Serving the Community since 1961
WHAT IS THE RENTAL DEMONSTRATION PROGRAM (RAD)?
According to a 2011 HUD analysis, it would take about $26 billion to repair public housing developments that provide shelter for over two million residents. Meanwhile, the federal budget for housing assistance fell by over six percent or $2.5 billion between 2010 and 2012. Given inflation, little financial improvement is expected in the near future.
At the same time, other HUD affordable housing programs were expiring that assisted families in privately owned properties with HUD-insured mortgages. When the contracts end, assisted families are eligible to receive tenant protection vouchers to remain the property or move. Since most of the properties are 20 to 40 years old, renovation and repairs are essential.
To deal with these crises, HUD launched the Rental Assistance Demonstration program, better known as RAD.
RAD is intended to assess the effectiveness of converting public housing to long-term, project-based rental assistance. The program’s four primary objectives are to:
Preserve and improve public and other assisted housing Standardize the administration of the plethora of federally subsidized housing programs and rules; The conversions are intended to promote operating efficiency by using a project-based assistance model that has proven successful and effective for over 30 years. In other words, RAD aligns eligible properties more closely with other affordable housing programs. Attract private market capital for property renovations; Through the use of this model, properties may be able to leverage private debt and equity to make capital repairs. Increase tenant mobility opportunities
A PHA or a current moderate rehabilitation property owner must submit an application to HUD. To be eligible, the PHA must be classified as a Standard or High Performer under the Public Housing Assessment System (PHAS) or Section 8 Management Assessment Program (SEMAP). SHA has selected Project-Based Vouchers (PBVs) in its application. HUD’s Office of Public and Indian Housing (PIH) will administer the PBV component.
Thus far, RAD has proved successful in raising private capital. PHAs and their partners have cleared a major milestone – they have crossed over 94,000 units and raised a total of $5.4 billion to rehabilitate and, in some cases, replace affordable properties from the ground up with new construction.
WHAT IS THE PBV PROGRAM?
In 1998, Congress authorized a provision to the Section 8 voucher program allowing PHAs to project-base a portion of their authorized units and created the Project-Based Voucher (PBV) Program. The standard PBV program is a discretionary component of a PHA’s Housing Choice Voucher (HCV) Program. Under the standard PBV program, a housing authority’s voucher program is comprised of two components: tenant-based Housing Choice Vouchers (HCVs) and Project-Based Vouchers (PBVs). HUD does not allocate any additional funding to the PHA for standard PBV. Instead, funding for standard PBV comes from funds already obligated by HUD to a PHA under its HCV Annual Contributions Contract (ACC). RAD PBV contract terms are 15 – 20 years and have mandatory contract renewals.
The PHA administers the program by entering into a HAP contract with a project owner by attaching rental assistance to specific housing units in properties that are determined to be decent, safe, and sanitary according to HUD’s Housing Quality Standards (HQS). The PHA establishes an initial contract rent amount. The units may be newly constructed units, rehabilitated units, or units in an existing property. The SHA has chosen to select all 169 family/elderly units in its portfolio to convert to RAD PBV.
WHAT IS THE PUBLIC HOUSING AUTHORITY (PHA) ROLE?
HUD contracts with public housing authorities to administer the housing choice voucher and public housing programs. The PHA has responsibility for day-to-day oversight of program performance and compliance. The PHA establishes local policies, must comply with federal, state and local laws as well as HUD regulations, and must affirmatively further fair housing. HUD provides funds to each PHA for these programs under the terms of an Annual Contribution Contract (ACC).
Under RAD PBV, the PHA typically plays a dual role: that of contract administrator and that of management agent. The HAP contract is administered by the PHA since HUD has entered into a voucher ACC with the PHA. As the contract administrator, the PHA is responsible for executing, managing, monitoring, renewing and terminating the RAD PBV contract as well as for making payments due under the contract and performing the typical functions of the PHA such as determining eligibility and level of assistance.
