Rental Assistance Demonstration Resource Desk

Frequently Asked Questions

Category:Application
Posted:06/02/2014
Question:Can a PHA apply the de-minimis standard for replacement across properties?
Answer:A PHA may apply the de-minimis standard for any group of properties that are undergoing conversion. For example, if the PHA has two CHAPs, each consisting of 100 units, and the PHA has six units at the first project that have rehab costs that would be exorbitant, the PHA could apply the de-minimis standard across both properties. Thus, because the PHA would, combined, be able to reduce 10 units (5%), the PHA would be permitted to reduce the 6 units at the first property (provided it does not reduce more than 4 units at the second property). However, the project utilizing the greatest reductions has to be the latest to convert (or converts simultaneously).

Posted:02/03/2014
Question:I have a PHA with a question about the rent reasonableness section of the RAD application. Their question is: Does a 3rd party have to furnish the rent reasonableness information or can the PHA supply the information based on the information that they have obtained from the 3rd party? For example, the PHA has a rent reasonableness comparison report from a contractor. Can the PHA just supply the information in the application and refer to the 3rd party report or does the application need to contain the actual 3rd party contractor information?
Answer:For purposes of the application, simply use your best guess. If your project is awarded a CHAP and closes, and your PHA also administers the voucher program, a third-party will be required to conduct the rent reasonableness determination each year (see 24 CFR 983).

Posted:02/03/2014
Question:In the event that a housing authority chooses to do a deminimis reduction, is the current funding simply redistributed across the units remaining or is that funding lost with the reduction?
Answer:Funding is lost in a de minimis reduction. You will see that when you enter the reduction in the Excel Application.

Posted:02/03/2014
Question:On October 3, 2011, we submitted our entire Public Housing Inventory (496 units) for Disposition under Section 18. Our Dispo application was only partially approved for our senior units (180 units) in April of this year. We are now planning to submit the remaining 316 PH units for repositioning under RAD. Since we went through the resident consultation process under the Sec. 18 Dispo application process, do we really need to have more rounds of resident consultation for the 316 units?
Answer:The Section 18 meetings would not count for RAD purposes. As required in the RAD Notice, and prior to submitting an application for RAD, the PHA is required to do the following: 1) Notify residents of projects proposed for conversion and legitimate resident organizations of the PHA’s intent to pursue a conversion; 2) Conduct at least two meetings with residents of projects proposed for conversion to discuss conversion plans and provide opportunity for comment; and 3) Prepare comprehensive written responses to comments received in connection with the required resident meetings on the proposed conversion to be submitted with the RAD Application. Once a PHA is selected to participate in the Demonstration, it must have at least one more meeting with residents before HUD will execute a HAP contract. Further information can be found in Section 1.8 of the Notice (Resident Notification).

Posted:02/03/2014
Question:We are preparing a RAD application. Approximately 75% of the units have already been rehabbed, and the rehab is being done 10 units at a time, so the vast majority of units will be in service at all times during the remainder of the rehab. The operating pro forma projects substantial positive cash flow from operations. Can this be used as a proposed funding source on the RAD application?
Answer:Positive operating cash flow during the development period can be reflected as a Source of Funds in the RAD Application. You will need to reflect those assumptions in your application.

Posted:01/30/2014
Question:If you submit a joint CNI/RAD application, will the RAD award date be based on the CNI award schedule?
Answer:When applying for RAD via a joint RAD/CNI application in which you indicate that the CNI application is also your RAD application, you will only receive a RAD CHAP award (Commitment to enter into a Housing Assistance Payment Contract or "CHAP") upon receipt of the CNI award. In other words, your RAD application will only be accepted if and when your CNI application is accepted so the date of your RAD award will be the date of your CNI award. If you not receive a CNI award, your RAD application is also considered rejected. If you believe the project is viable for RAD regardless of the CNI funding you should submit a separate RAD application independent of the CNI application (without any CNI grant money as a source of funds). In the latter scenario, you would receive a RAD Award (CHAP) regardless of the outcome of your CNI application.

Posted:01/30/2014
Question:When combining efficiencies into larger bedroom sizes, how is that reflected in the application? Shouldn't the combined units receive 1 Bedroom Contract Rents? If I leave them as efficiencies at line 47, then the rents are overstated. If I try to show them as 1 bedrooms (with only half the number of units), it won't let me.
Answer:Please put the post-RAD unit mix into the RAD Application, and then the Application will come up with the correct post-RAD rents. For example, suppose that (1) the property (pre-RAD) has 100 efficiency units and 100 1BR units, (2) you plan to convert the 100 efficiency units into 50 1BR units (for a 150-unit property post-RAD, all 1BRs); (3) the formula RAD rent for the efficiency units is $500; and (4) the formula RAD rent for the 1BR units is $600. In this example, the post-RAD 1BR rent would be $600 and would be applicable to all 150 post-RAD 1BR units. Continuing this example, the property would receive lower funding post-RAD than the pre-RAD baseline because of the lower unit count.

Posted:12/09/2013
Question:A PHA has either not applied or has applied but not received a CHAP. May this project apply for a waiver of the $100,000 cap in pre-development expenses per project?
Answer:No. HUD will only consider a waiver once the project receives a CHAP.

Posted:12/09/2013
Question:How does an increase or reduction in the number of bedrooms of a replacement unit impact contract rents under RAD?
Answer:A project changing its bedroom distribution will be paid a contract rent for the new post-conversion bedroom distribution. This adjustment occurs automatically in the RAD application when one inputs the desired bedroom distribution (it also is performed automatically on the Inventory Assessment Tool). These amounts are then inserted into the CHAP. Please Note: Regardless of HUD approval of unit or bedroom reconfigurations, a PHA must continue to offer all existing tenants a right to return to the property or obtain appropriate voluntary waiver of this right before HUD will allow conversion.

Posted:12/09/2013
Question:If a PHA has “special purpose” units that are receiving subsidy today and wants to convert them to dwelling units as part of a RAD conversion, will they be eligible for subsidy?
Answer:If units under ACC will be operated as affordable housing for families eligible for Section 8 assistance, they can be included in the HAP contract and eligible for subsidy. However, if units will continue to be used for other purposes, they cannot be included in the HAP contract and will not be eligible for subsidy. . A PHA should define those units in its application.

Posted:12/04/2013
Question:Where a PHA has applied to convert more than one project, may it choose to convert one project to PBV and the other to PBRA?
Answer:Yes. It is solely within the PHA’s power to determine whether it wishes to convert individual projects to PBV or PBRA. HUD requires notification of that choice during the 60 Day Milestone but does not require that it be the same type as other RAD conversions.

Posted:10/17/2013
Question:In the CNI NOFA, page 8, it indicates: "...For this Choice Neighborhoods NOFA, the application for an Implementation Grant and the application for RAD have been aligned to make application for both programs more feasible for applicants seeking to use both strategies. Submission of this grant application can therefore constitute application to RAD. PHAs wishing to participate in RAD must designate this as a joint RAD/Choice Neighborhoods Implementation Grant application in the Housing Strategy section and identify which public housing projects they are applying to convert under RAD." Does that mean we do not have to prepare a RAD application, but only describe or designate the CNI as a joint RAD application and do not have to prepare any other documents in accordance with HUD PIH Notice 2012-32?
Answer:If a CNI implementation grant is awarded, a RAD CHAP will also be issued. However, if the project covered under the CNI grant application can be redeveloped using RAD without a CNI grant, then we recommend also submitting a separate RAD application that represents a Sources & Uses without CNI funds.

Posted:10/01/2013
Question:For one of our clilents' projects, the unit count showing up in the application as being in PIC is incorrect. The Authority double checked the information in PIC and the unit count is different than the count shown in the application. We don't have a PIC correction ticket number as the info in PIC is correct. How should we note the correct unit count in the application?
Answer:Most likely, a change was made to PIC after the Application data was downloaded. If you know the date when PIC was updated, enter it in the Application (Section 2, row 42). If you do not know the date, enter any recent date in row 42 and include an explanation somewhere in your Application package that PIC currently contains the correct information.[Updated 7.29.13]

Posted:10/01/2013
Question:I am considering a conversion under RAD. How does a PHA determine the FMR bedroom adjustments contained on page 81 of the notice if the project(s) considered for conversion are not in a metropolitan FMR schedule?
Answer:The RAD Inventory Assessment Tool, as well as the RAD Application, automatically performs this calculation. Essentially, the adjustment is based on the ratio of rents for units of different bedroom sizes for the FMR for that area. Thus, if the 2 brm FMR for a community is 20% higher than the 1 brm FMR, and the PHA is converting all its 1 brm units to 2 brm units, the Tool and Application will adjust the rents upwards 20%. [Updated 7.29.13]

Posted:10/01/2013
Question:Is there still a 1200 unit cap on Public Housing units that are currently part of mixed-finance developments?
Answer:No. That cap was removed with the publication of PIH Notice 2012-32 REV-1. [Update 7.29.13]

Posted:10/01/2013
Question:My agency does not administer vouchers. I can't seem to find any guidance in calculating "Reasonable Rents" to include in the application under Section 2. How are these calculated?
Answer:If you plan to convert the public housing project to assistance under project-based vouchers (PBV) and you do not have a voucher program, you need to find a PHA with a voucher program that is willing to administer the PBVs. That PHA can provide you a Reasonable Rent estimate. For conversions to PBRA, the application asks for the Reasonable Rents as a proxy for market rents. In this case, please provide your best estimate of market rents. [Updated 7.29.13]

Posted:10/01/2013
Question:We have 66 public housing units inside of two mixed finance deals that are about 5 years old. There is very little rehab, if any, that could be done on these units since they are fairly new. Can we still apply to convert them?
Answer:Yes. RAD does not require rehab. While the original RAD Notice imposed a cap on the number of mixed-finance projects that could convert, PIH Notice 2012-32 REV-1 eliminates the cap so that there is no restriction on the number of mixed-finance projects that can convert. [Updated 7.29.13]

Posted:10/01/2013
Question:Will HUD provide technical assistance on the application?
Answer:Answer: HUD developed a tutorial for completing the public housing application that is available at http://www.youtube.com/watch?v=BxjMF76lIgo&feature=youtu.be. Additional questions can be sent to rad@hud.gov. If you need to discuss a question regarding filling out your application, please indicate as such in your email. Further, HUD will develop another RAD application tutorial, which will be available on the www.hud.gov/rad, that will cover applications for Portfolio Awards, Multi-Phase Awards, and Rent Bundling. [Updated 7.29.13]

Posted:09/05/2013
Question:I am proposing to convert units from two separate AMPs that will be financed in one transaction. How do I complete and submit the RAD application?
Answer:You will need to submit two applications. One application will reflect the entire financing transaction. The second application will simply reflect and document the conversion of units and will include no financing information. Use the following instructions for completing both applications: Step 1: Open up applications for both AMPs. Enter the units from each AMP that will be converted under RAD in line 47. Step 2: In Line 49 (Other Affordable) enter the units from AMP 2 that will be converted under RAD. Step 3: In Section 6, enter the Gross Potential Rents, Vacancy Loss, and Bad Debt Loss for the units that will be converted from Amp 2. Gross Potential Rents for AMP 2 can be found on Cell R187 in the application for AMP2. In line 122 explain that “The Other Affordable Units are also RAD units connected with the conversion of AMP 2, which has been submitted as a separate application and is attached. The units in AMP 1 (PIC Dev #: XX#########) and AMP 2 (PIC Dev #: XX#########) will be combined in a single financing transaction and will be included under a single HAP contract." Step 4: For all other application sections (Sections 4,7,8,9,10,11,12,13,and 15) fill out information for the entire project/transaction (i.e. all units from AMPs 1 and 2 included in the conversion, as well as any other units in the transaction). Step 5: Submit with the Board approval form, Financing letters of interest, responses to resident comments, and any other applicable attachments. Step 6: Go into the application for AMP 2; and, in addition to entering the units that will be converted under RAD in line 47, do the following: 1) Complete Section 2 and Section 3; 2) In Line 72 explain that “The units are being converted and will be combined with AMP 1 (PIC Dev #: XX#########) in a single financing transaction”; 3) Enter zero values for all other sections; 4) Submit the application with the Board Approval form and responds to resident comments. Step 7: Submit both applications to RADapplications@hud.gov at the same time.

