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Rob grew up in Southern Vermont and attended Bucknell University in Lewisburg, Pennsylvania. Rob founded D3G in 1994, and his passions include time with family, golf, being outdoors and reading. Personal motto: “Work is a dirty 4-letter word, so it is my job to make it more enjoyable.”

The Rev-4 of the RAD Notice - A few highlights

 

Since its release, the Rev-4 of the RAD Notice (now renumbered as Notice H-2019-09/PIH-2019-23 (HA)) has been a hot topic. The additional repositioning tools it provides housing authorities (HA) were heavily discussed at the recent RAD Collaborative Convening in Greensboro, NC and at other housing conferences I’ve been attending across the country. Here are some highlights from the revised notice with I find interesting: 

  • It allows HA’s to partner up, share resources, and do a bit of “horse trading” to benefit their portfolio repositioning.  They can now contribute public housing funds to each other’s projects, rent bundle across each other’s portfolio, transfer land or make other arrangements to facilitate RAD conversions amongst their portfolios.
  • HA’s can now apply for portfolio awards by entering 25% of units in RAD allowing them to lock in 2018 RAD rents as a future floor.
  •  Capital Needs Assessment requirements have been streamlined! This includes the elimination of all utility consumption baselines, and energy audits in some scenarios. 
  • A rent increase of $100 per unit is now possible if a RAD PBRA project involves new construction or substantial renovation in an Opportunity Zone (OZ). 
  •  Environmental clarifications include, broadening the use of tiered environmental reviews, required use of the new online HEROS platform, and increasing hazardous material requirements.
  •  Final guidance is provided on RAD for PRAC, allowing the conversion of Section 202 PRAC projects through RAD to long-term Section 8 contracts. (D3G can help whether you have a single PRAC or a complex portfolio. Read more here.)

D3G’s Housing Preservation Team brings superior knowledge and expertise to the complexity of RAD projects. We have 25 years of experience with HUD, FHA, RAD, Section 8 PBRA/PBVA, LIHTC and mixed income real estate repositioning services. Our experienced team can provide early planning and transactional guidance bringing projects from concept to reality. Read more about our RAD services here.

 

 

FHA OFFERS INCENTIVES FOR PROPERTY OWNERS WHO INVEST IN OPPORTUNITY ZONES

HUD Multifamily issued additional Opportunity Zone incentives today. As a dedicated housing professional for 25 years, I think there is still a lot more HUD could do to encourage Affordable Housing in Opportunity Zones.

 

You can read the HUD release here - https://www.hud.gov/press/press_releases_media_advisories/HUD_No_19_058

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HEROS Turns Five

On March 1st, HEROS celebrated five years in existence. From an idea floating around, to a document hundreds of pages long, to an almost mandatory system - it's come a long way!

 

Here are some HEROS stats:

Users

HUD staff:

  • CPD field: 477
  • CPD HQ: 35
  • OEE (CPD): 44
  • RAD: 55
  • Multifamily Housing and Healthcare: 371
  • Public Housing: 217
  • ONAP: 67
  • Other: 3

Non-HUD users:

  • CPD Entitlements: 3,235
  • CPD Consultants: 50
  • Public Housing Authorities: 51
  • ONAP Consultants & TDHEs: 22 (Pilot group only at this time)

 

Reviews in the system:

Part 50 – 4,850

Part 58 – 25,410

 

Here’s to many more years of HEROS!

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D3G Supported RAD Work in the News

D3G performed the RAD Due Diligence work on West Newton Apartments in Boston in 2017 and 2018. They just closed on the loan and the developer is getting ready to start the renovations. Not all RAD applications are accepted, but our clients have an upper leg when they use us to help them through the application process.

https://bostonrealestatetimes.com/inquilinos-boricuas-to-redevelop-and-preserve146-unit-west-newton-apartments/

 

We also provided the RAD Due Diligence work on Westside Courts in San Francisco in 2015 and 2016. Our Engineering, AEC and Green divisions all contributed to the massive improvements at this property.

https://www.globest.com/2019/02/26/mayors-office-unveils-public-housing-renovation/

 

What great success stories!

