Transcript Rental Assistance Demonstration (RAD) Program

Rental Assistance
Demonstration (RAD)
Program
2013 NJAHRA CONFERENCE
Atlantic Club Hotel & Casino
Atlantic City, NJ
Presenters:
William F. Snyder
Louis Riccio
What is RAD?
It is the conversion from Section 9 Public Housing
Assistance to Project Based Section 8 Assistance.
You will be released from your Public Housing
Annual Contributions Contract and the Declaration
of Trust.
You will have less administrative burden (HUD
estimates about 15%).
You will be relieved from the burdens imposed by
REAC (PASS, FASS, MASS).
RAD is the current administration’s attempt to
recapitalize public housing through private debt &
equity.
RAD-Should I or Should I not!
What is the future of public housing?
Will the PH program provide a stable
funding source for operations &
capital needs in the future?
Do my properties have significant
capital needs?
Can my properties pass HUD’s
physical condition assessment
(PASS)?
HUD Funding for Public
Housing
What do we know about the stability
and rate of funding for the Public
Housing Program?
“Proration Factor”
The Annual Contributions Contract
(ACC) stipulates that your subsidy is
subject to annual appropriations from
Congress. There is currently an
$800,000,000.00 gap in PHA
Operating Fund eligibility and
Congressional appropriations. PHAs
must estimate what percentage
Congress will approve in preparing
their budget.
The “Proration Factor”
Operating Fund
For 2012, the Congress accepted the
Administration’s recommendation and funded the
Public Housing Operating Fund at $3.982 billion,
$1 billion below total subsidy eligibility. This
funding level was paired with a $750 million offset
against “excess” existing operating reserves held
by Public Housing Authorities (PHAs). .
A year-long CR at the 2012 level will provide only
83 percent of PHAs’ operating costs for calendar
year 2013. This would be the deepest proration in
the program’s history.
Capital Fund Status
Estimated Need (Abt)
$26 Billion
Annual Accrual Rate
$3.6 Billion
2013 Appropriation
$1.78 Billion
25% Cut in CFP from 2010-2012
Capital Fund Program
From 2001 to 2013 the Capital Fund has been cut by nearly 50%!
25% from 2010 to 1013 alone!
Capital Fund Program
For 2012, the Public Housing Capital Fund was
funded at $1.875 billion, the lowest funding level in
the history of the program. Between 2010 and
2012, the Capital Fund experienced an
unprecedented 25 percent reduction from what
was already an inadequate funding level given the
inventory’s annual accrual of capital needs.
According to the Capital Needs Assessment
recently completed by Abt Associates at HUD’s
direction, the portfolio already has a modernization
backlog in excess of $26 billion, with an annual
accrual rate of approximately $3.4 billion.
Housing Choice Voucher
Program
Need/Eligibility
$18 Billion
Current HAP Funding
94%
Admin Fee
69%
Housing Choice Voucher
Program
HUD’s FY 2013 budget proposed $1.575 billion for
“administrative and other expenses of which up to $50 million
“shall be available to…allocate to public housing agencies that
need additional funds to administer their Section 8 programs” at
pre-QHWRA rates, leaving at least $1.525 billion for ongoing
administrative fees. Vouchers from incremental and special
purpose programs such as HUD-Veterans Affairs Supportive
Housing (HUD-VASH), Non-Elderly Disabled (NED), the Family
Unification Program (FUP), tenant-protection vouchers, and optouts will be leased and therefore “roll into” the Section 8 tenantbased renewal account for FY 2013, HUD has previously
estimated that the proposed funding level would provide an 81
percent pro-ration for 2013.
The FY 2012 act provided just $1.3 billion for ongoing
administrative fees, $97 million less than the FY 2011 enacted
level. This results in proration of 69 percent, this represents the
lowest pro-ration in the 37-year history of Section 8 tenant-based
voucher programs.
