SERC-NAHRO ANNUAL CONFERENCE RENTAL ASSISTANCE DEMONSTRATION (RAD) 1
In The Beginning, 2012 2
RAD Authority Authorized as part of the Consolidated Further Continuing Appropriations Act of 2012 (Public Law 112-55) Allows public housing and certain at-risk Multifamily legacy programs to convert to long-term Section 8 rental assistance Two components Competitive initially had a cap of 60,000 units (public housing and Mod Rehab), currently, 455,000 units Non-competitive no cap but subject to availability of tenant protection vouchers (Mod Rehab, Rent Supplement and Rental Assistance (RAP) program 3
Indicated RAD Objectives Modernize aging family & elderly properties Sub rehab of deteriorated properties Thin densities/mix-incomes via PBVs & transfer authority Demolish/replace severely distressed/obsolete properties Portfolio streamlining Preservation of Affordable Housing 4
Special Financing Provisions Assistance can be transferred Long-term contracts (15-20 years), which, at termination, must be renewed Use agreements that run with the term of the contract Upon foreclosure, the property must first be offered to a public entity and then other entity Ownership by public or non-profit, except in case of tax credit projects No balloons less than 18 years Project must meet needs identified in CNA (Capital Needs Assessment) 5
Rent Levels and Rent Adjustments Initial Rent Levels Not based on usual lender underwriting standards Set at the project s current funding levels under the public housing program Tenant Payment Project s Share of the PHA s Capital Fund Project s Operating Subsidy 6
Rent Adjustments Rent adjustments will be done by Operating Cost Adjustment Factor (OCAF) The initial rents will be a floor rent No special or other adjustments available due to project expense increases Rent Reasonable Test applicable to the initial rents 7
$900 Sample Public Housing Conversion Per Unit Monthly $800 $700 $600 $500 $400 $300 $200 $100 $- Operating Fund $330 Capital Fund $144 Tenant Payment $318 Pre-Conversion $792 Housing Assistance Payment $474 Tenant Payment $318 Post-Conversion 8
Project Locations 19% 81% Urban Rural 9
Project Type Column1 28% 72% Elderly Family 10
Section 8 Conversion Choices By Project 49% 51% PBRA PBV 11
Type Of Permanent Project Financing 42% 58% FHA Conventional 12
Type Of Permanent Project Financing 28% 72% 4% 9% 13
Addressing the Capital Backlog Average Public Housing Capital Need (Abt, 2010) $23,465 per unit Average Construction/Rehab in RAD (through 2017) Over $5 billion towards the construction and rehabilitation of over 88,000 converted units. Approximately $60,000 per unit 14
Project Based Rental Assistance (PBRA) Contract Project-based Rental Assistance Contract Administered by the Office of Housing/PBCAs generally familiar to HFAs Initial term of the PBRA Contract is 20 years Initial Rent Cap Initial rents based on current funding may not exceed 120% of the FMR, unless rents derived from current funding are below market, in which case limit is 150% of FMR Rents will be adjusted for the 20-year term by OCAF similar to MAHRA 15
Project Based Rental Assistance (PBRA) Contract (cont d) Choice Mobility allows tenant to move from project, but project retains the project based assistance If neither the PHA nor the HFA has a Section 8 tenant based assistance program May need another PHA to provide Choice Mobility Letter May seek a waiver from Choice Mobility requirements but waivers are very limited May limit turnover to 15% of the units in the project in any one year May also limit to no more than 30% of the PHA s annual voucher turnover 16
Project Based Rental Assistance (PBRA) Contract (cont d) REAC Inspections/Annual Financial Statements/Management and Occupancy reviews Are required similar to the traditional Section 8 program No limits in family projects on the number of units that may receive the benefits of the PBRA 100% of units may receive section 8 PBRA assistance 17