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LIHTC Pilot Notice

The long-awaited LIHTC Pilot notice was released late last week. Unfortunately, the notice language prohibits the pilot from being used for RAD transactions or New Construction using 4%. The industry will have to raise concern about these limitations because preservation of RAD and PRAC deserve reduced time and fees for transactions.

 

http://d3g.com/images/other_media/RAD/Mortagee_Letter.pdf 

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RAD Collaborative - First Regional Convening (Feb 27th - Mar 1st)

We're headed to the first convening of the RAD Collaborative in Portland, Oregon and hope to see you there! 

http://d3g.com/images/other_media/RAD/RAD_Convening.pdf

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RAD Success in Nashville

The power of public-private partnerships and RAD can be highlighted by Nashville’s dedication, efforts, and outcomes in affordable housing. D3G is proud to have been a part of the MDHA RAD story. This is a truly transformative project for a formerly depressed part of the city. It's so exciting to see the continued success of RAD projects!

 

https://spark.adobe.com/page/gXnmNtGtALo6i/

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RAD PBRA & PBV Funding During Shutdown?

Check out the latest news from the RAD Collaborative and be sure to save the date for Northwest Regional RAD+ Convening February 27th-March 1st. Hope to see you there!

 

http://d3g.com/images/other_media/white_papers/RAD_Collaborative_News.pdf 

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A change to the Rental Assistance Demonstration (RAD) regarding conversions to project-based rental assistance under RAD’s Second Component.

You can read more here but the good news is that they (HUD) clarified the understanding. 

https://www.federalregister.gov/documents/2018/12/11/2018-26709/rental-assistance-demonstration-amendment-to-final-notice 

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Opportunities for Developers and Stakeholders within HUD’s Rental Assistance Demonstration (RAD)

The HUD Rental Assistance Demonstration (RAD) began as a limited pilot program in 2012, focused on accessing capital to address the backlog of deferred physical needs within public housing.   According to a HUD 2010 study, the backlog of repairs was estimated at $26B within the public housing stock.   More recent estimates place the backlog repair cost at greater than $35B.  The underlying premise of RAD is to remove the restrictive covenants on the property, better known as a “Declaration of Trust” which previously hindered the ability for public housing entities to leverage and redevelop real estate assets. Unencumbered real estate, combined with the transfer of public assistance from the Section 9 platform to the Section 8 platform allows for public housing to receive long term Housing Assistance Payment contracts and operate more like conventional affordable housing.  A few current stats on the viability and success of the program:

a.       RAD is a no-cost program to the Government involving a transfer of Public Housing capital and operating funds to the stable Multifamily Section 8 platform.   All residents have the right to return post-transformation, and long-term affordability is protected by renewable 20-year Section 8 contracts. 

b.       RAD has overwhelming bipartisan support, as evidenced by the recent increase in statutory authority from the previous 185,000 units to 455,000 units of public housing.  Also worthy of noting is that the Senate requested elimination of the cap altogether, which would allow conversion authorization for all 1.2million units of public housing.

c.       The initial 85,000 units of RAD conversion has generated greater than $5.8B investment in public housing, with a private to public capital ratio of 9:1.  Based upon current HUD Section 9 subsidy levels, it would have taken 47 years of appropriations to invest the same amount of capital for repairs, renovations and replacement.