Community Development Program
From 2004 to 2013 the CDBG program has been reduced by 1.54 billion.
HOME Program
The HOME Program has been utilized as a source of gap
funding in developing new affordable housing. Over the last 10
years, the HOME program has been slashed by 50%!
Washington to the Rescue?
Do you think that the current congress
has an appetite form increasing HUD
funding Public Housing?
Do you think that housing programs a
congressional priority?
National Debt
Current Federal Budget $3.8 Trillion
Current National Debt
$16.8 Trillion
Current annual budget
deficit
$973 Billion
Proposed Budget Savings
over the next 10 years
$1.5 Trillion
National Debt-over the next 10 years
Per year Savings (per sequestration) 150 Billion
Current Annual Deficit
973 Billion
Annual Difference
823 Billion
10 years
10 Year deficit
Current Deficit
Total Projected Deficit at 2023
x10
8.23 Trillion
16.8 Trillion
25.03 Trillion
Entire federal budget is 3.8 Trillion
The Deficit is going up-not down as a result of sequestration!
As a nation, we are overspending.
The United States just doesn’t not have the resources to
continue to increase the federal budget. As such, it comes
down to a matter of priorities (guns or butter). Currently,
congress cannot agree on what priorities should be funded!
“Sequestration”
What is sequestration?
Sequestration is an across-the-board reduction in Federal budgetary resources
in all budget accounts that have not been exempted by statute. Under the
Balanced Budget and Emergency Deficit Control Act of 1985, as amended by
the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, and
other relevant legislation, across-the-board reductions of $85 billion in
budgetary resources were required to be ordered by the President on March 1,
2013. Sequestration reduces each agency’s budgetary resources in nonexempt accounts for the remainder of the fiscal year (which runs through
September 30, 2013).
Automatic cuts come from domestic discretionary spending which make up
about 30% of the federal budget. HUD spending is considered discretionary
spending and is subject to sequestration.
“Sequestration”
What will be the impact of sequestration on
HUD?
HUD will attempt to minimize the impact of sequestration to the
extent permitted by law. However, HUD cannot choose which
programs to exempt or what percentage cuts to apply. This will
mean automatic and across-the-board budget cuts at HUD. The
impact of sequestration on HUD programs will be dramatic.
An approximate 5% across the board cut in HUD programs
added to the already historic low proration factor!
“Sequester”
The sequester was originally passed as part of the
Budget Control Act of 2011 (BCA), better known
as the debt ceiling compromise.
It was intended to serve as incentive for the Joint
Select Committee on Deficit Reduction (the
“Supercommittee”) to come to a deal to cut $1.5
trillion over 10 years. If the committee had done
so, and Congress had passed it by Dec. 23, 2011,
then the sequester would have been averted.
No compromised deal has been achieved.
No compromise seems to be anywhere is sight!
U.S. Housing Authorities
Approximately 3,300 PHAs
1.2 million public housing units
60% of residents are elderly or disabled
40% include families with children
Average residency for non-elderly is
approximately 4 years
Federal Budget 101
Where Does the Money Go?
In fiscal year 2014, the federal government
will spend around $3.8 trillion. These
trillions of dollars make up a considerable
chunk – around 22 percent – of the US.
economy, as measured by Gross Domestic
Product (GDP). That means that federal
government spending makes up a sizable
share of all money spent in the United
States each year. So, where does all that
money go?
Federal Budget 101
Mandatory and Discretionary Spending
The U.S. Treasury divides all spending into three
groups: mandatory spending and discretionary
spending and interest on debt. Interest on debt,
which is much smaller than the other two
categories, is the interest the government pays on
its accumulated debt, minus interest income
received by the government for assets it owns.
Mandatory items: Medicare, Medicaid, Social
Security, unemployment, SNAP, SSI, TARP.