Posted:07/30/2013
Question:The number of PIC ACC units in the Application is incorrect, even though PIC correctly shows the number of units under ACC. May I use the correct numbers without generating a PIC ticket?
Answer:Yes. Enter today’s date in the “date corrected” line.

Posted:07/25/2013
Question:What is the deadline for a First Component RAD application to preserve the 2012 rent levels: 9/30/13 or 12/31/13?
Answer:As clarified in the revised RAD Notice, the RAD application must be received by 12/31/13 to preserve the 2012 rent levels.

Posted:05/20/2013
Question:Is the financing form required if you have firm commitments of the funding source (ie, AHP award letter, signed LOI with syndicator, HOME funds award)?
Answer:Yes, the financing Letters of Intent are standard forms that are part of the RAD Application and are required to be submitted in order for your application to be considered complete and eligible for review and acceptance into the RAD Program.

Posted:05/20/2013
Question:We are going to put in a RAD application for a site that has been vacant for almost three years. Is there any kind of waiver for the resident meetings in that case?
Answer:Because the project is currently vacant, the PHA is not required to hold the two meetings with residents of the project prior to submission of the application.

Posted:03/04/2013
Question:As we are modeling the pro forma for the HA's RAD application, what will the yearly subsidy increases be based on? For example, the Section 8 subsidy increases are based on a calculation that starts with COLA. Other funding sources require showing 2% increase in rental income. Is this assumption accurate in the future funding for this subsidies?
Answer:The RAD Notice provides that contract rents (whether under PBRA or PBVs) will increase in accordance with HUD's Operating Cost Adjustment Factor (OCAF) methodology. HUD designs OCAFs to reflect changes in average operating costs for apartment properties by state. For more information, see the Federal Register notice announcing the FY 2013 OCAFs (October 16, 2012 Federal Register starting at page 63324). HUD does not provide estimates of future OCAFs. Project owners, lenders and other funding sources should make their own estimates of how contract rents will change in the future. Because OCAFs represeent increases in local costs, and because these increases in local costs will be used to adjust rents (revenues), some lenders have not required that, for purposes of development of pro-formas, the revenues trend at a lower rate than expenses.

Posted:03/04/2013
Question:How long does the approval process take?
Answer:Now that the Initial Application Window is over, and we are in the open application period, we expect most reviews of RAD applications to take 30 days.

Posted:03/04/2013
Question:What criteria are used to evaluate whether the project may be entitled to RAD approval?
Answer:The eligibility for a PHA to participate in RAD is outlined in the RAD Notice. Acceptance into the RAD program requires the PHA to meet all eligibility requirements and to submit a complete RAD application that does not contain any fatal errors and includes all required attachments. Awards are made on a first come, first serve basis and are subject to the 60,000 unit cap for PHAs, including additional caps based on region, PHA, and existing mixed-finance projects (these caps are outlined in the Notice). Generally, the electronic application requires the PHA to complete a financing pro-forma for the project. The pro-forma is designed to demonstrate that the PHA's proposed financing plan for the project is reasonable; however, the application does not require that the PHA actually have secured the financing at the time of application.

Posted:11/12/2012
Question: The RAD application asks for the utility allowance. We are proposing to convert an entire AMP which is composed of several different buildings with different utility allowances. How do you handle that (the Application asks for one utility allowance)? Can you convert only one project in an AMP?
Answer: The entire AMP can be converted. For the purposes of the application, you should calculate a weighted average utility allowance for each unit type. For example, if there are 10 2BR units with a utility allowance of $100 and 15 2BR units with a utility allowance of $115, you would calculate: 10 x $100 plus 15 x $115 = $2,725, divided by 25 units = $109 weighted average utility allowance for all 25 2BR units. If the project is selected and eventually reaches closing, the Section 8 HAP contract can accomodate multiple utility allowances, if needed.

Posted:10/31/2012
Question: During the Ongoing Application Period, does Sectin 14 (Ranking Factors) impact my selection? Do I need to complete this section?
Answer: During the Ongoing Application Period, applications will be reviewed and selected on a first-come, first-served basis. The ranking factors will not apply. As a result, your entries in Section 14 (Ranking Factors) of the public housing RAD Application will not impact your selection in RAD. HUD still requires that you complete this section.”

Posted:10/24/2012
Question: If we have had our required meetings, but have not received any formal resident comments, how do we fulfill that attachment requirement. Would meeting notes be sufficient? Also, what do you consider sufficient documentation of the notification to residents that we intend to apply for the RAD conversion?
Answer: Simply write-up the residents comments from the meeting and how you responded. This is sufficient. You are welcome to attach meeting notes, the tenant notification notice, sign-in sheets, etc, but they are not necessary.

Posted:10/24/2012
Question: If we decide to convert 200 public housing units to PBRA, and then we later decide to take one unit off-line for whatever reason (for example, as a manager's unit), can we do that and how would we do that?
Answer: Yes, you can shift a HAP unit to a manager unit. If you do this before conversion, you would work with your transaction manager. Note that if this triggers a more-than-de-minimis reduction in unit count, you would need to meet all of the requirements for that reduction. A decision to change unit count should be made as early in the process as possible, so as not to delay the RAD closing. If you make this decision after conversion, you would want to be sure that the most advantageous use of the unit (taking into account financial and non-financial considerations) would be as a manager unit (using your example), rather than as a HAP unit. You would not be able to collect Section 8 subsidy on the unit unless (a) the manager's household qualifies for Section 8 and (b) the manager's household followed the normal Section 8 application / wait list / screening process.

Posted:10/22/2012
Question: Can we submit a RAD application without tax credits if we know that we eventually might apply for them?
Answer: Your Application must be feasible as submitted (that is, it must include enough rehab to result in a physically and financially viable project). If your Application is feasible, you certainly can add more sources of funds later, in order to do additional rehab (over and above the level required for long term viability). If, on the other hand, you need the tax credit equity in order to have a viable project, you need to include the tax credit equity in the Application.

Posted:10/22/2012
Question: Does the application need to be submitted from the Executive Directors email account ?
Answer: No. However, (1) please be sure that in Section 2 of the Application you include on row 19 the correct contact information for the person whom HUD should contact with any questions about the Application and (2) our auto-generated reply, indicating that the form has been received, will be sent to the email account that forwarded the application, not to the E.D.

Posted:10/22/2012
Question: HUD has been clear that a financing letter of interest is required for every source, but that a letter is not required when a PHA is proposing to use its own public housing funds. Is it correct to assume that a) deferral of developer fee due to the authority, b) items such as insurance which will be paid from property operations in order to show up in both the sources and uses, and c) the seller take-back note in favor of the authority are treated like public housing reserves and no financing letter of interest is required for these sources?
Answer: Yes you are correct that no financing letter is required for developer fee; seller take-back financing and/or any other sources of financing that come from the PHA. No letters are required at the application stage for operating expenses, like property insurance.

Posted:10/22/2012
Question: If a PHA is submitting two AMPs (two separate PIC Development Numbers) which wil be combined into one financing package, can it claim the points for priority project for both projects?
Answer: Because there are two separate projects, two Applications are required. Only one of those Applications can be the PHA's Priority Project.

Posted:10/22/2012
Question: Our Agency’s FDS operating expenses that were submitted to HUD in 2009 and 2010 do not match the data that auto populates when selecting the AMP. While it is not off by a significant margin (maybe +/- 5%) I am not sure how to address this. Since these numbers are used as benchmarks, and we will be exceeding them by 15% regardless of the differing amounts, how important is it that the data is accurate to the dollar? Should we just go with what pulls in?
Answer: There was an error in the original application posted where the historical FDS data was not loading correctly. HUD fixed this in a version uploaded on October 4th. If the error does not affect your application, you may continue to use the original version of the application. Otherwise, HUD suggests you download the more current version.

Posted:10/22/2012
Question: The properties we are considering for RAD pay all of the utilities now. We think it would be more prudent to have residents pay the utilities and for us to establish a utility allowance. How should we handle that in the Application?
Answer: The Application should use the current utility configuration (all utilities project paid, using your example). If you eventually decide to change the utility configuration, there would be an adjustment: the residents would get a higher utility allowance and your contract rent would be adjusted downward.

Posted:10/22/2012
Question: We noticed that the calculation of the RAD contract rent in the application is less than the calculation of the RAD contract rent in the HUD assessment tool. I was wondering why that might be the case.
Answer: The underlying data for the calculations in the Application were finalized later than the data used for the assessment tool, so this likely is due to improved data used in the Application. Feel free to forward additional information, including the PIC Development Number, if you would like for us to review the AMP-specific information.

Posted:10/22/2012
Question: Will the Initial Application Period be the only opportunity to apply for RAD (for public housing)?
Answer: No. There is an Ongoing Application Period that begins October 25, the day after the Initial Application Period closes. See Section 1.11.C.2 of the Notice.

Posted:10/22/2012
Question:Can we edit the validations tab? Is the PBV contract rent that is shown on the validation tab all we can get?
Answer: You can’t edit the validation tab. The amount you will get under PBV is the amount shown on the validation tab. We showed the calculations because we wanted you to see how they work.

Posted:10/22/2012
Question:Can we wait until the Financing Plan to decide on which Green designation we will pursue?
Answer:No, you must identify a designation in your Application. This choice can be changed later, in your Financing Plan.

Posted:10/22/2012
Question:In a 10/9/2012 FAQ, HUD notes that “For applications submitted during the Initial Application Period, the amount of rehab in the Financing Plan must be at least the amount that was estimated in the Application.” Is this statement still true if the Application lists an amount greater than that which would achieve the maximum point score? (The FAQ seems to take a slightly different position from the notice which states that “HUD will revoke a CHAP if the scope of rehabilitation changes in such a way that would have affected the project’s selection in the competition.”)
Answer:The Notice is correct. HUD will only revoke the CHAP if the scope of rehab changes in such a way that would have affected the project's selection in the competition. Thus, if the proposed amount of rehab exceeds the amount required to score all 50 points, and the actual amount of rehab still exceeds that amount, there will be no penalty.

