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RAD for PRAC Glossary: Key Terms, Acronyms, and Definitions

A quick-reference glossary of essential RAD for PRAC terminology, covering core HUD concepts, documents, roles, rent tools, and reserve requirements—to help owners and partners align from early planning through Conversion Plan submission and closing.

RAD for PRAC transactions come with a lot of program-specific terminology, often used differently across HUD guidance, lenders, and owner teams. This glossary serves as a quick reference to help owners, developers, and project partners align on key acronyms and definitions used throughout a RAD for PRAC conversion, from early planning and due diligence through the submission of the Conversion Plan and closing. When definitions vary by context, the intent is to reflect common industry usage and HUD framing to support clear and consistent communication.

  • Affirmative Fair Housing Marketing Plan (AFHMP): A required document for federally assisted housing providers to attract diverse renters, particularly underserved groups of individuals who are least likely to apply, to ensure equal housing opportunities for those who may have been impacted by past acts of discrimination

  • Annual Deposit to Replacement Reserves (ADRR): A yearly contribution to the replacement reserve account balance to maintain the minimum
  • Budget Based Rental Increase (BBRI): An annual process where an owner requests a rent increase based on necessary anticipated repairs and budgeted increases to operations and maintenance. The cycle typically starts 180 days in advance, and the request must be submitted to the Contract Administrator 120 days in advance for review and approval
  • Broadband Infrastructure: Means cables, fiber optics, wiring, or other permanent (integral to structure) infrastructure, including wireless infrastructure, that is capable of providing access to internet connections in individual housing units, and that meets the definition of “advanced telecommunications capability” determined by the Federal Communications Commission under Section 706 of the Telecommunications Act of 1996
  • Capital Advance Use Agreement: The contract within the PRAC program governing the use of the units covered in the HAP Contract, which will be terminated at closing and replaced by the Elderly Housing Use Agreement

  • Capital Needs Assessment (CNA): A detailed physical inspection of a property to determine critical repair needs, short- and long-term rehabilitation needs, market comparable improvements, energy efficiency, unmet physical accessibility requirements, and environmental concerns, including lead-based paint

  • Closing: The event during which the applicable transaction documents are entered into. “Conversion” does not occur prior to Closing

  • Contract Administrator (CA): The entity which enters into the PRAC contract with the owner and is responsible for monitoring performance by the owner. The CA is the PHA in the case of private-owner/PHA projects, and HUD in the private-owner/HUD and PHA-Owner/HUD projects

  • Contract Rent: The total amount of rent specified in the HAP Contract as payable to the Project Owner for an assisted unit

  • Conversion Plan: The submission to HUD that demonstrates firm commitment to the project from debt and equity providers based on the financial feasibility of the projected scope of work, as well as required due diligence and compliance with all program regulations, such as Resident Engagement, Fair Housing and Equal Opportunity, and more

  • Elderly Housing Use Agreement: To replace the Capital Advance Use Agreement, an Elderly Housing Use Agreement is signed at closing that is superior to all other governing documents and restricts the housing covered in the HAP Contract to low-income elderly persons and/or families with a term equal to the remaining term in the Capital Advance Use Agreement plus an additional 20 years with 5 year renewals thereafter

  • Elderly Family: Families of 2 or more persons, the head of which (or his or her spouse) is 62 years of age or older

  • Elderly Person: Means an individual who is at least 62 years of age

  • Fair Housing Act: 1968 act (amended in 1974 and 1988), providing HUD Secretary with fair housing enforcement and investigation responsibilities

  • Fair Market Rent (FMR): Means the rent that would be required to be paid in the particular housing market area to obtain privately owned, decent, safe, sanitary rental housing of modest (non-luxury) nature with suitable amenities, including utilities

  • Housing Assistance Payments (HAP): The subsidy payment made by the Contract Administrator to the owner of an assisted unit, as provided in the contract

  • HUD: U.S. Department of Housing and Urban Development

  • Housing Quality Standards (HQS): The minimum quality standards developed by HUD for the housing choice voucher program, including any variations approved by HUD

  • Initial Deposit to Replacement Reserves (IDRR): A financial contribution to the replacement reserve account balance at closing or substantial completion

  • LIHTC: Low Income Housing Tax Credit

  • National Standards for the Inspection of Real Estate (NSPIRE): A new real estate inspection standard administered by HUD that prioritizes the health, safety, and repair of functional defects found within physical assets operating in federal housing subsidy programs

  • Operating Cost Adjustment Factor (OCAF): An operating cost adjustment factor established by HUD annually that is applied to the current contract rent, less the portion of rent paid for debt service, for an annual increase to Section 8 contract rents

  • Operating Deficit Reserves (ODR): A financial reserve that replaces residual receipts post conversion in a RAD for PRAC project, with a minimum of $250 per unit per year to be used for project purposes such as unexpected expenses, delinquent receivables, etc., before the use of cash flow, where withdrawals do not need to be approved by HUD however, HUD does monitor the balance annually.