Federal Budget 101
Federal Budget 101
Federal Budget 101
Federal Budget 101
Total Federal Budget
$3.8 Trillion
Annual HUD Budget
$44.8 Billion
Percent of Total Budget
<2%
Annual Federal Budget deficit $973 Billion
Accumulated federal deficit
16.8 Trillion
Do you think that things will get better
anytime in the near future?
2014 Operating Fund levels are being
projected at the same levels as 2013
with sequestration.
Congress does not appear to be
anywhere close to a compromise on
spending priorities.
HUD Notice PIH 2012-32
Issued 7/26/12
Provide Instructions for the RAD
program
Eligibility
Selection Criteria
RAD Goals
Build on the proven Section 8
platform
Leverage private capital to preserve
assets
Offer residents greater choice and
mobility
Public Housing CHAP Unit
Commitment Targets
PHA Size
Northeast Midwest South
West
Total
<250 Units
Small
1,314
2,985
5,437
764
10,500
250-1,249
Medium
3,952
3,263
7,566
1,513
16,294
1,250+
Large
14,099
4,772
10,542
2,543
31,956
Total
19,365
11,020
23,545
4,820
58,750
RAD Authority
Authorized in the Consolidated Further
Continuing Appropriations Act of 2012
(Public Law 112-55)
Allows public housing & certain at-risk
multifamily projects to convert to project
based Section 8
Two Components:
1st-Competitive: Public Housing & Mod Rehab
2nd-Non-competitive: Mod Rehab, Rent
Supplement & RAP
On-going application period
1st Component-Competitive
Allow projects funded under public housing
and Section 8 Moderate Rehabilitation to
convert to project based Section 8
contracts.
PHAs may choose between project based
voucher (PBA) or project based rental
assistance (PBRA)
60,000 units are authorized for conversion
under the 2012 Appropriations Act.
2nd Component-Non Competitive
Rent Supplement, Rental Assistance
Payment and Moderate Rehabilitation
Programs may convert to Project
Based Vouchers.
No cap on the number of units and no
requirement for competitive selection
Subject to availability of vouchers
Public Housing Projects
Applications had to be submitted during the
application period (9/24-10/24/12)
Approved projects will received a Commitment to
enter into a Housing Assistance Payment (CHAP)
The PHA must submit a financing plan for HUD
review and approval.
Approved projects will receive a long-term Section
8 HAP contract.
We are currently in the “On-going Application”
period! You can still apply since the initial interest
was not what had been forecast.
Public Housing Awards as of May
2013-60,000 available units
Northeast
Midwest
South
West
Awarded PH 948
Authority
1,807
7,726
1,996
Remaining
Authority
18,417
9,213
15,819
2,824
TOTAL
19,365
11,020
23,545
8,820
There was a total of 130 projects that were issued CHAPs for 14,438 units
Scope of Rehabilitation Costs
RAD Awards
Per Unit Rehab/Construction Costs
% of Awarded Units
>$50,000
26%
$30-$50,000
22%
$10,000-$30,000
26%
<$10,000
17%
No Rehab/Construction
11%
Initial RAD Rents
HUD establishes the initial contract
Rents for every public housing project
based upon:
2012 Appropriated Operating Funds
2012 Appropriated Capital Funds
NOTE: For applications submitted prior to 12/31/13
Selection of PBA or PBRA
PBA
Project Based Rental Assistance will be administered by
the agency on whose Annual Contribution Contract the
voucher were assigned (most cases will be the agency
doing the conversion)
Term-15 years (up to 20 with approval of administering
voucher agency)
PBV rents will be equal to current finding subject to a
cap and will be adjusted annually
PBA contract will also carry a concurrent renewable RAD
User Agreement
Must provide Choice Mobility Option to residents
Maximum PBA assistance (20% of budget authority) will
not count against the PHA’s maximum for covered
projects
Cap on Number PBV Units in each
project.
The 25% limitation on the number of
PBV assistance in a project is
increased to 50%.