Posted:10/22/2012
Question:In the Application, the data for 2009 and 2010 do not match what we submitted toHUD. What should we do about that?
Answer: This is due to a minor bug in the original application, fixed in the version posted October 4. You may enter corrected information on row 179. Another option is to download the corrected version of the Application (but that would require you to re-enter information).

Posted:10/22/2012
Question:Is the State of Washington's "Evergreen Sustainable Development Standard" (ESDS) an acceptable Green Building designation for earning the 10 points offered for the Green Building and Energy Efficiency Ranking Factor in the RAD application?
Answer:Yes. At an applicant's request, HUD reviewed and approved the ESDS as an acceptable Green Building designation.

Posted:10/22/2012
Question:Should I be including the contract rent in the RAD inventory assessment tool or should I be incorporating the fair market rents in the actual application. Contract and fair market are slightly different, so want to be sure I am using the right rent.
Answer: The Application is auto-populating the contract rents, basically the same contract rents in the inventory assessment tool. You do, however, have to enter the reasonable rents and utility allowances (Section 2 of the Application, rows 56 and 57). Under RAD we are limited to current funding so you won’t be able to get up to fair market rent if that is higher.

Posted:10/22/2012
Question:The AMP we are considering includes two properties with different utility allowances for each bedroom size. How should this be handled in the Application?
Answer:Calculate a weighted average utility allowance. For example, if there are 10 2BR units at $100 plus 15 2BR units at $115, you would calculate 10 x 100 = $1000 plus 15 x $115 = $1725 equals $2725, divided by 25 units = $109.

Posted:10/22/2012
Question:The board approval form in my Application is not populating properly. What should I do about that?
Answer:One option is to download the current Application form. However, if you don’t want to re-enter data, you may and send it in and we will accept the form as it is.

Posted:10/22/2012
Question:We are not sure we can get the financing letter of intent from the tax credit investor. Will we be rejected if we don't have that?
Answer:Yes, a missing financing letter is a fatal error. If, however, you cannot obtain the letter in time for the Initial Application Period, stay in touch, because there may still be reservation authority left for the Ongoing Application Period.

Posted:10/22/2012
Question:We are planning a PBRA conversion. The Application requires a Reasonable Rent estimate (Section 2, row 57). What should we input?
Answer: Although, for purposes of the application, this line is not a factor when converting to PBRA, the PHA should still enter its estimate of reasonable (market) rent for the unit, which, if updated, should also be equal to the unit’s Flat Rent under the public housing program.

Posted:10/22/2012
Question:We plan to pursue the Green Building Ranking Factor. In the Application, do we need to state which industry-recognized designation we will pursue? Can we change our mind later, based on the PCA?
Answer:Yes, you do need to identify your planned designation in Section 14 of the Application. Yes, you can modify your selection when you submit your Financing Plan (at which time your selection becomes final). HUD recognizes that once you see the results of the PCA you may determine that a different designation is better suited to your property.

Posted:10/19/2012
Question: Our agency is currently planning on submitting a RAD application and we realize that the deadline for the initial Application Period is 10/24/12. Will applications be accepted until 11:59 pm on 10/24/12? Or is ther another time deadline?
Answer: That is correct. The deadline is 11:59 PM on 10/24/2012.

Posted:10/19/2012
Question:Does RAD allow for the complete demolition and reconstruction of a project?
Answer:Yes. If the reconstruction is on the current site, your conversion plan would need to cover temporary relocation costs for residents during the demolition and reconstruction. Alternatively, the reconstruction might be on a separate site (using the ‘transfer of assistance’ feature of RAD), in which case you might be able to complete the new construction prior to relocating residents from the existing project.

Posted:10/19/2012
Question:How is the financing impacted in the tool when you are only converting part of the project?
Answer:At the end of Section 2, indicate the (reduced) number of units that you are converting. In Section 3, indicate Partial Conversion as the reason for the beyond-de-minimis reduction in unit count. In the remaining Sections of the Application, enter amounts for the portion of the project that you propose to convert.

Posted:10/19/2012
Question:In Section 15 of the Application, we discuss the known environmental issues. We are wondering if our application will be less competitive if we have environmental issues that we are not proposing to address.
Answer:Regarding competitiveness, environmental issues will not affect the competitiveness of your Application. The only factors that influence competitiveness in the Initial Application Period are the Ranking Factors. The question is included in the application so that PHAs consider environmental issues when estimating rehab costs. Regarding how you respond to a known environmental condition, your rehab must include any remediation required under applicable requirements (e.g., if there are lead paint hazards, you must abate the hazards in accordance with the Part 35 lead based paint regulations). If applicable requirements allow management in place, there is no RAD-specific requirement to completely abate an environmental condition (e.g., if your project contains non-friable asbestos, RAD does not require you to remove the asbestos so long as you have and implement an acceptable Operations & Maintenance Plan). However, if you are planning to obtain new first mortgage financing, your lender may well require environmental remediation beyond what you may be planning, so HUD recommends that you discuss this issue with your lender (and any other funding partners) before completing your Application.

Posted:10/18/2012
Question: On a 4% tax credits application with tax exempt bonds, is it sufficient to have the financing letter signed by the potential syndicator instead of the state housing agency that will be issuing the credits?
Answer:Getting a financing letter from an investor is sufficient. Note that if there will be a permanent first mortgage loan, you will also need a financing letter from the first mortgage lender.

Posted:10/18/2012
Question:We are proposing to use 4% tax credits only, which are non-competitive. How do we respond to Section 13 on the application, which asks questions mostly geared to 9% tax credit applications?
Answer:There is a bug in the application; if you are proposing to use 4% tax credits you can simply enter an explanation such as "We are using 4% LIHTCs not 9% LIHTCs".

Posted:10/18/2012
Question:We have a project that has been demolished for a while, is not getting funding and does not have AMP numbers. Is this eligible for RAD?
Answer:No, RAD is limited to units that are currently receiving funding under your ACC.

Posted:10/18/2012
Question:When closing, we are converting half an AMP. It is correct that Section 8 operating budget is for the entire AMP and the proposed section will be the operating expenses for the units that are converting to RAD?
Answer:Yes. It will most likely trigger the less than 85% flag; explain that it is because of the reduction of units.

Posted:10/16/2012
Question:For projects for which tenants will be paying some utilities, do utility allowances have to be deducted from the RAD Contract Rent, as shown on the RAD PHA Application, or are they already deducted?
Answer:The RAD formula rents presented in the PHA Application are contract rents (after deducting any utility allowance). No further deduction needs to be made to account for tenant-paid utilities.

Posted:10/16/2012
Question:We plan to utilize LIHTCs. In Section 4 of the Application (Capital needs), all rehab costs are loaded in year 1. For years 2-5 and 6-20, what is placed here?
Answer:Years 2-20 will reflect anticipated replacements of items that you initially replaced during rehab. For example, refrigerators would be replaced again roughly at year fifteen. The 20 year accumulation of your annual replacement reserve funding (assuming that this is sufficient to meet your calculated replacement needs) can be entered in years 6-20.

Posted:10/15/2012
Question: For projects converting to PBRA, why do we need to input reasonable rents in Section 2 of the Application? Should we use FMR?
Answer: Because you have the option to change to PBVs until the 60 day Milestone, HUD asks for Reasonable Rent determinations for all RAD applicants. You may enter the Fair Market Rent or your estimate of the comparable market rent.

Posted:10/15/2012
Question: For the RAD Application, do we need to use the same level of vacancy that we used in the operating budget that we submitted to HUD? What if the lender will accept a lower vacancy rate than the Application allows?
Answer: Use a vacancy rate that meets the requirements of the Application and that is at or above the level that your lender will accept. For example if the lender requires a 10% vacancy assumption and the HUD format allows 7% vacancy, the Application should reflect the lender requirements.

Posted:10/15/2012
Question: Is it acceptable to fund some or all of the required 20 year Replacement Reserve funding in the form of an initial Replacement Reserve deposit , with only a small annual Replacement Reserve deposit or with no annual Replcacement Reserve deposit?
Answer: Attachment 1A-1 specifies that the initial and annual reserve deposits must be sufficient to cover all capital needs arising during the first 20 years. HUD recognizes that this requirement can be met through a relatively high initial deposit and a relatively low annual deposit. Please note, however, that an approach that utilizes a high initial deposit and low or zero on-going deposit will result in the Replacement Reserve funding being inadequate after year 20, which may present underwriting concerns for your lender and other funding partners. In a financing involving LIHTCs, the investor will likely want all anticipated rehabilitation completed in the initial financing which should result in a relatively low need for ongoing replacement reserve funding. Contact your lender (and LIHTC investor, if applicable) to determine whether this approach will be acceptable (for FHA financing, your Replacement Reserve approach must meet all FHA requirements as well as RAD requirements). HUD is open to considering this approach as part of your Financing Plan if your funding partners are agreeable.

Posted:10/15/2012
Question: My client wants to convert their selected units to PBV but does not intend to seek financing with the application. Is this acceptable within the RAD process?
Answer: Yes.

Posted:10/15/2012
Question: Ten years ago, our PHA borrowed a Capital Fund Financing Program loan and we pledged 33% of our future capital funds. We also entered into an agreement with HUD that we would not reduce our ACC inventory by more than 5%. We would like to participate in RAD for a project that would reduce our ACC inventory by 10%. What should we do?
Answer: We recommend that you first check with your CFFP lender and any other key business partners (for example, a LIHTC investor) to determine if their approval is required (based on loan documents, etc.) before you reduce the public housing inventory and, if so, whether they would be amenable to such a proposal. Approval from HUD may also be required, but such approval is not expected to be unreasonably withheld.

Posted:10/15/2012
Question: The PHA is looking to submit a RAD application for one of its developments. However, the PHA will not be able to meet the October 24, 2012, initial application deadline. (The PHA expects to be able to submit their application sometime in November.) The PHA would like to know what information, if any, is available regarding a possible timeline for the review and approval process for applications submitted after the October 24 deadline for the Initial Application Period.
Answer: HUD will review all applications received during the Initial Application Period before reviewing any applications received in the Ongoing Application Period. Timing will depend on how many applications are received during the Initial Application Period. Once HUD has reviewed, scored and ranked all Applications that were received during the Initial Application Period, HUD will issue CHAPs. Next, HUD will process Applications from the Ongoing Application Period in the order they were received. Accordingly, HUD hopes to begin review of Ongoing Application Period applications in December 2012.

Posted:10/15/2012
Question: We are considering RAD for the final phase of a public housing redevelopment. Since this project was demolished probably 5-10 years ago and this is the final phase (appx 500 mixed income units have been developed to date) there is no longer an AMP number. Does this preclude the submission of this Project in a RAD application?
Answer: Provided that the demolished units are covered under the PHA's current ACC, HUD would accept a RAD application. However, if the project was demolished 5-10 years ago, your PHA is likely not receiving any further funding for the ACC units initially on the site--whether through phase-down or otherwise. The Notice provides that once a project has been approved in Section 18, gone through demo/dispo and been 100% demolished, units formerly on the site are no longer eligible for RAD conversion.

