Public Housing Agencies (PHAs) navigating the complexities of repositioning have a powerful tool at their disposal: the RAD/Section 18 blend. Here are five compelling reasons to explore this strategy:
1. Market Rents Are High in Your Community
RAD rents are calculated using the capital funds and operating subsidies your PHA receives. At the same time, Section 18 provides Tenant Protection Vouchers (TPVs) that can be project-based and set at up to 110% of your area’s fair market rents. In many cases, Section 18 rents exceed RAD rents.
However, a RAD/Section 18 blend, which can include up to 30%, 60%, or 90% of units under Section 18, may allow you to unlock higher rent potential across all units, especially with available rent boosts. Curious about how your RAD rents compare to fair market levels? HUD’s RAD Rents spreadsheet (on the RAD Resource Desk) helps you easily compare potential unit rents between RAD and Section 18.
2. Your PHA Can’t Meet the Section 18 Justification Criteria
To qualify for a full Section 18 disposition, PHAs must meet specific criteria, like physical obsolescence, scattered site challenges, or unsafe surrounding conditions. But what if your agency doesn’t meet any of these? A RAD/Section 18 blend allows you to benefit from Section 18’s typically higher rent ceilings without satisfying one of its specific justifications. It’s a strategic workaround that combines financial flexibility with administrative feasibility.
3. You’re a “Small PHA”
PHAs that operate 250 or fewer public housing units are considered “Small PHAs” and automatically qualify for the Small PHA Blend. This option enables up to 90% of units to be disposed of through Section 18 and 10% via RAD. With demolition disposition transition funding (DDTF) or other rent boosts in play, a 90/10 blend can often match or exceed the rents available under a pure Section 18 transaction.
4. You’re Facing High Rehab Costs, New Construction, or a Transfer of Assistance
When your PHA is considering significant rehabilitation (with hard construction costs exceeding 90% of HUD’s local thresholds), new construction, or a transfer of assistance, you may qualify for a RAD blend allowing up to 90% Section 18 disposition. By combining these project scenarios with applicable rent boosts, these blends can deliver rents equivalent to full Section 18 while preserving flexibility in financing and execution.
5. Resident Rights and Protections Are Core to Your Mission
One of RAD’s standout features is its strong resident protections: rights to return, no rescreening upon conversion, organizing rights, funding for resident engagement, and more. These protections aren’t exclusive to traditional RAD conversions and apply to RAD/Section 18 blends. The blend offers the best of both worlds for PHAs that want Section 18’s financial benefits without sacrificing RAD’s commitment to residents.
Need Help Navigating the Options?
The HPS Consulting Team is here to help. As public housing repositioning experts, we support PHAs at every stage of their journey, from strategic analysis to implementation. Contact us today.