100% of the units may be PBV if the
at least 50% of the units qualify as
elderly, disabled or families receiving
supportive services.
Selection of PBA or PBRA
PBRA
Project Based Rental Assistance-the project will
be administered by HUD’s Office of Housing
PBRA Contract rents will be equal to the
project’s current funding, subject to a cap and
will be adjusted annually
Term-20 years
PBRA Contract will also carry a concurrent 20
year renewable RAD User Agreement
A Choice Mobility Option will be a condition of
the conversion
Eligibility for Conversion to RAD
Must have public housing units under ACC
Be classified as a standard or high performer. If “troubled”
must be able to demonstrate the capacity to carry out a
successful conversion.
Be classified as standard or high performer under SEMAP if
administering the PBV contract. If “troubled” must be able to
demonstrate the capacity to carry out a successful conversion.
Be in substantial compliance with HUD reporting and
programmatic requirements and/or be in compliance with an
MOA.
Not have debarments, suspension or LDPs lodged against the
Executive Director. Board members or affiliates.
Submit a completed application that complies with the RAD
instructions
Be in compliance with all fair housing and civil rights
requirements
Rehabilitation & Financing
Consideration
HUD estimates that there is a need for
approximately 25.6 billion in capital needs
across the portfolio
One of the main purposes of the RAD
program is demonstrate how the
conversion to Project Based Assistance
can generate access to private debt and
equity to address immediate and long-term
capital needs through rehabilitation.
Any and all viable forms of debt and equity
financing will be considered to support the
conversion.
Rehabilitation Needs
Applications will be scored on a perunit capital cost value system
High Need Scoring:
Family-$37,665
Elderly-$21,834
Green Physical Condition
Assessment-PCA
The PCA is at the center of the conversion process.
It provides the 20 year capital needs for the property.
It is not the same as your Physical Needs Assessment-PNA.
It is very important to the overall project financing.
All PCA capital needs must be supported through the upfront
financing and an annual deposit to a reserve for replacement
(R&R) or a combination of both.
If this cannot be accomplished, the project is not feasible!
Rehabilitation Consideration
Physical Condition Assessment (PCA)
Projects selected for award will be required
to perform a detailed physical inspection of
the property to determine short-term
rehabilitation needs and long term capital
needs to be funded through a reserve for
replacement.
The PCA Statement of Work must be in the
format utilized in HUD’s Mark to Market
program and may accessed at:
http://portal.hud.gov/hudportal/hud?src=/program_offices/housing/mfh/presr
v/mhrpaes/training
Rehabilitation Considerations
Green Building & Energy Efficiency
All projects retrofitted under the RAD
conversion must replace appliances
and systems with Energy Star,
WaterSense or Federal Energy
Management (FEMP) designated
product and appliances.
Rehabilitation Consideration
Temporary Relocation-Any temporary
relocation must comply with the
Uniform Relocation Assistance and
real Property Acquisition Act of 1970
(see 49 CFR Part 24)
Rehabilitation Consideration
Accessibility Requirements-When a
project’s rehabilitation meets the
definition of substantial rehabilitation
under 24 CFR Part 8.23, the PHA
must comply with all applicable
accessibility features under 504 of the
Rehabilitation Act of 1973.
Construction Considerations
Site Selection & Neighborhood
Standards-where a PHA is planning
to convert assistance under RAD in
conjunction with new construction on
an alternate site, the PHA must
comply with all applicable site
selection criteria per the Fair Housing
Act and Title VI of the Civil Rights Act
of 1964
Financing Consideration
RAD projects are eligible for financing from
private and public lending sources (see
application proforma).
Loans are secured according to the RAD
User Agreement that will be filed in first
position.
Debt Service Coverage must be at least
1.20 or the lender's requirements
HOME funds can be use in RAD projects
Financing Considerations
PHAs may use Operating reserves (Per
PIH Notice 2011-55) and unobligated
Capital Funds to support conversion (up to
$100,000.00 for planning)
PHAs must disclose the amounts of any
indebtedness, including Energy
Performance Contract, Capital Fund
Financing, etc. The PHA can refinance
these items as part of the conversion.