Posted:10/15/2012
Question: We are working with a housing authority to complete a RAD application. Should we miss the October 24 deadline, when is the net possible date to submit to HUD?
Answer:You may apply at any time. Applications received after October 24 will be processed on a first-come, first-served basis, but will not be reviewed until HUD has completed its review of applications submitted during the Initial Application Period.

Posted:10/15/2012
Question: We plan to finance our application in part with 4% LIHTCs and Tax Exempt Bonds, and we will not apply for the 4% LIHTCs and Tax Exempt Bonds until after CHAP issuance. Considering this, please clarify what entity is required to sign the Financing Letter of Interest in the Excel application for the 4% LIHTCs and Tax Exempt Bonds? Is it correct that only a potential syndicator for the 4% LIHTCs would be required to sign, and not the local or state agencies who will potentially issue the LIHTCs/Bonds?
Answer: For RAD transactions utilizing 4% LIHTCs and tax exempt bonds, HUD does not require either a LIHTC reservation or a bond inducement letter at the time of application. However, HUD does expect PHAs to have worked with a potential issuer and a potential investor so that, if a CHAP is issued, the PHA can rapidly and efficiently proceed toward issuance of bonds and purchase of LIHTCs. The purpose of the Financing LetterI(s) of Intent is to document that the PHA has made those preparations. In your situation, a single Financing Letter of Intent from the LIHTC investor would be sufficient. HUD will not require a Financing Letter of Intent from a potential issuer at the time of application. However, the Financing Plan will require a firm commitment from the issuer as well as a firm commitment from the LIHTC investor.

Posted:10/15/2012
Question:Can you make a RAD project from several scattered site units?
Answer:Yes, RAD allows scattered site projects. If the scattered site units are part of one AMP, all or some of the units may be included in a single application.

Posted:10/15/2012
Question:Does HUD care who signs the Board Approval Form? Do we need a Board Resolution?
Answer: HUD only requires that an authorized person sign. You will identify the authorized person on row 3 of the Board Approval Form worksheet (you can over-write the pre-populated name). You will need to follow your own internal procedures for designating an approved signer.

Posted:10/15/2012
Question:In Section 16: Required Attachments there is a requirement that the PHA provide “Evidence of PHA to Administer PBV Contracts”. Specifically what type of documentation is being requested? Our PHA currently administers PBV vouchers and has PBV developments as part of our portfolio, how are we supposed to document this as required?
Answer:It appears that your PHA intends to administer the PBV contract itself. In that situation, you may simply submit a one page letter from the PHA, confirming that it proposes to administer the PBV contract. Alternatively, if another PHA has agreed to administer the PBV contract, you would need to provide a letter from that PHA, confirming its agreement to administer the PBV contract.

Posted:10/15/2012
Question:Our understanding is that the requirement to submit a mixed finance affidavit (Section 1.9 paragraph A.3 on p. 48 of PIH 2012-32) applies only when the public housing proposed for conversion to PBRA or PBV is already part of a mixed-finance development. It does not apply simply because the post-conversion project will be a mixed-finance project. Is this correct?
Answer:You are correct. The Mixed Finance Affidavit is required only when the project is already mixed-finance public housing. If the project was not developed as mixed-finance public housing and is converting through RAD and planning to use Low Income Housing Tax Credits, the Mixed Finance Affidavit is not required.

Posted:10/15/2012
Question:Since my PHA has a CFFP loan, I see that the PHA cannot reduce its PHA inventory by more than 5%, or in this PHA’s case, 60 units. At their priority development there are 12 buildings with a total of 97 units. The PHA would like to convert 51 units within only 6 of the buildings. The remaining 46 units would not be converted or otherwise improved at this time. Is this allowed?
Answer:You may be able to carry out a full conversion of the 97 units; please see existing Q&A WEB10082012_2_09100 regarding the 5% limitation. Assuming the CFFP lender agrees, no reasonable proposal to HUD to exempt the PHA from the 5% limitation (and the corresponding 33% of annual Capital Fund grant for debt service) will be denied. It is definitely permissible to convert a part of an AMP (provided there is a sound business reason and that it makes sense from financing/management perspective). Indicate in Section 2 of the Application the mix of units you intend to convert. Explain in Section 3 (Reduction in Unit Count) that you are proposing a partial conversion (see row 69). You may also need to make corrections to the three year historical information in Section 8 (Operating Expenses) because you are converting only part of the AMP.

Posted:10/15/2012
Question:The project consists of another building with market tenants and a sixth building with just commercial space. A single State Agency mortgage covers all six buildings. The loan will not be refinanced. Any problems here?
Answer: This arrangement is perfectly acceptable.

Posted:10/15/2012
Question:There are four buldings with four HAP contracts. I assume they could be consolidated into one RAD contract.
Answer:Indeed, there are some Mod Rehab projects where there is one legal entity but multiple HAP contracts. It would be acceptable (and advisable) for the owner to consolidate these into one HAP following conversion.

Posted:10/13/2012
Question: Can we download the application more than once?
Answer: Yes.

Posted:10/13/2012
Question: If on an LIHTC transaction there is seller takeback financing for the PHA to bring the property into the LLC or partnership, does that require a financing letter of intent? Would Deferred Developer Fee as a source (another common element of a LIHTC transaction) require a financing letter of intent? Often times it is not formalized by a note, but is part of the investor agreement.
Answer: Neither seller take-back financing nor deferred developer fee require a financing letter of intent, because both are under the control of the PHA applicant.

Posted:10/13/2012
Question: In Section 15 of the Application (Additional Narratives), it says to limit each response to 200 words. What if we need more than that?
Answer: Provide a good summary. Due to size limitations in the extraction process, the HUD reviewer will only see 200 words of your narrative.

Posted:10/13/2012
Question:Are we required to have a co-developer?
Answer: No, this will be largely based on your experience.

Posted:10/13/2012
Question:Do we need to have identified the developer at the time of the application or just indicate that we plan to have a co-developer?
Answer:No, you don’t have to have secured the developer before the application. In the application, you would outline your plan, whether or not you plan to have a co-developer; if not, what your experience is that would indicate you do not need a co-developer. You would, however, need to have identified the developer at the time of the 30 day Milestone (when your development team description is submitted to HUD).

Posted:10/13/2012
Question:How do we properly account for units that are “off-line?” For example, we have a 233 unit AMP that has two (2) units off-line, but we will include those in the conversion, but in essence these two units will become manager’s units when converted under RAD in conjunction with 9% Tax Credits. Do we correct the PIC data on the application to account for these units?
Answer: In the example you describe, no change to PIC is needed (PIC shows 233 units, which is the number you actually have, including the two off line units). However, you mention that (post-RAD) you intend to use both units as manager units (non revenue units). In this situation, it appears that you intend to cover only 231 units under the post-RAD HAP contract. If that is what you intend, then your RAD Application should indicate a two unit reduction (that is, that you intend to reduce the count of assisted units by two units as part of the RAD conversion). If, conversely, you intend to convert all 233 units, note that Section 8 subsidy cannot be collected for a unit occupied by a staff person unless (1) the staff person's household is eligible for Section 8 and (2) the staff person's household goes through the normal Section 8 application, screening, and wait list processes.

Posted:10/13/2012
Question:Our RAD project includes a reduction in the number of assisted units. Do we need to submit a separate Section 18 application (demo/dispo)?
Answer:No. RAD approval of a proposed reduction in unit count is sufficient as long as it is a deminimis reduction of units or units are being reduced for any of the acceptable reasons described in the Notice [Section 1.5.B] . No separate Section 18 approval is required.

Posted:10/12/2012
Question: According to the Final RAD Notice, under Section 1.9 (Application Requirements), Section B, if you plan to use 9% tax credits, you are asked to get a letter from the credit issuing entity addressing the 4 points outlined in the notice. If you are “unsuccessful” in securing such a letter you need to submit a Self Scoring QAP 9% Application. My client expects to get a complying letter from its tax credit issuing entity. As I am filling out the application, I answered “Yes” to this question in cell BB 289 on the PHA App Form tab. However, when I get down to Section 16 it acknowledges that I must provide the letter from the tax credit issuing entity (Cell A 338) but in Cell A 339 it indicates I must also provide a self-scoring QAP application for the 9% credits. Is this incorrect? From the RAD notice, it appears you only have to provide the self-scoring if you are unsuccessful in getting a letter.
Answer: You are correct; a self-scored QAP application is not required in the situation you describe, and there is an error in the Excel Application. Please submit with your Application a one page PDF exhibit titled 'Self Scored QAP Application' simply explaining that because you have the required letter from the allocating agency a self scored QAP application is not required.

Posted:10/12/2012
Question: In Section 8 of the Application (Operating Expenses), if the AMP data does not pull in the 2011 operating expense information, do we need to provide that?
Answer:Yes, you can enter the 2011 data in the gray cell below the “N/A” – gave example on screen.

Posted:10/12/2012
Question: Our Executive Director will not be signing the Board Approval Form; our chairman will sign instead. Can we make that change in cell B3 of the Board Approval Form?
Answer: Yes.

Posted:10/12/2012
Question: The data pulling into our Excel application from PIC is incorrect. Specifically, the field pulling in the name of our President/CEO reflects our former President/CEO as well as an incorrect email address, and we are unable to correct the field. How do we go about getting this updated so that our application is correct?
Answer: You are correct that this information cannot be changed in the Application. However, the contact information that is important for RAD is the PHA Contact Information in Section 2 of the Application; this is the person that HUD will contact regarding your RAD application. If you have not already done so, please also follow the normal process to correct the information in PIC.

Posted:10/12/2012
Question: The unit mix data from PIC is correct, but the name of our president and CEO is wrong. This incorrect name is pulled into row 3 of the Board Approval Form. Can we over-write cell B3 (Board Approval Form) with the correct information?
Answer: Yes.

Posted:10/12/2012
Question: We are proposing a partial conversion but the vacancy rate is for the entire project; we can use the explanation field to explain why less than historical amount is used?
Answer: Yes.

Posted:10/12/2012
Question:In the Application, if our proposed expenses are less than 85% of historical, assuming we give a convincing case for reducing expenses < 85%, is that acceptable?
Answer:Yes; at the Application stage, this is only a benchmark/flag for the transaction manager, underwriters, and potential lenders. At the time of the application, you only need to explain your rationale.

Posted:10/12/2012
Question:Phase in of rent increases – during phase in period, is the difference between the phased in amount and contract rent covered by subsidy?
Answer: Yes.

Posted:10/12/2012
Question:Under RAD, does the conversion of two efficiencies into a single one BR unit trigger a need to create replacement units?
Answer:Under RAD, the normal demolition / disposition requirements (including one for one replacement) do not apply to conversions of efficiencies to 1BRs.