Recent Policy Improvements:

RAD, though still considered a demonstration program, has advanced far beyond the original 60,000 units of authority.   HUD’s Office of Recapitalization has demonstrated strong leadership and a willingness to both streamline the process, as well as encourage deeper rehabilitations and/or disposition/demolition of functionally obsolescent property.   Subsequently, at the beginning of Q2 2018 HUD released a housing guidance document (PIH 2018-04 (HA)) which provides greater flexibility, new opportunities and streamlined initiatives within RAD; including:

a.       Small PHAs under 50 units can transfer to the Section 8 platform under a simplified process.  These units would obtain project-based voucher (PBV) contracts and be transferred to a non-profit entity.

b.       Scattered site assets, defined as non-contiguous 4-unit or less buildings, can be “disposed” of by a public housing agency via: (i) Section 8 contract transfer; (ii) fair market value (FMV) sale; or (iii) transfer of ownership to public housing residents.

c.       PHAs with excess land and commercial buildings have a streamlined method for (i) FMV sale; (ii) transfer to a non-profit demonstrating commiserate public benefit; or (iii) leverage and housing construction using RAD. 

d.       PHAs intending to use 4% LIHTC bonds to address advanced capital needs may apply for a 25%-75% SAC/RAD rental assistance split, whereby 25% of the units can be granted HUD Section 18 Tenant Protection Vouchers (TPV).  This new financing structure provides greater rent levels and timing of rental assistance payments, substantially enhancing LIHTC 4% bond proceeds.

Opportunities:

The following HUD graphic details adoption rates of RAD by region in the United States.  The Southeast has been an early adopter of RAD and continues to show rapid acceptance of the program.

 

 

The following discussion points detail opportunities about the potential role of Developers and Stakeholders within RAD transactions:

1.       RAD works and works well, supported by the evidence and success of early adopters, and increasing interest by some of the largest affordable housing developers in the country.   They all cannot be that wrong!

2.       RAD is best when combined with other sources of capital, equity and grant funds; for this reason, affordable housing developers with affordable and mixed financing experience find themselves in a unique opportunity to assist with public housing transformation.

3.       PIH Notice 2018-04 provides a prescriptive process for determining functional and cost obsolescence on older properties.  New guidance encourages demolition of larger public housing projects and replacement with multiple smaller, regionally diverse, new construction projects.  Single large PIH projects will be encouraged to be divided into multiple transactions, deconcentrating demographics. 

4.       PIH Notice 2018-04 provides mechanisms for commercial property, vacant land, and low-density land to be repurposed, and either sold at FMV, transferred to a non-profit, or placed under a land-lease with a private developer. 

5.       PIH Notice 2018-04 provides a method for public housing transformation where residents may become home buyers.   It is estimated that more than 200,000 single family homes are within the public housing portfolio, and recent HUD guidance encourages transfer of ownership to residents.   

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Federal Home Loan Bank of Atlanta Announces New Advisory Council Members

ATLANTA, Feb. 15, 2018 (GLOBE NEWSWIRE) -- Federal Home Loan Bank of Atlanta (FHLBank Atlanta) announced today that it has appointed two members to its Affordable Housing Advisory Council.

New Members:

Rob Hazelton has vast experience with multi-family housing preservation as it relates to capital needs, architectural design, construction cost estimation, energy conservation, and environmental issues. Mr. Hazelton has worked in all 50 states for the preservation of multifamily and senior housing under the LIHTC Qualified Allocation Plans. He has been involved with the HUD Multifamily Accelerated Process Guide since inception, and is proficient in the FHA-HUD multifamily mortgage insurance markets. Frequently asked to provide technical services for HUD’s many pilot and demonstration programs, Mr. Hazelton is currently working with the LIHTC Pilot, the Rental Assistance Demonstration, Moving to Work, and self-managed Energy Performance Contracting. He was appointed to the Virginia Statewide Independent Living Council by former Gov. Mark Warner, and he continues to support local organizations which service the senior and disabled communities. Mr. Hazelton is an active board member of a Richmond Regional Energy Alliance, focused on bringing energy awareness and efficiency to disadvantaged communities. He is a graduate of Bucknell University and resides in Richmond, Virginia.