Conversion does not relieve the PHA from
these obligations. A lender may require
that the debt be paid off or subordinated.
Financing Considerations
Low-Income Housing Tax CreditsApplicants are encouraged to use
LIHTCs to support recapitalization of
the project (9% & 4%). Applicants
should indicate in their application
that they intend to use LIHTCs.
There is no requirement that the
credit be secured prior to submitting
an application. The 9% credit have
special application requirements.
9% LIHTC Considerations
(Competitive per QAP)
Must submit a letter from credit issuing agency
(HMFA) addressing:
Whether then property and proposed transaction appear
eligible
Whether the applicants PHA or owner entity have
acceptable experience to proceed
The timing of the application and LIHTC award
Whether a typical reservation of credits is sufficient to
address the expected need of the first or only phase of
the project
If you cannot secure this letter you must include
evidence that you diligently attempted to secure
such a letter and a self-scored LIHTC application
under the Qualified Allocation Plan
Amendment to Annual & Five Year Plan
(Should be done immediately!)
See PIH 2013-31-Attachment 1D for the specific
requirements.
Conversion to the RAD Program is considered a
“significant amendment” to the PHA’s Five Year
Plan for both qualified and non-qualified PHA.
RAD Conversion is subject to the Consolidated
Plan requirements and public notice and Resident
Advisory Board consultation requirement per 24
CFR Part 903.
Policy changes must be submitted to HUD within
60 days of CHAP delivery.
Public notice and at least one public hearing
Plan Amendments
Must include the following:
A description of the units to be converted, including type
of units (family, elderly, etc.) and bedroom distribution.
Any change in the number of units, including the de
minimis unit reduction (5% or 5 units).
Any change in bedroom distribution
Any change in policy governing admission, eligibility,
selection and occupancy after conversion (including
waiting list preferences).
Transfer of assistance where the converted units will be
moved to another location
HUD will review all amendments for civil right,
executive order and regulatory compliance.
Resident Provisions
(Attachment 1B.2)
Residents must be notified and have an
ability to comment on the conversion in
writing. Resident comments must be
responded to
At least 2 Resident meetings must be held
prior to submitting an application and 1
additional meeting after selection and prior
to execution of the HAP contract.
Similar to Demo/Dispo process
Initial Contract Rent Setting
(Attachment 1C-Pages 79-81)
Rent cannot exceed current funding
Initial contract rents cannot exceed
the lower of:
Current funding (adjusted for bedroom
size)
The reasonable rent
Up to 110% of the applicable FMR,
minus any utility allowance
The rent requested by the owner
Calculation of HAP Contract Rents
Step One-Determine Current Funding
Step One-Determine Current Funding
PUM Subsidy at full occupancy
The amount of the PHA’s Capital Fund Grant
PUM adjusted formula income (Rent)
Example:
$340.00 PUM Operating Subsidy
$135.00 PUM Capital Fund
$308.00 PUM Adjusted Formula Income
$783.00 PUM Current Funding
Calculation of HAP Contract Rents
Step Two-Apply Bedroom Adjustment Factor
The weighted current funding is adjusted by a bedroom
adjustment factor to arrive at a bedroom specific rent schedule.
Bedroom Size
1 Bdr
2 Bdr
3 Bdr
Total
PIC Units
20
50
30
100
FMR
$650
$775
$900
FMR Bdr.
Adjustment
0.839
1.00
1.161
Bdr. Adjustment
Rent
$646
$770
$894
$783
Calculation of HAP Contract Rents
Step Three-Apply Rent Caps PBRA
HUD will compare the Current Funning Rents from Step 2 with
the rent caps to determine the HAP Contract Rent.
