Rental Assistance Demonstration (RAD) PIH Notice 2012-32

C

URRENT

C

HALLENGES

Public Housing

• Capital repair needs in excess of $25.6B across portfolio, or $23,365/unit • Section 9 funding platform unreliable (pro-rations, cuts), inhibits access to private debt and equity capital (deed of trust) 2013 Op Sub Funding is an 81% proration 2013 Capital Fund may see about a 5% reduction • Public Housing Compliance requirements continue to be a challenge.

There are more PH requirements than in Section 8 Examples: Community Service, Pet Policy… 2

RAD A

UTHORITY

•

Authorized as part of the Consolidated Further Continuing Appropriations Act of 2012 ( Public Law 112-55 )

•

Final program rules outlined in PIH Notice 2012-32

•

Allows public housing and certain at-risk multifamily legacy programs to convert to long-term Section 8

rental assistance contracts

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RAD A

UTHORITY

,

CONT ’ D

•

2 components

–

1

st

Component,

Competitive

: Public Housing & Moderate Rehabilitation (Mod Rehab)

–

2

nd

Component,

Non-competitive

: Mod Rehab, Rent Supplement (Rent Supp) & Rental Assistance Payment (RAP)

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P

UBLIC

H

OUSING

C

ONVERSION

R

ENT

L

EVELS

Sample Public Housing Conversion Per Unit Monthly (PUM)

$900 $800 $700 $600 $500 $400 $300 $200 $100 $ Operating Fund $330

C

apital Fund $144

T

enant Payment $318

$792

Housing Assistance Payment $474

T

enant Payment $318 Pre-Conversion ACC Post-Conversion Section 8 5

RAD P ROVISIONS

• After award, must complete a Physical Condition Assessment (PCA) to identify conditions at the property • • • Can use other PH Funding Sources in the transactions • Reserves • Cap Fund • RHF Ownership – Public or non-profit, except to facilitate tax credits Initial Contract Terms – • PBRA – 20 years, with mandatory renewals • PBV – 15-20, also with mandatory renewals, but PHA also can extend initial contract for additional 15 years • Annual Adjustments to rents – based on Operating Cost Adjustment Factor (OCAF), i.e., lock in funding long term with an increase of inflation factor each year (OCAF) • Choice Mobility • PBV – resident gets opportunity for voucher after one year • PBRA – resident gets opportunity for voucher after two years; however, PHA may impose a cap of not more than 15% at any project annually and not more than 1/3 voucher turnover cap. Also, HUD provides a good-cause exemption for up to 10% of conversions for PHAs without a voucher program. 6

RAD P ROVISIONS

•

Exemption from 20% PBV caps for HCV agencies

•

PBV Income Targeting

– raised from 25% to 50% the number of families that can be assisted who are not also receiving supportive services exemption •

Eligibility, Waitlist and Annual Reexaminations

• PBRA – administered by project • PBV – administered by voucher agency •

Resident Participation funds

– must maintain “level of service”, i.e., current funding includes $25 per occupied unit annually •

Public Housing Requirements go away

(PHA plan, Federal Contracting, Section3/Minority reporting after initial conversion) 7

A

PPLICATION

S

NAPSHOT

8

RAD I

NVENTORY

T

OOLKIT

S

NAPSHOT

9

C

ONVERSION

S

TEPS

– P

UBLIC

H

OUSING

HUD Publishes Final Notice PHAs submits Excel-based Application to HQ HQ reviews application and requests Field Office input on Eligibility HQ issues awards/Commitments to Enter Housing Assistance Payments Contract (CHAPs) PHAs have 6 months to submit Financing Plan to HQ for review PHA

•

Asset Management

•

Subsidy Administration

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PIH Voucher Oversight Multifamily Housing

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Asset Management

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Subsidy Administration PBV PBRA Project converts

 Remove from ACC  Release DOT  Execute HAP  Execute RAD Use Agreement  Close Financing

HUD issues RAD Conversion Commitment

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RENTAL ASSISTANCE DEMONSTRATION (RAD) Various Considerations in Choosing PBRA vs. PBV Item 1. Baseline Funding Levels 2. Initial Contract Term 3. Contract Renewals 4. Rent Caps 5. Annual Inflation Adjustment 6. Choice Mobility 7. Voucher Admin Fee PBRA

Based on 2012 levels, with Operating Fund Offset restored 20 years Same

PBV

15 years (up to 20 at option of voucher agency); voucher agency may also automatically extend for another 15 years At end of contract term, Secretary must offer, and PHA must, accept renewal Same Current funding cannot exceed 120% of the FMR, unless the current funding is less than market, in which case the current funding cannot exceed 150% of FMR. Current funding cannot exceed the lower of (1) reasonable rent or (2) 110% of FMR. Based on Operating Cost Adjustment Factor (OCAF), i.e., the method used to adjust rents for Multifamily projects renewed under the Multifamily Assisted Housing Reform and Affordability Act (MAHRAA).

Same Resident may request next available voucher after two years; however, voucher agency may limit to not more than 15% of project in any year and not more than 33% of voucher turnover due to RAD. Resident may request next available voucher after one year, with no limitations. N/A PHA earns Section 8 voucher admin fee for all units converted to PBV Note: for agencies that do not administer a voucher program, and that convert to PBVs, the voucher agency will be responsible for administration of the waiting list, eligibility, reexaminations, leading to substantial deregulation for the converting agency.

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RENTAL ASSISTANCE DEMONSTRATION (RAD) Various Considerations in Choosing PBRA vs. PBV 8. REAC/UPCS Inspections 9. REAC/FASS-MF Annual Financial Statements 10. Management and Occupancy Reviews (MORs) 11. Cash Flow 12. Appropriations 13. Rehab Requirements Yes

Yes

No (unless project receives FHA insurance)

No (unless project receives FHA insurance) No (unless project receives FHA insurance) Yes Unrestricted Annual funding subject to appropriations; however, the Congress has never failed to renew a PBRA contract Same Annual funding subject to appropriations. Because of the RAD Use Agreement, if Congress provides less than full funding for the Voucher program (i.e., proration), the PHA administering the voucher program may will likely need to absorb the cuts from its non-RAD voucher units. There is no required level of rehab under RAD (or requirement to leverage debt). The PHA must simply ensure that whatever needs are identified are addressed.

Same

14. FHEO Site/Neighborhood Standards 15. Income Mixing

Standard FHEO requirements not waived under RAD. N/A Same Under normal PBV rules, not more than 25% of units in a project can be assisted, unless the units are elderly or disable, scattered site, or receiving supportive services. RAD increased the threshold to 50%, with the same exceptions.

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RAD W

EB

P

AGE

RAD Notice, application materials, and additional resources can be found at

www.hud.gov/rad

Email questions to

[email protected]

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