Christie V. Smith is executive director of Neighborhood Housing Services of Richmond, Inc. (NHSR), a community development corporation and community development financial institution. NHSR’s mission is to present opportunities for low- and moderate-income families preparing to purchase affordable homes, and to strengthen communities in Richmond and other areas of Virginia. Ms. Smith has served in a variety of capacities at NHSR, including as Homeownership Manager, Housing Counselor, and CRA Officer. She is currently active with the Virginia Association of Housing Counselors (VAHC), the National Association of Professional Women, the National Credit Union Association, and the African-American Credit Union Coalition. Ms. Smith holds a certificate of completion from the Mosley-Flint School of Real-Estate, is a certified FHA Direct Endorsement Underwriter, is certified under the VA’s Lender Appraisal Processing Program, is a VAHC certified Housing Counselor, is a HUD certified Default Counselor, and is a Virginia Housing Development Authority Train the Trainer facilitator. She develops underwriting guidelines for CRA products and NHSR loan products, and she approves, funds, and sells mortgage loans to the secondary markets. Ms. Smith holds a Bachelor of Arts degree in Business Administration and Criminal Justice, and a Master of Business Administration degree from the University of Richmond.

About the Affordable Housing Advisory Council 
FHLBank Atlanta’s Affordable Housing Advisory Council comprises 15 representatives from a diverse group of community and nonprofit organizations actively involved in providing or promoting low- and moderate-income housing and community lending within FHLBank Atlanta’s district. The Advisory Council provides advice to FHLBank Atlanta’s board of directors regarding ways in which the Bank can enhance the effectiveness of its housing finance and community lending mission.

About the Federal Home Loan Bank of Atlanta
FHLBank Atlanta offers competitively-priced financing, community development grants, and other banking services to help member financial institutions make affordable home mortgages and provide economic development credit to neighborhoods and communities. The Bank's members—its shareholders and customers—are commercial banks, credit unions, savings institutions, community development financial institutions, and insurance companies located in Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. FHLBank Atlanta is one of 11 district banks in the Federal Home Loan Bank System. Since 1990, the FHLBanks have awarded approximately $5.4 billion in Affordable Housing Program funds, assisting more than 827,000 households.

For more information, visit our website at www.fhlbatl.com.

D3G RAD Work in January RADTalk Newsletter

Every time I get a RADBlast and the RADTalk newsletter I get excited to see the statistics of the program and transformation project highlights. To date 818 public housing properties have been converted, resulting in 88,000 preserved units. And because D3G has worked on over 790 RAD properties totaling greater than 110,000 units, we commonly see our achievements championed by HUD! D3G was an integral team member on this month’s RADTalk showcase properties in San Francisco and Cleveland. Keep up the great work Office of Recapitalization!

https://www.hud.gov/sites/dfiles/Housing/documents/RAD_Jan2018_Newsletter%20013118.pdf

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D3G Provides One Stop Green MIP Shop for Walker Dunlop Deal

Congratulations to longtime client Walker Dunlop on securing a $15.5 million HUD loan for the construction of Manseau Flats, a multifamily project located outside of Lambeau Field. This project is expected to qualify for the National Green Building Standard designation, work that D3G supported as part of our one stop shop for Green MIP. We also delivered a range of due diligence services and reports for this project including, a Statement of Energy Design (SEDI), pre-construction radon mitigation review and an Arch and Cost Review. 

http://rebusinessonline.com/walker-dunlop-arranges-15-5m-hud-loan-for-construction-of-multifamily-project-near-lambeau-field-in-wisconsin/

 

How this Tax Plan Affects Affordable Housing

The irony between actions and words in DC is staggering. This week I was at AHF Live in Chicago, where the dominant topic of discussion was the President’s tax reform. And yet a day after the House passes the Tax Cuts and Jobs Act (TCJA) an article is published in which HUD Secretary Carson reminds us that "11 million households in America are severely burdened". To add on a layer of absurdity, Dr. Carson champions RAD as an example of how his Department plans to address the affordable housing crisis yet, no one in this Administration seems to comprehend that the House version of the tax cuts eliminates the Private Activity Bond market, which directly kills the historic, new market and 4% tax credit markets!

