On July 26, HUD published PIH 2012-32 and Federal Register Notice Docket No. FR-5630-N-03, the Final Notice for the Rental Assistance Demonstration (RAD). In addition to the Final Notice, HUD also published its response to public comments as well as a final notice overview. All documents are available on HUD’s RAD website.
The Final Notice reflects much of the same provisions from the March 8, 2012 Proposed Notice (PIH 2012-18), with some small changes, many of which will help housing authorities apply for and implement RAD conversion(s) in their communities. Members can read CLPHA’s complete list of changes in the RAD Final Notice. Highlights of positive changes include:
Choice Mobility under Project-Based Rental Assistance (PBRA) Conversions is More Flexible
The Final Notice lowers the annual project cap from 20 percent to 15 percent for PBRA conversions. This allows housing authorities the flexibility to limit the number of moves annually to 15 percent, in efforts to help stabilize a property’s turnover rate.
Capital Needs Ranking Factor is More Reasonable
The Final Notice adjusts the capital needs ranking factor point scale so that lower capital needs projects receive points relative to the level of proposed rehabilitation. In other words, lower capital needs projects will now receive more points under the ranking factor.
Increased Predevelopment Funds Allowed
The Final Notice increases the amount of predevelopment funds that can be spent on a proposed public housing conversion from $50,000 to $100,000.
Other Positive Changes to the Final Notice
CLPHA commented on nearly all of these issues in joint comments to HUD on the proposed notice, and appreciates the above changes in the Final Notice. Members can read the full list of changes in the Final Notice here.
HUD Retains PBV Cap Despite Broad Support for Removal
CLPHA, as well as many other affordable housing organizations, are very disappointed that the Department did not completely remove the 50 percent cap on PBV conversions in family properties. Many commenters argued that the PBV cap is administratively burdensome to housing authorities by limiting the ability of housing authorities to obtain financing and forcing the relocation of existing households, contrary to congressional intent. HUD’s response stated the Department desire was to “retain the principle of income-mixing that is central to the PBV program,” and that a principal objective of the demonstration is to assess how the established forms of Section 8 subsidies can work to recapitalize and preserve at-risk affordable housing.”
CLPHA is concerned about the lack of parity between PBV and PBRA conversions in the Final Notice, including contract rent setting, given the fact that the Department was given broad waiver authority as a critically important tool in order to ensure a successful demonstration program. CLPHA expected that HUD would have exercised its waiver authority to a greater extent than it did in the Final Notice, especially given the need for housing authorities to be creative in order to operate optimally under the no-cost RAD program.
CLPHA Sponsors RAD Training Workshop in Chicago
CLPHA, in partnership with the National Equity Fund (NEF) and Enterprise Community Investment, Inc., is sponsoring a RAD Training Workshop in Chicago, IL on September 6-7 entitled "Making a RAD Deal Work". The workshop is geared specifically at housing authorities interested in applying for RAD. Topics include: assessing your portfolio; choosing your development team; legal/organizational structures of the ownership entity; laying the groundwork for financing; financing options; and other sources of financing. The workshop includes time to discuss individual deals with lenders, syndicators, and HUD. Housing authorities with all levels of experience in conducting RAD-like deals are welcome to attend; registration is free.
The workshop will begin at noon on Thursday and end at 12:30pm on Friday, with a reception on Thursday evening included. More details will follow in the coming days, including registration information.
Any questions about the Final Notice or the RAD Workshop in Chicago can be directed to CLPHA Research & Policy Analyst Theresa Finney Dumais via email or phone at 202-638-1300.