Bedroom Size
1 Bdr
2 Bdr
3 Bdr
Current Funding (Step 2)
$646
$770
$894
120% of FMR
$780
$930
$1,080
-Utility Allowance
$50
$60
$70
FMR Rent Cap
$730
$870
$1,010
Market Rent
$640
$740
$830
*PBRA Contract Rent
$646
$770
$894
*Contract shall be the lower of the Current Funding or the 120%
FMR cap. In this example the current funding is less than the
120% of FMR.
Calculation of HAP Contract Rents
Step Three-Apply Rent Caps PBV
Bedroom Size
1 Bdr
2 Bdr
3 Bdr
Current Funding Rents
(Step 2)
$646
$770
$894
Reasonable Rent
$640
$740
$830
110% of FMR
$715
$853
$990
-Utility Allowance
$50
$60
$70
FMR Cap
$665
$793
$920
*PBV Contract Rent
$640
$740
$830
When converting to PBV, the contract rent is the lower of the current
rent, 110% of FMR (minus utilities) or reasonable rent. In this
example the Reasonable Rent is the lower amount.
Rent Setting
PBRA Rent Cap
Lower of:
Current Funding or
120% of FMR (less utility allowance)
Except where current rent funding is below market,
wherein rent is limited to 150% of FMR
PBV Rent Cap
Lower of:
Current Rent
110% of FMR (less Utility Allowance)
Reasonable Rent
Rent Calculation
Once you convert to RAD, you will no
longer receive Operating or Capital
Fund subsidies.
HUD will post presumptive contract
rent calculations for every public
housing project at www.hud.gov.rad
RAD Application
Due by: On-going application period
Ranking/Scoring
Capital Needs
Green Building
Choice Mobility
Priority Project
All applicants must complete the Microsoft Excelbased RAD Application which will be available on
the RAD website (www.hud.gov/rad). The
application will contain certain pre-populated
project data.
Applications will be accepted on a project by a
project basis
RAD Application
Filed at: [email protected]
RAD Board Approval Form-includes the proposed pro-forma and other key
certifications and must be approved by the Board of Commissioners and
signed by the authorized representative.
Financing Letter of Interest/Intent-from each lender or equity investor
indicating that the proposed pro-forma is reasonable. This is not necessary
where the long-term capital needs are being met from a reserve for
replacement.
Mixed Finance Affidavit-is required where the PHA is requesting to convert
public housing to a mixed finance project.
Choice Mobility Letter-signed by the voucher agency that has committed to
provide Choice Mobility vouchers. This is not necessary where the PHA is
meeting this requirement through turnover in their own voucher program.
Designation of PBV Administering agency-the PHA must identify the agency
that will be administering the PBV contract (signed letter from the
administering agency)
Resident consultation-include responses to comments received in
connection with the resident meetings on the proposed conversion to RAD
All required materials (Including attachments) must be submitted
electronically using the Excel-based RAD application. Attachments must be
included as PDF files. NO PAPER OR FAX SUBMISSIONS AREV
PERMITTED.
There is no cap on the number of applications that a PHA can file.
Ranking Factors
Four Categories
High Capital Need
Projects (0-50 pts)
Applications that
propose to meet or
exceed the
established
thresholds for high
capital needs will
receive the
maximum 50
points.
Occupancy
Type
High Need
Family
$37,665
Elderly
$21,834
Ranking Factors
Four Categories
Choice-Mobility Commitment (20
pts.) Evidence must be provided
documenting that at least 15% of the
assisted residents have the annual
mobility option. It must be
demonstrated that there are sufficient
turnover vouchers available to cover
this option.
Choice Mobility
If the PHAS does not have a Voucher Program, another
agency may donate vouchers to cover the project.
Both agencies will earn the 20 mobility points.
Both agencies must complete and execute a Choice Mobility
Letter as part of the application.
