RAD Roadmap to Success
What is RAD?
Our technical and transactional experts are experienced working with Housing Authority Executive Staff and Boards on repositioning strategies that include Streamlined Voluntary Conversion, Required Conversions, and a combination of Section 18, RAD, and LIHTC.
Owner and CEO, Rob Hazelton, explains RAD and the importance it plays in the revitalization of public housing and surrounding communities.
What Are My Repositioning Options?
RAD allows Public Housing Authorities to convert their existing Public Housing subsidy into a project-based Section 8 subsidy. It is a one-for-one replacement of Public Housing units, in which residents have a right to return. RAD rents are based on the PHA’s operating subsidy and capital fund allocation levels under the public housing program.
Section 18 of the Housing Act of 1937 supports the demolition and/or disposition of obsolete Public Housing and qualifies PHAs for Section 8 Tenant Protection Vouchers (TPV) for any Public Housing unit occupied within the last 24 months. In many areas these TPVs result in higher rents than seen under Public Housing or RAD. PHAs may dispose of Public Housing assets to a PHA-controlled entity to preserve affordable housing.
A RAD/Section 18 blend permits some properties converting under RAD to receive Section 18 Demolition/Disposition approval and vouchers for a portion of the units involved. The Section 18 units are eligible for Section 8 Tenant Protection Vouchers (TPVs) and may be project-based.
The higher TPV rent levels bring in more subsidy income to the project which in turn leverages greater borrowing power to fund more renovation needs.
Faircloth-to-RAD allows Public Housing Authorities to develop new Public Housing units using HUD’s Mixed-Finance program with pre-approval to convert the property to a Section 8 contract following construction completion.
Allows PHAs with 250 or less units to convert public housing units to tenant protection vouchers.
Competitive Planning and Implementation Grants are awarded to support neighborhood revitalization efforts in communities with severely distressed HUD-subsidized housing. The goal is to coordinate with local stakeholders and residents to create a plan that improves housing opportunities, increases access to supportive services, and brings new amenities to the neighborhood.
Planning for Repositioning and Assessing Your Portfolio
D3G offers a brief and a full-scale Repositioning study. Our analysis includes property-specific or portfolio-wide plans to help create a vision for the future.
- Location Analysis
- Physical Conditions Screening Assessment
- Environmental evaluation – preparing for NEPA/HEROS Review
- Financial Feasibility Analysis
- Program Recommendations
- Results and Expectations
Executing a RAD Conversion
D3G can assist with the RAD conversion process outlined below:
The first we begin the process with.
Create a financing plan that demonstrates project feasibility over the next 20 years and complies with the requirements of the RAD Notice, Revision 4.
- Determining HCC thresholds and eligibility for Construction Blends
- Guidance through Section 18-required consultations
- RAD Conversion Commitment (RCC) review and amendments
- Technical Assistance for RCC revisions, HAP Contract finalization, and IMS/PIC removals
- Start of Section 8 HAP contract
Executing a Section 18 Demolition-Disposition Application
- Physical Needs Assessment and applicable environmental reviews
- Consult with local HUD Field Office
- Community engagement: strategic communications and meetings with residents, local elected officials, and PHA Board.
- Write Section 18 Application package and submit to the Special Applications Center (SAC)
- Apply for Tenant Protection Vouchers (TPV) after SAC approval
FAQ
- A Housing and Urban Development (HUD) program that aims to preserve affordable housing.
- RAD allows Public Housing Authorities to convert their existing Public Housing subsidy into a project-based Section 8 subsidy. It is a one-for-one replacement of Public Housing units, in which residents have a right to return.
- Section 18 of the Housing Act of 1937 supports the demolition and/or disposition of obsolete Public Housing and qualifies PHAs for Section 8 Tenant Protection Vouchers (TPV) for any Public Housing unit occupied within the last 24 months. In many areas these TPVs result in higher rents than seen under Public Housing or the RAD rents. PHAs may dispose of Public Housing assets to a PHA-controlled entity to preserve affordable housing.
- A RAD/Section 18 blend permits some properties converting under RAD to receive Section 18 Demolition/Disposition approval and vouchers for a portion of the units involved.The Section 18 units are eligible for Section 8 Tenant Protection Vouchers (TPVs), which have rents higher than RAD rents in many areas and may be project-based.
- There are two types of Blends:
- RAD/Section 18 Small PHA Blend: A PHA with 250 or fewer Public Housing units and who wishes to close out their Public Housing units may convert up to 80% of the units via Section 18 and preserve them as affordable housing.
- RAD/Section 18 Construction Blend: a PHA may qualify for Section 18 TPVs based on construction costs compared to Housing Construction Cost (HCC) standards. Depending on the percentage of construction costs, 20%, 40%, or 60% of units would be entitled to TPVs.
- Project-based Vouchers are rental vouchers that are applicable toward specific dwelling units in a building, PBV vouchers stay with the unit even after a tenant moves out. Project-based Rental Assistance (PBRA) is a contract tied to units in a specific building.
- Project-Based Vouchers: Section 8 program administered by a local voucher agency, which may be the PHA or a partnering PHA. If the PHA administers the PBVs, they may receive administrative fee.HUD’s PIH Office oversees the voucher agency but does not administer the contract.
- Rents are capped at the lowest of the current funding, 110% of the FMR, or Rent Reasonableness.
- The initial contract will be for a period of at least 15-years (but may be up to 20-years).
- Project-Based Rental Assistance: Section 8 program administered by HUD’s Office of Multifamily Housing. RAD PBRA developments in a Qualified Opportunity Zone are eligible for a rent increase of up to $100 per unit per month.
- Rents are capped at the lower of current funding or 120% of the FMR.
- The initial contract will be for a period of 20 years.
- Faircloth-to-RAD allows for a streamlined process to develop Public Housing units using the Mixed-Finance program with pre-approval to convert the property to a Section 8 contract following construction, i.e., by converting it to RAD.
- Each PHA has a Faircloth Limit, referring to the maximum number of Public Housing units that a PHA is eligible to receive subsidy for. If there is a difference between the Faircloth Limit and the current number of Public Housing units, then the PHA has a Faircloth Authority to develop more public housing.
- Lenders and investors can use the revenue certainty through familiar Section 8 contracts to underwrite the construction of these projects.
- RAD Closing
- Start of Section 8 HAP contract
- RAD Closing
- Start of Section 8 HAP contract
- RAD Closing
- Start of Section 8 HAP contract
- RAD Closing
- Start of Section 8 HAP contract
- RAD Closing
- Start of Section 8 HAP contract
- The Low Income Housing Tax Credit (LIHTC) program allows an owner to partner with an investor who receives credits against their federal tax liability in exchange for equity investment in the development. This equity investment can be a significant source in the capital stack. Approximately one-third of all RAD transactions have included LIHTCS.
More questions? Reach out to our experts to schedule a free consultation.