Project-based Voucher Contract (PBV) Administered by HUD through PHAs Initial Term of 15 years although PHA may agree to provide 20-year term; also PHA can agree to extend for 15 more years Initial Rent Cap Initial rents based on the Project s current funding limited to lesser of 110% of the FMRs or the market/reasonable rent for the units in the project Rents adjusted annually by OCAF same as PBRA 18
Project-based Voucher Contract (cont d) PHA will earn a Section 8 administrative fee for the PBVs added to its inventory No REAC/Project Financial Statements/or Management and Occupancy Reviews but will be subject to Housing Quality Standards (HQS) New Notice indicates that there is no cap on the number of units that may receive PBV assistance in each project (RAD only). No limits on number of PBV units in an elderly project or a project for persons with disabilities Use of existing PHA waiting list for admission of new tenants upon unit turnover 19
Project-based Voucher Contract (cont d) Choice Mobility Tenant may request a Section 8 voucher after first year of occupancy Project retains the PBV PHA must give the PBV tenant requesting a voucher first priority on the PHA s voucher waiting list 20
PBV vs. PBRA Handout 21
Resident Rights Relocation RAD does not allow for permanent displacement of existing residents Any permanent displacement or displacement for more than one year requires compliance with the Uniform Relocation Act Need to be aware that certain notices may be required even when there is no permanent displacement If URA is applicable can trigger significant benefits to displaced tenants 22
Other Consideration for RAD Projects Environmental Reviews NEPA Review not satisfied by Phase I or Phase II Environmental review NEPA must be done by a Responsible Entity (frequently the city or county) or by HUD If no substantial rehabilitation RE or HUD may find that the project is categorically excluded from NEPA review 23
Other Consideration for RAD Projects Ownership of Converted RAD Projects For LIHTC transactions owner may be for-profit limited partnership There must be some PHA control over the partnership May be through any or all of the following: 51% or more of the general partnership interest Ground lease of the land Declaration of Restrictive Covenants Subordinate Debt on the Project 24
Other Consideration for RAD Projects Procurement Requirements Must comply with applicable PIH, State and local procurement requirements 25
The Process HUD has spent the past 6 years putting in place a robust process to manage RAD Application for HAP Commitment (CHAP) Two resident consultations Board approval Financing Letters of Interest Application for RAD conversion (RCC) RCC issuance At least one additional resident meeting Significant Amendment to Annual Plan Physical Conditions Assessment (PCA) Application for Firm Commitments Financing Plan 26
The Process (con t) Closing process All closing documents reviewed for compliance As of January 2018, 88,039 units have been closed Post-closing quality control Tenant relocation compliance HAP payment processing Asset management oversight 27
PHA Libraries - Upload Documents ABC Housing Commission Property Name No Units Converting Ownership Data A 110 View Application CHAP Issuance Date Ownership Data Not Yet Confirmed 01/02/2018 Milestone Complete N/A 180 Days Following CHAP Issuance Due Date: 09/01/2018 RAD Financing Plan Financing Plan Grid: No Debt/Conv Financing Plan Guide Item DESCRIPTION 1 Conversion Overview Download Coversion Overview Template 2 Current Conversion Type COMPLIANCE SATISFIED BY EITHER UPLOADING A FILE OR CHECKING THE N/A BOX N/A Current Selection: PBRA Choice Mobility Exemption: Yes FILE UPLOADED Check here if this is incorrect Comments (Save Changes at End of Grid) HUD Comments FHEO Approval 28