The donating agency will have 60 days from the issuance of
the commitment letter (CHAP) to submit a significant
amendment to its annual plan to HUD for approval. If it is
not received the CHAP will be revoked.
HUD may issue exemptions to the Choice Mobility
Component for PBRA for up to 10% of the awards under the
demonstration. The good-cause exemption must be listed in
the application. The PHA may amend its application, during
the application period, to indicate that it will meet the Choice
Mobility requirements.
Ranking Factors
Four Categories
Green Building & Energy Efficiency
(10 pts) The PHA must commit to
pursue industry-recognized standards
and certification for green building
(Enterprise Green Communities
Criteria, LEED, Energy Star, etc). A
certification must be submitted after
completion of the renovations
providing evidence that the green
standards have been achieved.
Ranking Factors
Four Categories
PHA Priority Project (20 pts) A PHA
may designate only one project for
which it submits a RAD application as
a “priority project” except for small
PHAs which may designate all
projects as priority project. The
project will automatically earn 20
ranking points
Ranking Factors
Summary of Ranking Factors
Points
High Capital Need
0-50
Choice Mobility Factor
20
Green Building & Energy
Efficiency
10
PHA Priority
20
TOTAL
100
CHAP Milestones
(Commitment to Enter into a Housing Assistance Payment
Contract)
All PHAs will be notified of their selection via
issuance of an award letter, signed by HUD.
Attached to the award letter will be a Commitment
to Enter into a Housing Assistance Payment
(CHAP) which will indicate HUD-approved terms
and conditions for the conversion.
CHAPs are not subject to negotiation by the PHA
or a third party.
The PHA has 15 days in which to notify HUD that
they are refusing to terms of the CHAP.
CHAP Milestones
(Commitment to Enter into a Housing Assistance Payment
Contract)
The CHAP may be revoked:
Upon HUD Determination of financial infeasibility
PHA failure to meet required deadlines
PHA Non-cooperation
Violation of program rules & restrictions, including fraud
PHA failure to submit an approved significant
amendment to HUD
If HUD determine that the conversion would be
inconsistent with fair housing, civil rights laws, fair
housing or civil rights court orders, settlement agreement
or voluntary compliance agreements
CHAP Milestones-30 Days
(Commitment to Enter into a Housing Assistance Payment
Contract)
Pages 59-62
Within 30 days following CHAP
issuance the PHA must submit to
HUD:
Accepted Lender Engagement or
Commitment letter (if applicable)
Statement of Development Team
Capacity
PHA’s decision whether the project will
convert its assistance to PBV or PBRA.
CHAP Milestones-90 Days
(Commitment to Enter into a Housing Assistance Payment
Contract)
Within 90 days following chap issuance,
the PHA must submit to HUD a certification
from the PHA that all industry-standard due
diligence has been performed for and
received by the lender and/or financing
source. It must include the Physical
Condition Assessment (PCA), appropriate
environmental reports, an appraisal, survey
and title insurance.
Projects without financing must submit a
copy of the PCA
CHAP Milestones-150 Days
(Commitment to Enter into a Housing Assistance Payment
Contract)
Within 150 days following CHAP
issuance, the PHA must submit a
certification that it has applied for form
commitments of all financing. FHA
insurance must be in the form of the
Firm Commitment Application to FHA.
CHAP Milestones-180 Days
(Commitment to Enter into a Housing Assistance Payment
Contract)
Within 180 days following CHAP issuance, the PHA must submit a
Financing Plan (See attachment 1A.1)
HUD will have 60 calendar days from the date of submission to
approve. Reject, or request additional information.
The PHA may make corrections that satisfy HUD or appeal HUD’s
decision within 30 days of notification.
PHAs will be notified of HUD approval of the Financing Plan via
issuance of a RAD Conversion Commitment (RCC), conditioned
upon firm commitment of financing from a lender (see 1A.2Contents of RAD Commitment)
The PHA has 30 days of issuance of the RCC to execute and return
to HUD. Failure to return will result in the forfeiture of the award.
