- Completion of Years 1-3 of 20-Year Repair Schedule in Addition to Non-Critical Needs Defined by RAD Capital Needs Assessment.
- RAD Transaction Managers often request that repair items scheduled for years 1–3 (and sometimes years 4–5) in the CNA 20-year schedule be completed within 12 months of conversion. While this accelerates improvements, it can significantly increase your development budget. Pairing these repairs with the Initial Deposit to Replacement Reserves (IDRR) may require additional funding and careful coordination with contractors. Planning for these costs upfront is essential to avoid delays.
- RAD Transaction Managers often request that repair items scheduled for years 1–3 (and sometimes years 4–5) in the CNA 20-year schedule be completed within 12 months of conversion. While this accelerates improvements, it can significantly increase your development budget. Pairing these repairs with the Initial Deposit to Replacement Reserves (IDRR) may require additional funding and careful coordination with contractors. Planning for these costs upfront is essential to avoid delays.
- Securing Contractor Bids
- With rising construction and labor costs, RAD Transaction Managers are requiring actual contractor bids to confirm critical and non-critical repair costs. There is some coordination between submitting bids to HUD during the financing plan or post-RCC stage, convincing contractors to hold pricing through the Recap approval process, and adjusting funding if bids come in higher than expected.
- With rising construction and labor costs, RAD Transaction Managers are requiring actual contractor bids to confirm critical and non-critical repair costs. There is some coordination between submitting bids to HUD during the financing plan or post-RCC stage, convincing contractors to hold pricing through the Recap approval process, and adjusting funding if bids come in higher than expected.
- Meeting the Six-Month Operating Reserve Requirement
- New guidance in RAD Supplemental Notice 4C (PIH Notice 2025-03) requires six months of stabilized operating reserves for non-LIHTC and no debt conversions “to ensure that a PHA has adequate funds should operating expenses such as utilities, management fees, management staff salaries, maintenance, real estate taxes, and insurance exceed the gross rent potential of the Covered Project…” PHAs should determine this reserve level and incorporate it into their development sources-and-uses budget planning.
- New guidance in RAD Supplemental Notice 4C (PIH Notice 2025-03) requires six months of stabilized operating reserves for non-LIHTC and no debt conversions “to ensure that a PHA has adequate funds should operating expenses such as utilities, management fees, management staff salaries, maintenance, real estate taxes, and insurance exceed the gross rent potential of the Covered Project…” PHAs should determine this reserve level and incorporate it into their development sources-and-uses budget planning.
- Including an Energy Audit
- Section 1.4, item A.1 of the RAD Notice Rev 4 requires an energy audit as part of the CNA and eTool narrative unless your project qualifies for an exemption (e.g., it is new construction, has LIHTC financing, or has fewer than 20% assisted units). Be sure to include this audit in your scope of work and select a CNA provider who meets all qualifications outlined in the “RPCA SOW and Contractor Quals” on the RAD Resource Desk. This step not only ensures compliance but can also identify cost-saving opportunities through energy efficiency.
- Section 1.4, item A.1 of the RAD Notice Rev 4 requires an energy audit as part of the CNA and eTool narrative unless your project qualifies for an exemption (e.g., it is new construction, has LIHTC financing, or has fewer than 20% assisted units). Be sure to include this audit in your scope of work and select a CNA provider who meets all qualifications outlined in the “RPCA SOW and Contractor Quals” on the RAD Resource Desk. This step not only ensures compliance but can also identify cost-saving opportunities through energy efficiency.
- Addressing 504 UFAS Compliance
- Even non-financial conversions must meet UFAS 504 accessibility standards. While there may be flexibility in categorizing 504-related repairs as critical, non-critical, or part of a transition plan, your CNA provider should identify all deficiencies and associated costs. A knowledgeable provider can guide your PHA in prioritizing and categorizing these repairs effectively.
- Even non-financial conversions must meet UFAS 504 accessibility standards. While there may be flexibility in categorizing 504-related repairs as critical, non-critical, or part of a transition plan, your CNA provider should identify all deficiencies and associated costs. A knowledgeable provider can guide your PHA in prioritizing and categorizing these repairs effectively.
Considering a RAD-o-Matic conversion and want to make sure you’ve thought through the details? Interested in a CNA provider that can help navigate the requirements?
Reach out to D3G to start a conversation.