The link between the success of RAD and the private activity bond market is strong, as it is estimated that greater than 50% of RAD conversions will require tax credits to address needed repairs and deferred maintenance. The Finger Lake Times described the devastating effect this legislation would have, and how conversions like those planned in New York City would never come to fruition. I have faith that those in the Senate will understand the mechanisms necessary to solve the housing crisis and will not eliminate the 4% bond market.  

D3G Works on $60 Million Dollar Walker Dunlop Deal

Congratulations to long-time client Walker Dunlop on their arrangement of a $61 million dollar HUD loan for Bozzuto Development on Monarch at Waugh Chapel, a multifamily project located in Gambrills, Maryland.

D3G was tasked to support multiple facets of the FHA-loan due diligence process. Our Architectural, Engineering and Cost department provided a pre-application review as well as a full 221(d4) A/e plan and cost review. Our Energy team provided the required studies for the property to achieve the MIP reduction to 25 bps. D3G’s Environmental Team provided complex Phase 1 ESA, Phase 2 investigation, and NEPA studies inclusive of floodplain mitigation.   

This project demonstrated how important a knowledgeable and integrated team is to a successful FHA loan application! 

http://markets.businessinsider.com/news/stocks/Walker-Dunlop-Provides-61-Million-Loan-for-New-Bozzuto-Apartment-Community-1007083893

 

 

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CNA E-Tool is Here

November 1st came and went. And though I’m sure most dentists couldn’t sleep the night before due to the excitement of National Brush Day (in the United States), most MAP Lender’s couldn’t sleep due to the dread of HUD Tool Day. Yep, as of Wednesday November 1st all FHA mortgage applications must be completed using the CNA e-Tool. The night before may have been Trick OR Treat, but the day after, just tricky. The mortgage industry recognized the potential detriment the unpolished software platform could have on Q4 mortgage applications; yet despite the best efforts of some of the largest industry groups, HUD followed through with mandatory submission requirements. No more beta testing. No voluntary submission. Mandatory. And for this occasion, I wrote a Haiku:

The e-tool is live

Best thing since sliced wonder bread

Or a dumpster fire?

While the tool (made in 25-year old programming language!) could never be on par with Wonder Bread, D3G’s efforts to learn the tool and study the HUD-KPMG programming has created knowledge and efficiencies we can pass on to the Lenders. These considerable efforts by D3G Staff to understand the e-Tool will mitigate the dumpster fire to a small bathroom trashcan. Jokes aside, D3G is ready for the e-Tool.  Are you?

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Fannie Mae Reaches it's 500th Green Multifamily Financing Transaction in 2017

Congratulations to Fannie Mae, and even more so to Chrissa Pagitsas, Director of the Multifamily Green Financing Business for Fannie Mae! Fannie Mae’s green programs have come a long way since D3G provided the first Green PNA Demonstration Report to Chrissa and her team in 2010. Interesting fact, the first green Fannie program was based on HUD’s Green Retrofit Physical Condition Assessment (GRPCA) scope of work. Yes HUD was the innovator, however their green multifamily loan volume pales in comparison to Fannie Mae. 

Again, Congratulations Fannie Mae!

http://www.prnewswire.com/news-releases/fannie-mae-closes-on-its-500th-green-multifamily-financing-transaction-of-2017-300534097.html

 

D3G RAD El Paso Project in the News

D3G is in the news again and we couldn’t be happier to be partnering with the Housing Authority of the City of El Paso (HACEP) as they pioneer the RAD program and wrap up Phase One of the project.  

“In the RAD world, HACEP and it’s partners are rock stars.”