Once the RCC is executed, HUD expects the RAD conversion to
close quickly. The RCC will allow 90 days from issuance to closer
the transaction.
The RCC will be an attachment to the RAD Use Agreement
CHAP Milestones-320 Days
(Commitment to Enter into a Housing Assistance Payment
Contract)
Within 320 Days following issuance of
the CHAP (not later than 40 days
following closing), the PHA must
submit evidence of firm commitment
of financing or evidence of equivalent
milestone in securing all sources of
financing required to the close the
deal.
CHAP Milestones-360 Days
(Commitment to Enter into a Housing Assistance Payment
Contract)
Within 360 days following CHAP
issuance, the PHA must reach
closing.
The Financing and RCC must include
a reasonable timeline for completion
of all rehabilitation items acceptable
to HUD, generally 12 to 18 months
from the date of the closing.
Closing
within 360 days of CHAP issuance
The closing will include the following:
Release of the Declaration of Trust
Removal from the public housing ACC
Execution of the new PBRA or PBV HAP
contract and RAD Use agreement
Recordation of the RAD Use Agreement
Closing of any bridge, construction or
permanent debt or equity financing.
Closing of the Terms and Conditions of the
RCC
Timeline
“CHAP Milestones”
On-going application period
Opens 10/24 (First-Come, First Serve)
Award letter-must accept or refuse terms of the CHAP within 15 days
Lender Engagement letter/Development Team statement-within 30 days of
CHAP
Annual & 5 year Plan Amendment and PBV/PBRA decision-60 days after
CHAP
Certification regarding due diligence-within 90 days of CHAP
Application for firm financing commitments completed-within 150 days of
CHAP
Financing Plan-within 180 days of CHAP
Evidence of firm financing commitments-within 320 of CHAP
Closing-within 360 of CHAP
NOTE: Failure to meet CHAP milestones can cause the CHAP to be revoked.
Does it Make Sense for you to
consider RAD Conversion?
This is a decision that rest with each
individual PHA at each individual
project.
There are many factors to consider!
Factors to Consider
Do you think that funding for the public housing program will
stabilize in the future?
Once you receive your CHAP, all covered units shall not be issued
REAC scores for the fiscal year in which the CHAP was issued, nor
any subsequent year until the time of conversion.
Asset Management will be eliminated for the projects that are
converted and may also place you under the 400 unit threshold for
project based accounting and management.
After conversion, units shall be subject to the Section 8
requirements.
If you file an application by 12/31/13 you will be locked into the
2012 Operating fund level as a component of your rent.
What are your capital needs. The 4% LIHTC program is providing
about $35,000-$45,000 per unit in rehabilitation.
Can you afford the planning expenses?
Once you convert, you will no longer receive Operating or Capital
Funds.
Factors to Consider
The cost of preparing the application
is not that great.
You can withdraw your application at
anytime up to the point of closing.
If I decide to move ahead, what
should I do next?
Determine if you have in-house capability to prepare the RAD application or
you need to hire a consultant.
Estimate your Capital Needs from your existing Physical Needs
Assessments-PNA.
Prepare a vision of what you want to accomplish through the RAD conversion
Determine RAD feasibility for your units.
Determine if you have sufficient HCV turnover to support Choice
Mobility
Determine whether you will be converting the PBV or PBRA.
Verify that the number of units that is included in your application
equals the total of units listed in the PIC system.
Amend your Annual & Five year plan to include RAD.
Meet with your residents (twice) before submitting your application.
Prepare a “draft application”
Obtain the Financing Letter of Interest/Intent
Prepare RFPs and start assembling your development team (Technical
Consultant, Investment Banking Services, Tax Credit Consultant, PCA
architect/engineer, design architect).
You will also eventually need a property appraisal and a market study.
Question & Answers
Thank-you for attending
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