The PHA has the option to continue to own the project under the auspices of the PHA or may transfer ownership to any related non-profit affiliate, instrumentality, or other identity-of-interest non-profit of the PHA. The PHA may also transfer the ownership to any other non-profit or public body. Because the project also includes tax credits, it will be owned by a for-profit entity for the purpose of allowing investor capitol to come into the project for rehabilitation of the properties. In that case, the PHA through a related entity remains in control of the project. Same people, same buildings, same mission …
The Somersworth Housing Authority has received a commitment (CHAP) from HUD to participate in the Rental Assistance Demonstration which adheres to our mission of providing safe, clean, independent and affordable housing to eligible families, elderly and persons with disabilities without discrimination. The 3 existing properties to be converted to PBV’s are 56-unit family with a mix of 1,2,3 and 4 bedroom units at Bartlett Ave/Verona Street; 64 unit elderly/disabled with a mix of 1 and 2 bedroom units at Filion Terrace (75 Washington St) and 49 elderly/disabled all 1 bedroom units at Charpentier Apartments (28 Franklin St). The total project of 169 units is proposed to convert from public housing to affordable housing using HUD RAD program and the LIHTC program with 4% Tax Exempt Bonds. The general scope of work affecting the physical systems, buildings and units, could be boilers, roofs, insulation siding, electrical panels, smoke/co detectors, landscaping, kitchens, baths, flooring, etc. based on the Capital Needs Assessment currently in progress.
WHAT IS THE SHA’S RAD IMPLEMENTATION PLAN?
Renovations: Expected renovations might require the resident to re-locate into an “on-site hotel” unit while rehab occurs in the initial unit. Upon completion, residents will be moved back into the original rehabbed unit. All relocation costs will be incurred with SHA relocation funds.
Rents: Most residents will not have a rent increase as a result of a RAD conversion. However, if they are paying a flat rent in public housing, they will most likely have to pay more in rent over time. If their rent changes by more than 10% and requires them to pay more than $25 per month in additional rent, their new rent will be phased in. If the increase in their rent is less than 10% or $25 per month, the change in rent will be effective immediately.
We realize the RAD conversion will cause resident anxiety throughout the development and we will strive to be as accommodating as possible. Two Resident Meetings have occurred to explain and update residents of the process and to alleviate any misconceptions. Continuing to meet regularly should help the process move more smoothly.
We are looking forward to the ultimate end goal being long term financially stable properties to continue to serve the community and its affordable housing needs. Same people, same buildings, same mission...
Somersworth Housing Authority
Questions? Call us at 1-603-692-2864
Several buildings at Nadeau Homes and Filion Terrace are currently under construction.
Commitment to enter into a Housing Assistance Payments Contract (CHAP): Conditional commitment provided to the PHA for units that have been selected under the First Component of the Demonstration that describes the terms under which HUD would enter into a HAP Contract with the Project Owner once the project complies with all requirements in the CHAP, this Notice, and other statutory and regulatory requirements applicable to the project.
Choice Mobility: For residents of RAD projects, the option to obtain a housing choice voucher from a PHA after a year of residency.
Financing Plan: Documentation submitted to HUD for review to demonstrate that the Covered Project can be sustained physically and financially for the term of the Housing Assistance Payment (HAP) Contract at the rent levels permitted under the Demonstration. The Plan must show how the project’s immediate and long-term capital needs will be addressed.
Housing Choice Voucher: Assists very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Housing choice vouchers are administered locally by public housing agencies (PHAs). The PHAs receive federal funds from HUD to administer the voucher program.
Project-Based Voucher (PBV): A component of a PHA’s HCV program, where the PHA attaches voucher assistance to specific housing units through a PBV HAP Contract with an owner. Unlike a tenant-based voucher, the PBV assistance remains attached to the unit when the family moves, and assists the next eligible family to move into the PBV unit. The PBV program is administered by HUD’s Office of Public and Indian Housing.
Public Housing Agency (PHA): An agency created by local government to administer public housing
RAD Conversion Commitment (RCC): The contract executed by HUD, the PHA and, as applicable, the post-conversion Project Owner. The RCC follows HUD approval of the Financing Plan and describes the terms and conditions of the conversion.