 

A big shout out to all of the D3G employees who worked towards this success. They certainly are rock stars!

Check out the article here.

-Rob

An Update on the CNA eTool from RAD

Update on CNA eTool, Post-Conversion Construction & Relocation Reviews, Guidance on Delayed Conversion

 

Update on CNA eTool

As the Office of Recapitalization continues to work with the Office of Multifamily Housing to implement the new Capital Needs Assessment (CNA) e-Tool, we want to update you on the timing of this implementation. 

While the CNA e-Tool itself is currently operational (see CNA e-Tool Web Page for information and guidance), the ability of PHAs to login and submit the CNA through the HUD system is not. Consequently, the Office of Recapitalization and the Office of Multifamily Housing have jointly decided to delay the requirement for the CNA e-Tool to be used in all RAD conversions to February 1, 2018. In an earlier announcement, we referenced that all RAD Physical Condition Assessments (RPCAs) procured now should be using the CNA e-Tool by October 1st; consequently, with this announcement, we are rescinding that requirement and instead we are now requiring that all financing plans submitted after February 1, 2018, must use the CNA e-Tool. 

In the meantime, PHAs may continue to use the existing RPCA Tool. If they have already procured a PCA using the new CNA e-Tool, they may validate it through the CNA eTool public validation portal website using the existing protocols and then upload the validated Tool to the RAD Resource Desk. 

Please note that the PCA Scope of Work has not, and will not, change with the use of the CNA e-Tool.  All the existing RAD requirements for the PCA will remain the same; only the Assessment Tool that is required to be submitted will change.  It is important to note that most Needs Assessors/Consultants performing PCAs within the RAD program have either already been trained, or are currently being trained, on the new Assessment Tool.  Therefore, PHAs are strongly encouraged to procure these services from a Needs Assessor/Consultant with RAD or Multifamily experience, as this Assessment Tool is complex and may not be easily populated by someone unfamiliar with it.

Additionally, in preparation for the CNA e-Tool’s mandatory use in February 2018, the Office of Recapitalization is producing PHA-specific trainings and a revised User Guide, which will be available both on the RAD Resource Desk and at the link above.  This training will be released later this calendar year and will provide PHAs with a general overview of the CNA e-Tool, as well as specific guidance on how to obtain the necessary credentials for uploading the Assessment Tool into the HUD system; instructions on how to initially populate the Assessment Tool; and other requirements for submission of a successful CNA e-Tool.

If you have any questions, please visit the link above or www.radresource.net, where you can find FAQs and ask a specific question related to your transaction.

 

Post-Conversion Construction and Relocation Reviews

HUD has contracted with a firm to conduct preliminary compliance reviews of completed RAD conversions to better carry out oversight of relocation and verify construction activity. Ninety properties were selected at random for either a relocation review or a construction review. These reviews are all desk audits which include contacting the PHA and reviewing relevant files. If you have been contacted by the firm conducting these reviews, we appreciate your cooperation.

 

Guidance on “Delayed Conversions”

For RAD conversions involving a transfer of assistance, there are two options to structure the conversion when the residents will remain in their original Public Housing units until construction completion: 1) a conventional conversion with a Master Lease or 2) a Delayed Conversion. HUD has posted to the RAD Resource Desk an “Overview of Master Leases & Delayed Conversion Agreements” that describes the options PHA have related to the timing of conversion, the documentation that is used, and the restrictions and benefits associated with each option.

 

                - The RAD Team

 

 

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D3G Provides Services for Ambitious, Luxury, Multi-Family Development in Florida

D3G provided third party compliance services on this complex 221(d4) project in Miami. Our staff enjoyed partnering with Turnberry Associates, LeFrak, Wells Fargo, and the US Department of Housing and Urban Development (HUD) to process this very large project within an expedited time frame. We were responsible for phase I&II environmental studies, NEPA-HEROS reporting, architectural code review, and independent cost estimation.

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