Posted:10/11/2012
Question: How will HUD determine the immediate capital needs for ranking the High Capital Needs factor in the application?
Answer: HUD will use the Construction Costs from Section 11: Uses of Funds in the Application to calculate the High Capital Needs score. This amount must match the Year 1 Immediate Needs in Section 4 of the application. Construction costs include all rehabilitation or constructions costs, site improvements, general requirements, contractor overhead, contractor profit, P&P Bond or LOC, Contingency, and Permits & Impact Fees. It does not include any of the additional line items listed in Section 11. In other words, if a line item appears in Section 11, the cost for that item should be entered into its appropriate line and should not be included in Immediate Needs.

Posted:10/11/2012
Question:In terms of scoring, does the ranking factor for High Capital Needs include only hard costs?
Answer:No. The figures include both hard and soft costs – specifically, all rehabilitation or construction costs, site improvements, general requirements, contractor overhead, contractor profit, performance and payment bond or letter of credit, contingency, permits and impact fees and other costs. [See RAD Application, Line 87 Guidance “?” Box.]

Posted:10/10/2012
Question: Our PHA is considering a RAD conversion for a project with an Energy Performance Contracting loan. Is an EPC-financed project eligible for RAD? What do we need to do about the existing EPC loan? Is it just a question of getting my RAD lender and my EPC lender to agree on who will take the first lien and who will take the second?
Answer: Yes, projects with EPC loans are eligible for RAD. One strategy is to pay off the existing EPC loan at the RAD closing. If your RAD transaction will generate sufficient funds to pay off the EPC loan, this strategy will probably be the easiest strategy to implement. Alternatively, you can work with your new first mortgage lender and your existing EPC lender to see if they can agree on a strategy in which the EPC loan will remain in place, with payments being made from post-RAD cash flow. Consult with your legal and financial advisors, your EPC lender and your new first mortgage lender, to determine which approach will work best for you and your project.

Posted:10/10/2012
Question: Please confirm that the proposed transaction outlined in our RAD application may change from application submission until final closing. For example, if our application proposes to be financed with 9% LIHTCs, and we are then issued a CHAP, may we change our financing plan to 4%/Bonds within the 180 days following CHAP issuance, and reflect these changes in the required Financing Plan? Similarly, may we change our unit mixes originally proposed in the application before final closing?
Answer:Yes. Note, however, that for Applications submitted during the Initial Application Period the dollar amount of rehab proposed in the Application cannot be reduced in such a way that would have impacted your selection in the Demonstration.

Posted:10/03/2012
Question:My RAD transaction will utilize a $2 million construction loan. How should I reflect that in the Excel application form?
Answer:Be sure to include any construction loan fees, plus construction loan interest costs, in the Uses of Funds section. Following are two reasonable options for the construction loan itself: (1) show the construction loan as a $2 million Source of Funds, and in the Uses of Funds section utilize one of the 'other' line items to show $2 million of 'Construction Loan Repayment'; or (2) Use an 'other' line in the Sources of Funds for 'Construction Loan (net)' but show the amount at zero; in the comment column include an appropriate explanation such as '$2M; will be repaid at final closing'.

Posted:10/03/2012
Question:My RAD transaction will utilize a construction loan from a local bank, which will be paid off when the permanent loan (from a large national lender) closes after completion of rehab. Do I need to submit a Financing Letter of Intent / Interest from the local bank (the proposed construction lender)?
Answer: Yes.

Posted:10/03/2012
Question:What will be the effective date of the post-RAD HAPs?
Answer:The date of closing. The Notice details the steps that must take place prior to closing.

Posted:10/01/2012
Question:My RAD transaction includes 100 units, three of which will be used for social service delivery. The Notice allows the PHA to retain the current subsidy for those units, but the Excel Application includes gross potential rent only for the remaining 97 units. How should I account for the current subsidy for the three service delivery units, in the Excel Application form?
Answer:In Section 7 of the Application form, select one of the Other Income lines (rows 129-131), title it ‘Social Services Units’, and include the sum of B5 plus B6 from the Validation page, multiplied by the three. Technically, you should also make a deduction for vacancy loss and bad debt loss, but for purposes of the Application HUD will not require any deduction. Include an appropriate explanation.

Posted:09/24/2012
Question: As a result of planned repairs, we anticipate a reduction in operating expenses as compared with the most recent three years. What operating expenses should a PHA use in applying for RAD?
Answer: PHAs should carefully evaluate their current operating expenses to determine whether there may be operating savings post-rehab. They may also want to determine the operating expenses for comparable projects in the project’s market area and use that as a benchmark. The proposed expenses should also be reviewed with the lender. The lower the ratio of expenses to rents, the more debt that can be leveraged through a RAD conversion. However, for purposes of completing the application, any major line item operating expense that is less than 85% of three-year historical costs must be explained in Section 8 of the application. [See RAD Final Notice Reference: Attachment 1A.1, Paragraph H.4.]

Posted:09/24/2012
Question: Do I need to submit a "Financing Letter of Interest" for each source of financing that I plan to use in conjunction with my proposed RAD conversion?
Answer: Yes, for each financing source you plan to utilize, your application submission must include a signed Financing Letter of Interest. The Excel-based application includes a worksheet that is auto-populated with inputs from the Application. For each financing source, the user should enter information at the top of this worksheet for the applicable financing source, print out this worksheet, obtain a signature from a representative of the financing source, and include the signed worksheet as a PDF attachemnt with their Application submission. Repeat this process for each financing source. An application submission will be considered incomplete if each identified financing source does not have this Letter. Please note that this letter is not required when a PHA is proposing to use its own public housing funds (e.g. Operating reserves) as a financing source.

Posted:09/24/2012
Question: If we are a PHA with a voucher program, do we have to partner with another PHA in order to receive the Choice-Mobility ranking factor points?
Answer: Yes. The Choice-Mobility points are only provided to agencies that (a) do not operate a voucher program but are converting to PBRA and are able secure a commitment of vouchers from a voucher agency, or (b) operate a voucher agency and commit to provide vouchers to a public housing-only agency that is converting to PBRA. [See RAD Final Notice Reference: Paragraph 1.7, C5.]

Posted:09/24/2012
Question: Is there flexibility to allow changes in a public housing project (AMP) configurations, e.g., to convert only the scattered-site units at an AMP that also has elderly high-rise units?
Answer: Yes, PHAs can apply for any portion of an AMP that makes sense from a financing and management perspective. The PHA should note such plans in line 69 of the RAD Application (“Partial Conversion”). If a PHA receives a CHAP for the proposed conversion, it will remove those units from inventory in PIC at closing. [See RAD Final Notice Reference: Paragraph 1.9, A.]

Posted:09/24/2012
Question: The application will not allow me to enter certain values. For example, I have been quoted an interest rate by a lender that I cannot enter into the application.
Answer: The Application includes a number of minimum and maximum thresholds that an applicant cannot exceed. For example, users cannot enter a vacancy rate cannot be less than 3%. Similiarly, users cannot enter a combined interest rate + mortgage insurance premium cannot be less than 3.5%.

Posted:09/24/2012
Question:During the Initial Application period, is there any benefit to submitting my application early?
Answer:No, applications submitted during the Initial Application Period (September 24th to October 24th) will be scored and ranked solely on the four ranking factors described in the Notice. An application that is submitted on September 25th is no more competitive than an application that is submitted on October 22nd.

Posted:09/24/2012
Question:I have received a fatal error message that I believe is incorrect. Who can I contact at HUD for help?
Answer: Email rad@hud.gov for technical questions related to the application.

Posted:09/24/2012
Question:If we are proposing to demolish or dispose of some units as part of our RAD conversion, do we need HUD approval under the Section 18 requirements prior to the submission of our application?
Answer:No, approval prior to application is not required for Section 18 Demolition or Disposition. However, approval of the Demo/Dispo must be obtained before submitting the Financing Plan. The PHA should note such plans in line 69 of the RAD Application (“Partial Conversion”). Please also note that demolition coupled with a new construction project does not require separate Section 18 approval. [See RAD Final Notice Reference: Paragraph 1.5, B.]

Posted:09/24/2012
Question:Is there a benefit to apply during the Initial Application Period, rather than wait for the Ongoing Application Period?
Answer:Yes, applications submitted during the Initial Application Period will be ranked and scored according to the four ranking factors described in the Notice. If during this period HUD receives more applications than it can award under the statutory 60,000 unit cap, then HUD will establish a waiting list and those applications submitted during the Initial Application Period will be at the top of the waiting list. Applications that are then submitted during the Ongoing Application Period would be placed on the waiting list below those waiting list applications from the Initial Application Period.

Posted:09/24/2012
Question:My estimate of physical needs for the project does not align with the my actual schedule of capital repairs because I’m demolishing the building and doing new construction, pursing tax credits and trying to maximize the eligible basis, or otherwise plan to perform greater initial repairs than appear in my PNA. How should I represent this in the application?
Answer:If you plan to make repairs earlier than your physical needs assessment suggests, in section 4 of the Application under Capital Needs (Row 87-89), enter the actual schedule in which you expect capital needs to be addressed. If your proposal includes new construction, do not include the physical needs estimates for the current building; instead, enter the total construction costs under immediate needs and an estimate of the short-term and long-term needs of the project once newly constructed. If your proposal involved rehab, but you intend to perform all of the repairs that your PNA suggests are needed in years 2-5, then increase your entry of Immediate Needs (Row 87) and decrease your entry for Short-Term Needs (Row 88).

Category:Benefits of RAD
Posted:10/01/2013
Question:If we are demolishing 49 units, but building 60, what numbers should I put in that we are converting?
Answer:The number of assisted units cannot be increased under RAD. In the example you describe, you would indicate that you are converting all 49 ACC units and that the project will also include 11 additional, non-RAD units (you would enter these additional 11 units on rows 48 or 49 of the Application). Be sure also to enter the gross potential rent / vacancy loss / bad debt loss for the additional 11 units in Section 6 of the Application. [Updated 7.29.13]

Posted:10/01/2013
Question:If there is no new Federal funding available with RAD, what are the financial benefits of participating in the program?
Answer:There are a number of financial benefits, including: • Ability to leverage private debt and equity to meet rehabilitation needs. RAD creates an opportunity to convert existing rent subsidy and capital funds to a Section 8 Housing Assistance Payments (HAP) contract. PHAs can borrow against the HAP income stream and/or leverage 4% or 9% LIHTC equity investments against it. • Historically low rates on permanent financing. In the case of FHA financing, for example, current rates are at about 3%, with .45% added for mortgage insurance premium (MIP). These extremely low rates increase project borrowing potential dramatically. • More secure funding stream. While also subject to annual appropriations, project-based Section 8 contracts have not been subject to the same “proration” issues of the public housing Operating Fund Program or the large swings in the Capital Fund Program. • Fee potential. Similar to other affordable housing developers and managers, under RAD, PHAs can earn development, property management, asset management and/or guarantee fees depending upon the financial structure of a transaction. • Additional income potential. Depending upon the financial structure, PHAs may also be able to generate additional income or receipts from RAD transactions via project cash flow, debt-service on PHA-supplied financing and seller take-back notes, ground-lease payments, etc. • Long-term preservation. Unlike traditional public housing, the contract rents will support an annual contribution for replacement reserves so that the project has funds to address the timely replacement of systems of components. • Operational stability. Contract rents will be adjusted annually by an operating cost adjustment factor, which should facilitate long-term project planning. Further, all of the following potential sources of PHA income in a RAD transaction constitute unrestricted, non-Federal funds: • Developer fees (10% in debt-only deals; up to 15% in LIHTC) • Land-lease payments • Sellertake-back financing on appraised value of existing units in a rehabilitation transaction (this is not available in the case of demolition and new construction) • Cash flow [Updated 7.29.13]

Posted:06/18/2013
Question:I'm considering a RAD transaction, versus pursuing demolition-disposition through the SAC. It appears that, under RAD, approval of new financing is simpler. However, one advantage that the SAC provides (or used to provide) was the possibility of Tenant Protection Vouchers,that had the effect of increasing a PHAs voucher pool and providing the means for vouchers to be deployed via PBV using a true FMR-based payment standard. However, I understand that RAD brings with it no corresponding bonus of "extra" vouchers (please confirm).
Answer:You are correct that, under RAD, a PHA does not receive TPVs. See Notice PIH-2012-07 for procedures for authorizing TPVs under demolition / disposition. Note that the RAD-HAP contract does begin to fund at construction closing and funds throughout construction. Some PHAs intend to use that rental income to assist with temporary relocation costs for residents. Those PHAs must ensure that their relocation plan complies with all requirements of the Uniform Relocation Act.