3 Resident Comments 4 RPCA or ecna and Scope of Work 5 Environmental Review 6 Development Budget (including completed SLR & EPC Approval letter, as applicable) 7 Development Team 8 Proposed Financing Download Template 9 Operating Pro Forma (including PILOT legal opinion, as applicable) 29
10 Market Study 11 Title Report 12 Evidence of Approval of PHA/MTW Plan or Significant Amendment 13 Approved Amendment to Attachment A of the MTW Agreement 14 Estimate of Public Housing Funds Available for HAP Subsidy Download Initial Year Funding Tool Download Instructions 15 RAD Fair Housing Accessibility & Relocation Plan Checklist Download Checklist 16 Approved Affirmative Fair Housing Marketing Plan or Evidence of Submission (PBRA only) 30
17 Transfer of Assistance Download Approval Worksheet 18 FHEO Upfront Review: Change in Unit Configuration or Unit Reduction Download Template 19 FHEO Upfront Review: Change in Occupancy Type Download Template 20 FHEO Upfront Review: New Construction Download Template Minority Concentration Mapping Tool 21 Financing Plan Certification Download Certification Template 22 Other Documents "Other" Title: 31
HUD-RAD HOME RAD RD HOME CONTACT RAD RD Documents Sort By: Document Title or Document Date Document Document Date 2018 RAD Initial Year Funding Tool 06/07/2018 2018 RAD Training Recording Links 06/06/2018 2018 Year of Conversion Funding Tool - Instructions 06/06/2018 2530 Guidance for RAD Transactions 02/22/2015 2530 MF Development Compliance and Credit Requirements 02/22/2015 CHAP Amendment Overview & Contract Rent Flexibilities 04/05/2018 Contact List - Readiness Transaction Managers 03/29/2016 Conversion Overview Template - FHA 03/02/2016 Conversion Overview Template - No Debt/Conventional Financing 03/02/2016 Conversion Overview Template - non-fha LIHTC 03/02/2016 Delayed Submission of Draft RAD Closing Package (RAD Closing Memo) 04/27/2018 Energy Performance Contracts (EPCs) - FAQs 03/08/2016 Energy Performance Contracts (EPCs) - Letter to PHAs 03/08/2016 Environmental Review - Requirements for First Component RAD Transactions *New* 03/01/2016 Environmental Review - Using HEROS as a RAD Partner 09/21/2017 FDS Reporting Requirements for RAD Conversions (Accounting Brief) 04/20/2017 FHEO Upfront Review Template - Change in Occupancy 05/19/2017 FHEO Upfront Review Template - New Construction 04/14/2017 FHEO Upfront Review Template - Reduction or Change in Units 04/14/2017 Financing Plan Guide: FHA Insured Conversions (with or without LIHTC) 07/05/2017 Financing Plan Guide: No Debt/Conventional Financing 10/06/2017 Financing Plan Guide: Non-FHA LIHTC 07/05/2017 General Information Notice (GIN) - Sample *New 3.1.17* 03/01/2017 Guide to PBV v. PBRA 04/08/2015 32
HEROS Guide for RAD Partners 01/30/2018 HEROS Training for Partners 01/30/2018 Instructions for Completing the Rehab/Construction Completion Milestone 10/25/2017 Kick Off Call Agenda 06/09/2015 MTW Guide for RAD 10/22/2015 OCAFs 2008-2018 04/19/2018 Overview of Master Leases & Delayed Conversion Agreements (RAD Closings) 09/08/2017 PHA Instructions for Requesting Early Removal of Public Housing Units 06/30/2017 PHA Primary User Guide for the RAD Resource Desk 02/02/2016 PIC Removal - Explanation of Units and Property 03/18/2016 PIC Removal - Instructions for PHAs *Updated 3.18.16* 03/18/2016 PIH Notice 2016-23 - Requirements & Guidance for PHAs Removing All Public Housing Units 02/28/2017 Quick Reference Guide for Projects Converting to Project-Based Voucher Assistance (PBV) 11/29/2017 Quick Reference Guide to Multifamily Housing Requirements (PBRA) 10/09/2015 RAD Accessibility & Relocation Checklist for PHAs 05/11/2017 RAD Fair Housing, Civil Rights and Relocation Requirements Notice (Notice H 2016-17; PIH 2016-17) 12/02/2016 RAD Notice PIH 2012-32 REV-3 (1/12/17) 02/01/2017 RAD Physical Condition Assessment (PCA) Tool (Save to your computer and enable macros. Get instructions here.) 04/16/2018 RAD Physical Condition Assessment - Exhibit - Environment Restrictions Checklist 04/16/2018 RAD Physical Condition Assessment - Exhibit - Summary of HUD s Responsibility Laws 04/16/2018 RAD Physical Condition Assessment Guide 04/16/2018 RAD Physical Condition Assessment Statement of Work 04/16/2018 RAD Relocation Checklist for Transaction Managers *Updated 12.13.16* 12/13/2016 Relocation - Using HCVs for Relocation Under RAD 12/04/2017 Rent Bundling Tool 02/10/2016 Resident Information Notice (RIN) - Sample 10/10/2017 33
