an agency’s HOTMA-redefined inventory cap, as HOTMA exempts previously assisted properties (including public housing properties) from the PBV cap.
PHAs owning and operating fewer than 50 ACC units and if disposition will result in the PHA closing out its Section 9 public housing program, HUD will approve a PHA’s disposition application. The PHA will be eligible for TPVs for all occupied units. This includes larger PHAs who have converted all but 50 units or fewer under RAD or previous Section 18 disposition actions.
Scattered-site units consisting of units in non-contiguous buildings with 4 or fewer total units are now also eligible for disposition approval and replacement with TPVs for all occupied units.
HUD RAD Training 2018: Keys to A Successful RAD Conversion. On May 17-18, 2018 HUD conducted a training for PHAs and their partners who are new to RAD. The 2-day conference featured many experienced practitioners, including the Collaborative's Sheila Jones, who led a discussion on anticipating organizational change under RAD. Find recordings of all of the sessions, the presentation slides, and a list of “Key Takeaways” that HUD produced addressing topics including strategic portfolio planning, resident rights, creative RAD tools, the latest updates on policy and practice--and more here.
Simplified RAD Application Now Available. HUD released in May 2018 a revised and simplified RAD Application for public housing conversions. The application can be used by any new applicant as well as PHA’s who have reserved their position on the waiting list through the submission of a Letter of Interest and who will be invited to submit an application as a result of the cap increase. The application is available here.
Implementation of CNA e-Tool for Non-FHA RAD Transactions. As a reminder, all non-FHA RAD Financing Plans submitted on/after February 1, 2018, must include the new CNA e-Tool. A webinar reviewing these requirements was held on December 7, 2017. A recording of that webinar can be obtained here. A follow-up Q&A session will be held from 2:30 to 3:30 est on Thursday, January 18. Registration materials via HUD Recap Office soon.
RAD PBV HAP Contract Now Available. Formerly, PBV conversions of public housing properties used the standard “PBV HAP Contract for New Construction or Rehabilitation” along with a “RAD rider” that made amendments to the contract. To improve the readability of the contract, HUD has produced PBV contract documents that incorporates the changes made by the RAD rider directly into the standard PBV HAP contract. This contract (Part I and Part II) is available in the Document Library on the RAD Resource Desk. PHAs must use this version for any closing packages submitted on or after January 1, 2018 or for any closings that occur on or after February 1st 2018.
Underwriting Considerations for Existing “Mixed Finance” Projects. At the heart of RAD is the requirement that, prior to conversion, a project can reasonably demonstrate that it has the resources to meet the 20‐year capital needs identified in the Capital Needs Assessment (CNA). Often, public housing mixed‐finance projects were developed in conjunction with low‐income housing tax credits and, therefore, involve outside investors, owners, and lenders. Unlike traditional public housing projects, existing public housing mixed‐finance projects can find it impractical to refinance the property, or to re‐size the annual deposit to replacement reserves, prior to the end of the tax credit compliance period. To respond to these realities, the HUD Recap Office has adopted alternative underwriting criteria for mixed‐finance projects that are unable to meet the 20‐year capital needs identified in the CNA at the time of conversion under standard underwriting criteria.
RAD Minority Concentration Analysis Mapping Tool. HUD recently released the RAD Minority Concentration Analysis Tool in order to allow PHAs to quickly assess whether a proposed site for new construction or transfer of assistance under RAD is or may be in an area of minority concentration. The report provides the data needed for the analysis described in H/PIH 2016-17, including minority data from the Census for: 1) the Housing Market Area; 2) the census tract; 3) the area comprised of the census tract of the site together with all adjacent census tracts; and 4) an alternative geography if proposed by a PHA. To utilize the tool, the user must first login. Depending on the output of the tool, a PHA can determine whether: a) an upfront review by HUD is not required; b) a review by HUD is needed to confirm that the site is not minority concentrated; or c) the area is minority concentrated and could only be approved if it meets one of the exceptions for building in an area of minority concentration.
RAD Project-Based Voucher OCAF Worksheet. RAD contract rents are adjusted at each anniversary of the HAP contract by the Operating Cost Adjustment Factor (OCAF) HUD publishes each year in the Federal Register. While OCAF adjustments are commonly used in PBRA, it is new for PHAs and the Project-Based Voucher program and includes some nuances that PHAs may not be aware of. Consequently, HUD has produced the RAD PBV OCAF Rent Adjustment Tool to assist PHAs and independent entities to annually adjust contract rents. Please note that while this is not a required worksheet and should not be submitted to HUD, HUD recommends that the PHA retain a copy of the methodology used to adjust the RAD contract rents for audit purposes. The worksheet is available by clicking on RAD PBV OCAF Adjustment Tool in the Contracts & Closing Documents in the Document Library of the RAD Resource Desk.
Final "Duty to Serve" Rule Released. The Federal Housing Finance Agency (FHFA), which oversees Fannie Ma.e and Freddie Mac, released its final rule that implements Fannie Mae's and Freddie Mac's duty to serve three specific under-served markets: manufactured housing, rule housing, and preservation of affordable housing. Under the rule, the GSE's are awarded points in a system to encourage them to undertake activities in these markets. The duty to serve the preservation of affordable housing markets specifically cites RAD as an eligible activity - as urged by the Collaborative - which may encourage Fannie and Freddie to devise financing products tailored to RAD. (Prior to publication of the rule, Freddie Mac provided financing in large RAD transactions in El Paso and San Francisco). The RAD Collaborative will continue to engage with FHFA as the new rule is rolled out. The entirety of the rule can be found here.
Notice on Disposition of Non-Dwelling Public Housing Real Property. HUD issued on November 29, 2016, Notice PIH 2016-20 (HA), which details how a PHA seeking to retain certain public housing real property - including non-housing buildings and excess land - that was not or is no longer used for public housing dwelling purposes can do so - either by paying fair market value to HUD for the property or seeking and allowed exception to this requirements. The Notice, which is effective upon publication, is particularly applicable to RAD conversations wherein non-dwelling real property not deemed essential to the conversion of the housing units must be separately disposed of outside of the RAD conversion process in order to the PHA to use it for non-public housing purposes. The Collaborative will monitory implementation of the Notice and share practice implications as needed.
HUD Publishes Fair Housing, Civil Rights, and Relocation Notice. The long anticipated Notice was published on November 10, which outlines site and neighborhood standards, civil rights, and relocation requirements for public housing conversions under RAD. The Notice H 2016-17/PIH-2016-17 can be found here. HUD is developing a new, consolidated draft checklist that streamlines both the content and timeless of submission and their review and approval process. The checklist will be made available for public comment shortly. See the RAD Collaborative, CLPHA, and Reno & Cavanaugh's final comments on the published notice here.
Initial-Year Funding. Following from an earlier listening session on the RAD closing process, HUD’s Recap Office has developed helpful Initial-Year Funding Instructions that describe the calculation of funding during this period, as well as how to access these funds. It also has revised and simplified the Initial-Year Funding Tool, which is an Excel-based worksheet to help calculate the amount of revenue available to a project in the Initial Year of a RAD conversion. Active access to the Tool is enabled by logging into the RAD Resource Desk.
PBV Provisions in HOTMA 2016. The Housing Opportunity Through Modernization Act of 2016 (HOTMA) offers several new PBV provisions—some based on RAD practice, others new—that will apply to RAD PBV conversions once HUD issues implementing regulations. PBV Details in HOTMA 2016 offers a detailed summary. Plus, find a HUD-produced tutorial on HOTMA's implementation here.
RAD & EPCs. For some helpful answers to questions about how RAD and Energy Performance Contracts can best work together, click here.