Posted:10/19/2012
Question:Local sources of funds with whom we have talked are not interested in investing their funds into a project that they already view as affordable.
Answer:Perhaps if you shared information on the future capital needs of the project the potential funder might better understand that although the project is affordable and viable today, its long term viability is not necessarily assured. Preservation is a key factor in meeting local affordable housing needs.

Posted:10/15/2012
Question: Does RAD conversion increase the risk of losing affordable housing units through foreclosure?
Answer: In HUD’s view, RAD conversions reduce the risk of losing affordable housing units. The risk (outside RAD) of losing public housing units as a result of inadequate funding is quite high; in a typical year, 10,000 to 15,000 units are removed from the public housing inventory because funding is inadequate. RAD is designed to maximize the likelihood that converted projects will be financially and physically viable on a long-term basis, thereby minimizing the risk of foreclosure. Further, even if the lender forecloses after a RAD conversion, the lender (and any subsequent owner) will be bound by the RAD Use Agreement. The RAD Use Agreement ensures that the property will remain available for low income residents for the full term of the RAD HAP contract; that the lender (or subsequent owner) will be required to accept an extension of the RAD HAP contract if it is provided by HUD; and that in such case the RAD Use Agreement will be extended for the full renewal term of the HAP contract.

Posted:10/03/2012
Question:My RAD transaction will utilize Low Income Housing Tax credits. The LIHTC investor will also provide permanent financing. Does the LIHTC investor need to submit two Financing Letters of Intent / Interest (one for the LIHTC equity and one for the permanent financing)?
Answer: Yes.

Posted:09/24/2012
Question: What are the non-financial benefits to PHAs of participating in RAD?
Answer: In addition to the financial benefit noted, above, there are a number of non-financial benefits, including regulatory relief. Both the Section 8 PBRA and PBV programs are viewed by many, from a regulatory perspective, as less burdensome the public housing program. These programs are also considered more stable due to the infrequency of regulatory changes.

Category:Capital Fund Financing Program (CFFP) / Energy Performance Contracting (EPCs)
Posted:10/18/2012
Question: My PHA is considering RAD and we have an existing Capital Fund Financing Program obligation. Our CFFP lender is willing to allow the RAD conversion, but the RAD conversion will reduce our ACC unit count by more than 5%. How will HUD look on requests to waive the 5% limit on reductions in ACC unit count, for PHAs with CFFP financing?
Answer: If key business partners (the CFFP lender and other key business partners such as a LIHTC investor) agree, HUD intends on approving such waiver requests as part of the general approach to discharging all or a portion of the CFFP debt.

Posted:10/15/2012
Question: Ten years ago, our PHA borrowed a Capital Fund Financing Program loan and we pledged 33% of our future capital funds. We also entered into an agreement with HUD that we would not reduce our ACC inventory by more than 5%. We would like to participate in RAD for a project that would reduce our ACC inventory by 10%. What should we do?
Answer: We recommend that you first check with your CFFP lender and any other key business partners (for example, a LIHTC investor) to determine if their approval is required (based on loan documents, etc.) before you reduce the public housing inventory and, if so, whether they would be amenable to such a proposal. Approval from HUD may also be required, but such approval is not expected to be unreasonably withheld.

Posted:10/15/2012
Question:Since my PHA has a CFFP loan, I see that the PHA cannot reduce its PHA inventory by more than 5%, or in this PHA’s case, 60 units. At their priority development there are 12 buildings with a total of 97 units. The PHA would like to convert 51 units within only 6 of the buildings. The remaining 46 units would not be converted or otherwise improved at this time. Is this allowed?
Answer:You may be able to carry out a full conversion of the 97 units; please see existing Q&A WEB10082012_2_09100 regarding the 5% limitation. Assuming the CFFP lender agrees, no reasonable proposal to HUD to exempt the PHA from the 5% limitation (and the corresponding 33% of annual Capital Fund grant for debt service) will be denied. It is definitely permissible to convert a part of an AMP (provided there is a sound business reason and that it makes sense from financing/management perspective). Indicate in Section 2 of the Application the mix of units you intend to convert. Explain in Section 3 (Reduction in Unit Count) that you are proposing a partial conversion (see row 69). You may also need to make corrections to the three year historical information in Section 8 (Operating Expenses) because you are converting only part of the AMP.

Posted:09/25/2012
Question:If my PHA has a CFFP* and/or EPC loan, what do I need to do before submitting my application and what are the implications for applying for RAD if I have a CFFP loan? *Under the Capital Fund Financing Program (CFFP), a PHA may borrow private capital to make improvements and pledge, subject to the availability of appropriations, a portion of its future yaer annual Capital Funds to make debt service payments for either a bond or conventional bank loan transaction. An EPC loan is generally undertaken under 24 CFR 990.185, wherein energy conservation measures are financed by a third-party based on projected energy savings.
Answer:At the time of application, you will need to indicate how you plan to address the current obligation, e.g., by repaying the loan. Once you receive an award, you will then have six months to provide a Financing Plan that explains precisely how these obligations will be handled. As a result, you should have early conversations with your CFFP or EPC lender. Generally, debt service payments under the CFFP program cannot exceed 33% of a PHA’s annual Capital Fund award. For this reason, the CFFP program restricts PHAs from reducing their public housing inventory by more than 5% (any reduction in inventory affects a PHA’s Capital Fund formula grant). Under RAD, a PHA will be removing units from inventory and, therefore, eliminating the Capital Funds generated by that project’s formula characteristics. There are a number of possible solutions: • If the PHA has added public housing units to its stock since the CFFP loan closing, the PHA may be able to remove the RAD conversion units without exceeding the 5% rule. • It may be possible for the PHA to pay off the CFFP loan with proceeds from the RAD financing. • For larger PHAs, a change of 5% in the number of ACC units (and related capital funds) may be sufficient to cover the RAD project being considered for conversion. For example, if a PHA has 3,000 ACC units, it could convert a 150-unit project without tripping the 5% restriction. • Finally, PHAs may request an exemption from HUD to exceed either the 5% restriction or the limitation that not more than 33% of Capital Funds be used for debt service. PHAs will need to work directly with their lenders and investors to seek approval and make any needed changes in their respective documents. [See Final RAD Notice Reference: Paragraph 1.4, B-3]

Category:CHAP
Posted:06/02/2014
Question:How should RAD units be removed from PIC?
Answer:For every CHAP, the PHA needs to submit a PIC Removal Application using one of the RAD flavors (PBV or PBRA) in the Inventory Removal sub-module. Instructions for submitting this application are here. This is the only step the PHA will need to take in PIC, unless there are errors in the submission in which case HUD will return the application to “Draft” for the PHA to correct and re-submit. At conversion, the SAC will approve the PIC removal application and remove the units prior to the effective date of the new HAP contract.

Posted:02/03/2014
Question:My RAD project received a CHAP in December 2012 and had a REAC inspection in April 2013. Because the project was exempt for PHAS purposes at the time of the REAC inspection, can the record of the inspection be removed from the REAC system?
Answer:No. REAC inspections will continue after issuance of a CHAP, and scores will continue to be issued. The exemption is an exemption from the PHAS scoring system. The April 2013 inspection score for your project stands, but it will not affect your PHA's score under the PHAS system.

Posted:12/04/2013
Question:Can a PHA apply the de minimis unit reduction across projects with active CHAPs?
Answer:Yes. Like rent-bundling, a PHA may spread their de minimis unit reductions across two or more projects with active CHAPs, pending HUD review of the timing and feasibility.

Posted:10/01/2013
Question:I am a PHA that has been awarded a CHAP and would like to convert additional units to RAD. How do I do this?
Answer:In some cases, a PHA may wish to convert additional units to RAD after the CHAP has been issued. If the additional units are current under the same AMP number that was awarded the CHAP, this is permissible. The PHA must alert the Transaction Manager, update the number of units on the RAD Resource Desk via the Transaction Log and Property Information sections. Additionally, an amended CHAP must be issued to reflect the new number of units. However, if the units that the PHA wishes to add are not currently under the AMP number that was awarded the CHAP, the PHA must submit an Ongoing RAD Application for those units. [Updated 7.29.13]

Posted:10/01/2013
Question:PIH Notice 2012-32 REV-1 page 76 indicates that a PHA must notify HUD within 15 days of the CHAP award (or issuance) if it decides to refuse the CHAP. Is the PHA required to confirm its intent to accept the CHAP under that same deadline?
Answer:The PHA is not required to notify HUD that it will accept the CHAP. Unless HUD hears otherwise, it is assumed that the CHAP has been accepted by the PHA.[Updated 7.29.13]

Category:Choice Mobility
Posted:06/28/2013
Question: Our agency is considering converting to RAD. We average 6 turnovers per month for both our Public Housing and TBS8 programs. With such low turnover and the RAD choice mobility requirement, we are concerned that we would not be able to house clients from the general waitlist. Is there a waiver for the PBV choice mobility requirement?
Answer: Notice PIH-2012-32 does not provide for waivers of the PBV choice mobility requirement.

Posted:05/22/2013
Question:For RAD PBV conversions, is there a special choice-mobility requirement, or is the choice-mobility requirement the same as under the normal PBV program?
Answer:The choice-mobility requirement for RAD PBVs is the same as for the normal PBV program (under Section 8(o)(13)(E) of the Housing Act of 1937).

Posted:03/04/2013
Question:Per the 2nd sentence in 24 CFR 983.260(c) addressing process for PBV program “If voucher or other comparable tenant-based rental assistance is not immediately available upon termination of the family’s lease of a PBV unit, the PHA must give the family priority to receive the next available opportunity for continued tenant-based rental assistance.” Would families wishing to move from PBV (exercising their tenant based rental assistance option) have a higher preference that a family wishing to port their voucher to a higher cost area; special purpose vouchers such as FUP, NED, VASH, etc; or families whose tenant-based rental assistance was terminated due to lack of funding? Or can the PHA determine the order of preference between these specific groups?
Answer:PBV families wishing to exercise their statutory right to move with tenant based rental assistance have an absolute priority over all others.

