Repositioning: A Roadmap to Success
What is Repositioning?
Repositioning facilitates the preservation, rehabilitation, or demolition and new construction of units by increasing access to financing to address capital needs. Repositioning preserves the availability of affordable housing assistance, either through a physical unit or voucher. Long-term repositioning goals and strategies are determined by an agency’s specific needs.
Step One
Understand the Available Options for Your Public Housing Agency
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.
Green Retrofit and Resiliency Program (GRRP), a provision of the Inflationary Reduction Act (IRA), provides grant and loan funding to facilitate energy-efficient and climate-resilient retrofits of properties participating in HUD’s Multifamily assisted housing programs. Eligible properties will include those participating in the Section 8 Project-based Rental Assistance, Section 202 Supportive Housing for Low-Income Elderly, and Section 811 Supportive Housing for Low-Income Persons with Disabilities programs.
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.
Streamlined Voluntary Conversion (SVC) involves a PHA with up to 250 units voluntarily removing public housing units from an ACC in exchange for tenant protection vouchers. The PHA must also commit to closing out its public housing program. Unlike RAD, any remaining public housing funds cannot be used after SVC for rehab or operations of the property.
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.
Step Two
Assess Your Portfolio and Make a Plan
Our Repositioning Analysis includes the review of a single development to assist with long-term planning for housing stabilization and recapitalization. Our team will focus on this development and perform a physical condition screening assessment and environmental investigation, financial feasibility analysis of potential HUD repositioning programs, and a timeline for project completion. These components will be combined into a comprehensive report of recommendations and overall strategy for long-term property success.
We will review a PHA’s entire portfolio to assist with long-term planning for housing stabilization and recapitalization. Early analysis of engineering, environmental, and location aspects of each asset in a portfolio can identify both limitations and opportunities which should be considered during the pre-planning stages. Includes an assessment of the physical needs of each property, any potential environmental concerns, a financial feasibility study of available HUD programs, and a repositioning timeline. These components will be combined in a comprehensive report of recommendations and overall strategy for long-term portfolio success.
Our team of development finance experts can be relied on from initial project planning through closing. We have experience in providing technical assistance for RAD, Section 18 Demolition-Disposition, Blends, Faircloth-to-RAD, and more. Whether you need help on an hourly basis to determine your vision or need some guidance on the execution of your chosen repositioning path, our team is ready to add capacity to your agency.
“What is RAD?” with CEO and Founder Rob Hazelton
RAD Repositioning Study Podcast
Martineztown Case Study – Albuquerque Housing Authority – pg. 28
Cayce Place – Metropolitan Development & Housing Agency
Step Three
Identify Your Pathway to Success
RAD Application Consulting
If you are looking to add capacity to your team, let us guide your RAD transaction from application to closing. Our RAD subject-matter experts will educate you on the requirements of the RAD Notice, Revision 4, and related notices. We will:
- Draft and submit your RAD Application
- Review your CHAP
- Ensure compliance
- Assemble your Transaction Log
- Submit your Financing Plan
Section 18 Application Consulting
Whether you’re trying to prove physical obsolescence through a Section 18 Physical Needs Assessment, or you want to dispose of single-family homes through the Scattered Site justification, D3G is your one-stop shop for Section 18. Our team of housing experts and Physical Needs Assessors will:
- Interpret the intricacies of PIH Notice 2021-07 (HA)
- Write your Section 18 application package for your review and submittal
Faircloth-to-RAD Consulting
If you are interested in utilizing Faircloth Authority to construct new units and want to confirm it’s the best fit for your agency, let us determine if the financing and development process under Faircloth-to-RAD is feasible. If so, D3G will:
- Guide your PHA and offer technical assistance throughout the process, from pre-development construction and conversion to permanent financing
Step Four
Essential Consulting and Due Diligence Service to Support Your Application
A detailed analysis of a property’s current condition is provided via an in-depth site inspection by individuals trained in building engineering and construction practices and a review of readily available documentation. Includes a narrative description of the condition of structures and major systems, interviews with site personnel, a review of completed capital improvements and maintenance, a zoning and code compliance review, a 20-year replacement reserve analysis, a listing of critical and non-critical repairs, and a HUD CNA e-Tool 3.0.
The purpose of the Phase I ESA is to provide an appropriate inquiry into the previous ownership and uses of the subject property and to identify recognized environmental conditions (RECs) to include the presence or potential presence of hazardous substances. The assessment is completed via site reconnaissance, review of publicly available records, information requests to local agencies, a study of aerial photography and historical map data, and interviews with site personnel..
A Physical Needs Assessment is used to determine cost obsolescence via a construction cost estimate comparison to the project’s total development cost (TDC) and/or to determine functional obsolescence. Includes a field inspection and review of substandard housing conditions, modern building code compliance, unit rental size, bedroom to bathroom ratios, marketability, and healthy home concepts.
An ASHRAE Level 2 Energy Audit is used to evaluate current and future utility usage. Suggested efficiency improvements to conserve water and use less energy. The report documents prudent utility-related improvements (water and energy annual savings) to the property, the cost of the improvements, and a simple financial payback analysis. This includes an initial assessment of potentially viable alternatives for generating electricity, heating water, and heating and cooling the conditioned space of the building.
With support from relocation consultants, our team will ensure the relocation plan and budget meets requirements of the applicable regulations whether they be triggered by RAD, Section 18, or other federal and state funding sources.
More questions? Reach out to our experts to schedule a free consultation.