  • Owner: Any private person or entity (including a cooperative) or a public entity that qualifies as a PHA, having the legal right to lease or sublease assisted units

  • Project Based Rental Assistance (PBRA): Rental Assistance under Section 8(C) of the Act provided by HUD to owners according to the terms of a HAP Contract for the provision of housing to eligible tenants, administered by HUD’s Office of Multifamily Housing

  • Project Based Voucher (PBV): A component of a PHA’s HCV program, where the PHA attaches voucher assistance to specific housing units through a PBV HAP Contract with an owner

  • Public Housing Authority (PHA): Means any State, county, municipality, or other governmental entity or public body, or agency, or instrumentality of these entities, that is authorized to engage or assist in the development or operation of low-income housing under the 1937 Act

  • Preservation Rental Assistance Contract (PRAC): The contract entered into by the owner and HUD setting forth the rights and duties of the parties with respect to the project and the payments under the PRAC, used for Section 202 and Section 811 properties

  • Preservation Rent Increase (PRI): A rent increase applicable to RAD for PRAC conversions where the hard construction cost (including general requirements, overhead and profit, and payment and performance bonds) will exceed 30% or 60% of Housing Construction Costs for a given market area as published by HUD, that is subject to the availability of funds through September 30, 2026

  • Rental Assistance Demonstration (RAD): The demonstration program that was created in 2012 by HUD to give Public Housing Agencies (PHAs) and owners of other kinds of Multifamily federal rental subsidy contracts the ability to voluntarily convert programs to a more stable Section 8 platform to preserve the subsidy and improve the physical condition of the asset by obtaining the ability to access and leverage debt

  • RAD Resource Desk (RRD): The online portal for the RAD program where applications are submitted, reviewed, and approved, as well as where resources for the program are held

  • RAD Conditional Approval (RCA): Upon review and approval of the Conversion Plan, the Office of Recapitalization will issue the RAD Conditional Approval, which outlines the terms and conditions for moving forward with and closing the RAD for PRAC conversion. The RCA is valid for 90 days

  • Rent Bundling: An opportunity to convert several properties through the RAD for PRAC program, where a “donor” property will share higher rents with one or more “recipient” properties. Rents are averaged amongst all units within a bundle; donor properties must close first or simultaneously with the recipient properties, and owners may bundle as many properties as they would like

  • Residual Receipts: Project funds that are left over after covering operating expenses and reserves that are set aside in a financial account that can be used to support maintenance and operations of a PRAC property

  • R4P: RAD for PRAC acronym commonly used in the industry

  • Section 8: Housing Assistance Payment Program (Housing and Community Development Act of 1974) OR Section 8- Housing Choice Voucher Program (Housing and Community Development Act of 1974)

  • Submission of Interest: Through the RAD Resource Desk, an owner will begin an application to indicate interest in completing a RAD for PRAC conversion for a desired property. The submission of interest includes property data, PRAC data, ownership data, and other important information, such as the intent to use rent bundling or request rent increases. Once a submission of interest is submitted, the owner is under NO obligation to complete the conversion

  • Substantial Rehabilitation: Significant work on the infrastructure of multifamily rental housing, where the pre-construction cost-estimate is equal to or greater than 75% of the cost of replacement after the rehabilitation is complete

  • Supportive Services: Services provided by the owner to the tenants that assist with healthcare, mobility, housekeeping, securing benefits, and more

  • Transaction Log (T-log): A page on the RAD Resource Desk where the operating budget, development budget, and funding sources are input for review by the Transaction Manager and HUD

  • Transaction Manager (TM): The HUD-appointed employee who will oversee and provide assistance during the RAD for PRAC transaction for HUD

  • Transfer of Assistance (TOA): A version of RAD where the subsidy is moved from one location to another as part of the conversion

  • Utility Allowance (UA): The amount a PHA or Project Owner determines is reasonable for tenant-paid monthly utility costs

  • Work or Scope of Work: The improvements required by HUD or set by the project owner that include HUD-required repairs, along with marketability improvements to be performed within a defined period following the conversion and specified in the RCA or other RAD Conversion Documents

 

If you’re preparing for a RAD for PRAC conversion (or you’re already in the Conversion Plan/RCA phase), using consistent terminology early can prevent delays later. If you’d like support interpreting requirements, aligning documentation, or planning scope/budgets and due diligence items (e.g., CNA, accessibility, environmental, resident engagement, and compliance), connect with our team to map the right next steps for your property and timeline.

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