RHF/DDTF Forecasting Report 06/27/2016 RHF/DDTF Rent Boost & Cancellation Certification - Existing Funds 08/11/2017 RHF/DDTF Rent Boost & Cancellation Certification - Future Funds 08/11/2017 RPCA User Guide - Section 1 Applicant Guide to the Statement of Work 02/22/2015 RPCA User Guide - Section 1 Applicant Guide to the Tool 02/22/2015 RPCA User Guide - Section 2 Contractor Guide to the Statement of Work 02/22/2015 RPCA User Guide - Section 2 Contractor Guide to the Tool 02/22/2015 RPCA User Guide - Section 3 Lender Guide to the Statement of Work 02/22/2015 RPCA User Guide - Section 3 Lender Guide to the Tool 02/22/2015 RPCA User Guide - Section 4 HUD Transaction Manager Guide to the Statement of Work 02/22/2015 RPCA User Guide - Section 4 HUD Transaction Manager Guide to the Tool 02/22/2015 Significant Amendment to the PHA Plan FAQs 02/22/2015 Things PHAs Can Do to Facilitate RAD Conversions 02/22/2015 Timelines for Closing RAD Transactions in 2018 03/15/2018 Transfer of Assistance Approval Worksheet 01/02/2018 Underwriting Considerations for Existing Mixed Finance Projects 10/06/2017 Underwriting Instructions for FHA RAD Transactions (Mortgagee Letter 2012-20) 02/22/2015 Welcome Guide for New Awardees 04/08/2015 34
Contracts & Closing Documents Sort By: Document Title or Document Date Document Document Date Addendum to the HAP Contract - Labor Standards (PBV & PBRA) 05/11/2017 Certification and Assurances (Sample) 05/11/2017 Consolidated Owner Certification Template (Sample) 06/15/2017 Delayed Conversion Agreement - PBRA 10/30/2017 Delayed Conversion Agreement - PBV 10/30/2017 Guidance & Sample Language for RAD Ownership/Control 03/08/2017 Instructions for Completing the 50058 End of Participation (EOP) 10/26/2017 Instructions for Completing the Rehab/Construction Completion Milestone 10/25/2017 Instructions for Final Docket Submission After Closing 04/10/2018 Interim Tenancy Addendum to Tenant Lease 11/28/2016 Lease - PBRA - House Rules Addendum Sample 09/06/2017 Lease - PBRA Model Lease (HUD Form 90105a) 02/22/2015 Lease - PBV House Rules Lease Addendum (Sample) 09/06/2017 Lease - RAD PBV Tenancy Addendum 02/13/2018 Legal Opinion - PHA Counsel (Template) 07/24/2017 Legal Opinion - Project Owner Counsel (template) 07/24/2017 Master Lease Template 08/12/2016 Mixed Finance - Release from Declaration of Restrictive Covenants 04/08/2015 Mixed Finance - Termination of ACC 04/08/2015 Mixed Finance - Termination of Regulatory & Operating Agreement 04/08/2015 Overview of Master Leases & Delayed Conversion Agreements 09/28/2017 Overview of the RAD Closing Process for PHAs 02/22/2015 35
Public Housing - PBRA HAP Contract Part 1 02/13/2018 Public Housing - PBRA HAP Contract Part 2 02/13/2018 Public Housing - PBV HAP Contract Part 1 02/13/2018 Public Housing - PBV HAP Contract Part 2 02/13/2018 RAD Closing Checklist & Overview - PBRA 02/23/2018 RAD Closing Checklist & Overview - PBV 02/23/2018 RAD Conversion Commitment (RCC) 05/11/2017 RAD PBV OCAF Adjustment Tool (Post-Closing) 11/06/2017 RAD Subordination Agreement 10/03/2016 RAD Use Agreement 05/11/2017 Signature Page Models - RAD Use Agreement and DOT/DORC Releases 09/19/2017 36
RAD Web Page RAD Notice, application materials, and additional resources can be found at www.hud.gov/rad Email questions to radresource.net 37
Jerry R. Anderson jerry.anderson@gillgroup.com 303 805-0670 Thank You! 38