Posted:10/19/2012
Question: Do Choice Mobility requirements apply to a PHA converting it's entire portfolio to PBRA?
Answer: Yes, unless the PHA requests an exemption and is approved for that exemption.

Posted:10/16/2012
Question:Does this apply to PBV or just PBRA? How do we receive points for PBV option?
Answer:This Ranking Factor does not apply to PBV conversions.

Posted:10/16/2012
Question:Our Housing Authority has both Section 8 and public housing program. How do we get points for Choice Mobility Factor for PBRA?
Answer:In this case, where you have both Section 8 and Public Housing, you would need to find another agency that wanted to convert to PBRA and your agency agreed to meet their choice requirement.

Category:Closing
Posted:07/18/2014
Question:The RAD Project Based Rental Assistance (PBRA) Housing Assistance Payment (HAP) contract, HUD Form 52624, is inconsistent with the Multifamily Assisted Housing Reform and Affordability (MAHRA) PBRA HAP contract with respect to future changes in key terms. Can a PHA request that the RAD contract include language that would conform with MAHRA in this area?
Answer:Yes. At the request of the PHA, the parties may amend the RAD PBRA HAP by adding a sentence to the end of Section 1.2(c), and by adding a new Section 1.2(d), as noted below in CAPS. (c) HUD Requirements. The Contract shall be construed and administered in accordance with Notice PIH 2012-32 (Notice). With the exception of the provisions of 24 C.F.R. Part 880 and section 8 of the Act that are identified in Appendix I and Appendix II of the Notice, respectively, as inapplicable, the Contract shall further be construed and administered in accordance with all statutory requirements and all HUD regulations and other requirements, including any amendments to and/or changes in statutory requirements, HUD regulations (including 24 C.F.R. Part 880), and other requirements. HOWEVER, ANY CHANGES IN HUD REQUIREMENTS, EXCEPT TO THE EXTENT REQUIRED BY STATUTE, THAT ARE INCONSISTENT WITH THE PROVISIONS OF SECTIONS 2.5(a)(1) AND 2.8, SHALL NOT BE APPLICABLE. (d) STATUTORY CHANGES DURING TERM. IF ANY STATUTORY CHANGE DURING THE TERM OF THE CONTRACT IS INCONSISTENT WITH SECTION 2.5(A)(1) OR 2.8 OF THE CONTRACT, AND IF HUD DETERMINES, AND SO NOTIFIES THE CONTRACT ADMINISTRATOR AND THE OWNER, THAT THE CONTRACT ADMINISTRATOR IS UNABLE TO CARRY OUT THE PROVISIONS OF SUCH SECTIONS BECAUSE OF SUCH STATUTORY CHANGE, THEN THE CONTRACT ADMINISTRATOR OR THE OWNER MAY TERMINATE THE CONTRACT UPON NOTICE TO THE OTHER PARTY. NOTWITHSTANDING SUCH TERMINATION, THE PROJECT SHALL REMAIN SUBJECT TO THE RAD USE AGREEMENT ENCUMBERING THE PROPERTY ON WHICH THE PROJECT IS LOCATED. These changes will conform the RAD PBRA HAP to the MAHRA PBRA HAP with respect to “future changes.” HUD will shortly prepare a formal change request under the Paperwork Reduction Act to incorporate these new provisions. The above changes will ensure the commensurate private investment necessary to improve the physical condition for residents and will also ensure the long term affordability restrictions remain in place.

Posted:07/17/2014
Question:How is RAD responding to concerns of commercial lenders and Low-Income Housing Tax Credit (LIHTC) investors with regard to foreclosure matters and continued rental assistance?
Answer:HUD has posted a standard rider to the public housing conversion RAD HAP contracts to address the concerns LIHTC investors have raised while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. These riders document and set forth conditions for: providing notice to LIHTC investors; accepting the investor’s offer to cure on behalf of a defaulted owner; providing HUD consent to the transfer of the investor’s interest in the ownership; and pre-approving replacement of the general partner or managing member with the special limited partner or similar entity for a limited period of time in order to facilitate an acceptable permanent replacement. To access these riders, go to www.radresource.net > Contracts & Closing Documents. HUD is also in the process of drafting standard riders to the Use Agreement and the public housing conversion RAD HAP contracts to clarify that HUD will not assert an interest to prohibit a lender from foreclosing when there is cause, but that the Use Agreement -- which establishes affordability requirements -- survives foreclosure by its terms and that continuation of HAP assistance requires HUD consent. It is also HUD’s goal through these riders to provide for a limited continuation of HAP assistance if the lender or its designee comes into ownership of the project in accordance with its rights under the loan documents. When final, these riders will be published on the RAD website. Until these riders are finalized, HUD has developed several provisions that can be provided by the RAD Closing Coordinator to assist with transactions currently moving into the closing phase. These provisions address lender concerns while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. Importantly, neither rider changes RAD statutory and RAD notice requirements around ownership and control. The RAD Use agreement and RAD HAP contract – two means through which long-term affordability for residents are secured – survive foreclosure, leaving current and future residents protected.

Posted:07/08/2014
Question:Who should prepare Exhibits H and I of the RCC?
Answer:Exhibits H and I are no longer required to be completed. The RAD Transaction Manager should note Ex. H and Ex. I as "Not Applicable" when issuing the RAD Conversion Commitment (RCC) to the PHA. In lieu of completing these exhibits, the PHA must instead submit a certification prior to or at closing which has been added to the Consolidated Owner Certification template which can be found on www.radresource.net > Contracts & Closing Documents. Please consult your Transaction Manager or assigned RAD Closing Coordinator if you have any questions.

Posted:06/03/2014
Question:Does HUD require that new leases be executed prior to closing?
Answer:No. The new leases only need to be executed prior to the effective date of the HAP.

Posted:06/03/2014
Question:Must a PHA give tenants 30-day notice of the effective date of the new lease?
Answer: PHAs must give tenants at least 30-day notice of their public housing lease termination (recognizing that the exact date of closing, and thus the exact effective date of the HAP, is not known). HUD recommends that PHAs provide this notification to residents along with a notification of the effective date of the new lease. However, PHAs should consult with legal counsel, especially with respect to the requirements of state and local tenant laws.

Posted:06/02/2014
Question:Can an existing mixed-finance project developed with tax credits be converted to RAD without a change in ownership?
Answer:Yes. Essentially, the underlying funding program is changing, not the nature of the ownership. However, the PHA must still evidence that it has an “interest” in the project.

Posted:06/02/2014
Question:Does the project retain its fiscal-year or does it create a new fiscal year depending on the month in which the new HAP is effective?
Answer:The project’s fiscal year is defined by the organizational documents/organizational fiscal year. So, if the owner’s organization has a fiscal year ending 12/31, then that would be the fiscal year-end date for PBRA or PBV.

Posted:06/02/2014
Question:For conversions where the PHA is transferring ownership to a non-profit or public entity, must the PHA also evidence “ownership or control” of the units?
Answer:No. The RAD statute requires that, unless to facilitate tax credits, converting properties either be owned by public or non-profit entities or controlled by the PHA. As such, transfer of ownership to these entities is permitted as-of-right. The PHA must still submit to the HUD closing attorney the organizational documents, but the review of these documents is only to ascertain that the entity has the legal authority to own the units

Posted:06/02/2014
Question:How should RAD units be removed from PIC?
Answer:For every CHAP, the PHA needs to submit a PIC Removal Application using one of the RAD flavors (PBV or PBRA) in the Inventory Removal sub-module. Instructions for submitting this application are here. This is the only step the PHA will need to take in PIC, unless there are errors in the submission in which case HUD will return the application to “Draft” for the PHA to correct and re-submit. At conversion, the SAC will approve the PIC removal application and remove the units prior to the effective date of the new HAP contract.

Posted:06/02/2014
Question:If a public housing-only PHA converts its entire inventory to RAD, does it need to submit one last FASS-PH report (for that last partial or full year)?
Answer:Yes. Because it received Federal funds for a portion of that fiscal year, the PHA will need to submit a close-out FDS.

Posted:06/02/2014
Question:When a PHA is not taking on any debt, is it required to obtain title insurance and/or surveys?
Answer:If there are no existing surveys for the property, the decision will be made by the field counsel as to what is required. Often in these circumstances, in lieu of title insurance or surveys, the PHA will be required to obtain a Title Report. Although each case will be determined by field office counsel, generally, new surveys and title insurance will not be required when there is a clean Title Report.

Posted:06/02/2014
Question:When does HUD require a separate escrow arrangement?
Answer:If there is no new debt in the transaction, the PHA can provide an agreement or certification stating that the repairs in Exhibit F of the RCC will be completed as required by the RCC and in compliance with HUD program rules.

Posted:05/30/2014
Question:What is the process for clearing critical repairs that have been completed?
Answer:The RAD Conversion Commitment contains an exhibit (Ex. G) for all critical repairs associated with the RAD conversion and states that they must be completed prior to closng. The Owner must provide a written certification that all critical repairs listed in Exhibit G of the RCC have been completed prior to closing. This certification can be made via the Consolidated Owner Certification template which is available on www.radresourc.net > Contracts & Closing Documents. [Updated 5.30.14]

Posted:04/29/2014
Question:I am a PHA with a CHAP and would like to complete some repairs prior to the closing of the RAD conversion. Is this allowed?
Answer:All repairs identified as "critical" in the RAD PCA must be completed prior to closing. If the PHA wishes to complete additional repairs to the property prior to closing, it is permitted to do so but must follow all applicable Public Housing rules. It is important to remember that until the RAD conversion has closed, the property is still considered Public Housing and is subject to Public Housing rules. The PHA must also make sure the Financing Plan and RAD PCA are updated to reflect the changes to the repair schedule and scope of work. Please note that RAD conversions pursuing FHA financing should discuss the completion of additional repairs with their Transaction Manager as additional approvals may be necessary.

Posted:03/28/2014
Question:Is a RAD Use Agreement required for a Mod Rehab RAD conversion?
Answer:No. The RAD Use Agreement is not required when a Mod Rehab converts to RAD under either the 1st or 2nd Component. The RAD Use Agreement is only required for 1st Component public housing conversions.

Posted:12/09/2013
Question:When, under RAD, are Capital Funds considered obligated and/or expended?
Answer:If a PHA is contributing Capital Funds to the development budget (Sources & Uses), those Capital Funds are considered both obligated and expended as of the effective date of the RAD closing. If a PHA needs to extend the obligation end date for capital funds in order to use capital funds in the development budget, the PHA should send a request to the Office of Capital Improvements, to the attention of Jeff Riddell, with copies to the RAD Transaction Manager and the local PIH field office.

Posted:12/04/2013
Question:If a PHA owns excess personal property (i.e., vehicles) not currently considered part of any one AMP, may it include the property in its RAD conversion?
Answer:Yes, provided that either: (A) the PHA is converting its entire public housing portfolio; or (B) there is a sufficient nexus between the property and the proposed conversion (i.e., the vehicle will serve the project).

Posted:12/04/2013
Question:In both the RAD application and in the RAD Inventory Assessment Tool, HUD uses the 2012 FMRs to establish the rent setting caps. When a project finally closes, will HUD update the rent setting caps with the FMRs in the year of conversion?
Answer:Yes. HUD will apply the 2012 FMRs at the time of issuance of the CHAP and will check the contract rents against the most recent FMRs at time of conversion.

Posted:10/17/2013
Question:If a RAD conversion closing occurs on Feb. 1, 2014, will the rent be the Contract Rent set forth in the application (the 2012 level) inflated by both the 2013 and 2014 OCAF?
Answer:For all RAD closings during calendar year 2014, the 2012 'current subsidy' rents will be inflated once by the 2014 Operating Cost Adjustment Factor (OCAF). No OCAF adjustment will be made for RAD closings during calendar year 2013.

Posted:10/17/2013
Question:We have mixed-finance ACC on two properties. As such we assume that since the public housing funding will disappear at RAD conversion, we will not need anyone's sign-off from HUD's Office of Public Housing Investments(OPHI) prior to RAD conversion. Is this a correct assumption? If there is a sign-off needed we assume the RAD team will obtain this, is this correct?
Answer:Converting a Mixed Finance deal via RAD will be coordinated through your RAD Transaction Manager. You will not need to separately contact other HUD offices. We strongly suggest that you consult with your counsel on documentation. In addition to the Mixed Finance ACC, there are other Mixed Finance documents that will likely be impacted by the conversion- Declaration of Restrictive Covenents, the existing Regulatory & Operating Agreement, a Subordination Agreement for the existing debt (unless it will be paid off prior to closing), as well as amendments to the Partnership Agreement, Ground Lease (if applicable), existing loan documents and other management documents.

Posted:10/01/2013
Question:Since the new RAD HAP Contract will be executed simultaneously with construction closing, can HAP income be used as "income from operations" for the rehab (assuming that operating expenses temporarily fall during the construction period)? Can the income be used for temporary relocation expenses?
Answer:The RAD Notice indicated that public housing conversions would be eligible for a RAD Rehab Assistance Payment. Essentially, the PHA would continue to receive the subsidy portion of the HAP contract rent during the initial rehab period. Essentially, any unit that was receiving subsidy at the time of conversion will continue to receive subsidy during the initial period of repairs, which you may use to support the operations of the project, pay for relocation costs, or other costs of development. [Update 7.29.13]

Posted:04/24/2013
Question:What is the exact process for releasing the DOT? Is there a document or form that we have to create or fill out or does HUD just do that automatically when the Financing Plan is approved? Is there an amendment to the ACC?
Answer:The release of the DOT will be done by HUD at closing and in conjunction with the signing and recordation of the Use Agreement. HUD will provide the PHA's with closing instructions outlining the necessary forms and systems changes that the PHA must complete prior to closing. Following closing, the ACC is amended when the PHA removes the unit from the PIH Information Center (PIC). HUD will provide instructions to PHAs for properly documenting the removal of units from PIC.

Posted:03/05/2013
Question:On what date does a RAD project cease being a public housing project?
Answer:The project ceases to be a public housing project at the effective date of the HAP contract, which is the first of the month following closing.

Posted:01/24/2013
Question:Our RAD conversions do not include any type of financing. How does this impact our potential closing date?
Answer:In your situation, you should be able to close much more quickly than if your transaction involved new financing. For planning purposes, please take the following into account. There would be no need for the 150 day milestone, and you would be able to submit your Financing Plan (the 180 day milestone) soon after you and HUD have reviewed the PCA. After you submit the Financing Plan, HUD will review it (anticipated to take 60 days or less, probably less in your situation) and issue a RAD Conversion Commitment. You would have 90 days from that point to close the transaction, and though you probably won't need all of that 90 days, your attorney will need some time to work with you and HUD to prepare closing documents and to schedule the closing.

Category:Demoliton/Disposition
Posted:06/02/2014
Question:Can a PHA apply the de-minimis standard for replacement across properties?
Answer:A PHA may apply the de-minimis standard for any group of properties that are undergoing conversion. For example, if the PHA has two CHAPs, each consisting of 100 units, and the PHA has six units at the first project that have rehab costs that would be exorbitant, the PHA could apply the de-minimis standard across both properties. Thus, because the PHA would, combined, be able to reduce 10 units (5%), the PHA would be permitted to reduce the 6 units at the first property (provided it does not reduce more than 4 units at the second property). However, the project utilizing the greatest reductions has to be the latest to convert (or converts simultaneously).

Posted:02/03/2014
Question:I have approximately nine acres of vacant land which is a result of demolition of public housing units. If my authority is approved for RAD how would it affect this property?
Answer:Generally speaking, the land associated with a conversion would also convey with the conversion. If land associated with a previously disposed structure is still part of the "project," there should not be any issue removing the DOT from this land as part of the RAD conversion, which the PHA could then use to support its mission.

Posted:12/04/2013
Question:A PHA is considering applying for RAD for a project that has already been demolished. Is this project still eligible for RAD?
Answer:No. Only projects with units under ACC and in PIC are eligible for RAD.

Posted:12/04/2013
Question:Can a PHA apply the de minimis unit reduction across projects with active CHAPs?
Answer:Yes. Like rent-bundling, a PHA may spread their de minimis unit reductions across two or more projects with active CHAPs, pending HUD review of the timing and feasibility.

Posted:10/01/2013
Question:If a HA is proposing to do a RAD conversion of Public Housing that involves demolishing an existing project and rebuilding an equal or greater number of units on the same site, is this treated in essentially the same way as for a RAD conversion with rehab? Is it unnecessary to do a transfer of assistance as long as the units are being rebuilt on the same site? Where and how does the RAD PCA fit into this scenario?
Answer:In the situation you describe, a transfer of assistance would not be needed, because the RAD project would be located on the same site as the current public housing. In demolition-and-reconstruction projects, a RAD PCA is not required. See Notice PIH-2012-32, page 26, footnote 6; and Attachment 1A.1 paragraph B. [Updated 7.29.13]

Posted:04/23/2013
Question:Our PHA has a large project spread among multiple buildings. Can we convert a portion of those buildings under RAD and apply for Section 18 demolition / disposition approval for the remaining buildings?
Answer:Yes. A PHA can propose to convert a part of an AMP as long as it can be considered a "project." The remainder of the AMP could continue to be operated as public housing or be demolished/disposed via Section 18.

Posted:04/19/2013
Question:A PHA wants to demolish a building and convert to RAD. However, repairs were made to the building three years ago, using ARRA funds. The provisions governing ARRA funds say that the improvements must stay in place for 10 years. Is this a situation in which a RAD waiver could be obtained?
Answer:There’s no ARRA-specific restriction of 10 years. No waiver is required.

Posted:03/22/2013
Question:Can a housing authority that has demolished units counted in their ACC rebuild and covert to RAD for the new building with the same unit count?
Answer:RAD is a "current funding" program. Therefore if you have units that have been demolished but are still in PIC and being funded by operating and capital funds, you can convert those units to RAD. The RAD rents will be set by the amounts currently funded in the operating and capital funds. Thus, if there has been a phase down of funding, the RAD rents will be set at the lower (current) levels. If the demolished units are not still in PIC, they are not eligible for RAD conversion. For the most part, units that are being built back under "Faircloth" must first be brought into the public housing program under either the traditional development method or the mixed-finance method, and then they would be eligible for RAD. Some PHAs have inquired as to whether there could be a "joint" or "simultaneous" closing. The Department is looking into that possibility.

Posted:10/22/2012
Question: We are working with a housing authority that has a large public housing development that they want to demolish and rebuild. Can RAD be used for this purpose to transition the existing acc subsidy into long term section 8 vouchers? We are unclear if this program only applies to rehab projects.
Answer: RAD allows new construction, and RAD also allows transfer of assistance to a different site at the time of the RAD conversion. Accordingly, the type of project you describe is eligible for RAD.

Posted:10/18/2012
Question:We have a project that has been demolished for a while, is not getting funding and does not have AMP numbers. Is this eligible for RAD?
Answer:No, RAD is limited to units that are currently receiving funding under your ACC.

Posted:10/13/2012
Question:Our RAD project includes a reduction in the number of assisted units. Do we need to submit a separate Section 18 application (demo/dispo)?
Answer:No. RAD approval of a proposed reduction in unit count is sufficient as long as it is a deminimis reduction of units or units are being reduced for any of the acceptable reasons described in the Notice [Section 1.5.B] . No separate Section 18 approval is required.

Posted:10/12/2012
Question:Under RAD, does the conversion of two efficiencies into a single one BR unit trigger a need to create replacement units?
Answer:Under RAD, the normal demolition / disposition requirements (including one for one replacement) do not apply to conversions of efficiencies to 1BRs.

Category:Eligibility
Posted:07/28/2014
Question:What is the definition of "project" under the PBV program?
Answer:A project may be the following: a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. HUD interprets project to apply to all these structures (i.e., single building, multiple contiguous buildings, etc.), and a PHA must consider the entire definition and apply this definition to proposed PBV units. Note: If you are pursuing FHA financing or conventional financing, please be sure to check with your lender for any additional requirements they may have.

Posted:07/21/2014
Question:Section 1.5A of the Notice says that “Prior to the approval of a project’s Financing Plan, a PHA may expend up to $100,000 in public housing program funds in related pre-development conversion costs per project without HUD approval.” Is that an absolute cap?
Answer:No. With the approval of the PIH field office, a PHA may expend additional public housing program funds. Other potential strategies include: using the PHA’s non-public-housing funds, and structuring the transaction so that development partners provide some of the pre-development capital (and receive repayment at the closing).

Posted:07/01/2014
Question:We see from the regulations that the Moderate Rehabilitation SRO program is excluded from participation in the RAD program. Is there a possibility for a waiver of this exclusion and how do we go about requesting it?
Answer:It is excluded by statute, so HUD does not have discretion to make it eligible. However, HUD has asked Congress to make Mod Rehab SRO eligible in the 2015 appropriation bill.

Posted:02/03/2014
Question:Does RAD apply to the USDA RD 515 program?
Answer: No. Please see eligibility requirements in the RAD Notice PIH-2012-31, REV-1. The First Component of RAD is for projects funded under the public housing and Section 8 Moderate Rehabilitation (Mod Rehab) programs. The Second Component of RAD is for owners of projects funded under the Rent Supplement (Rent Supp), Rental Assistance Payment (RAP), and Mod Rehab programs. The HUD RAP program is not the same as the USDA Rental Assistance program.

Posted:02/03/2014
Question:In the event that a housing authority chooses to do a deminimis reduction, is the current funding simply redistributed across the units remaining or is that funding lost with the reduction?
Answer:Funding is lost in a de minimis reduction. You will see that when you enter the reduction in the Excel Application.

Posted:02/03/2014
Question:We hope to convert 72 PH units (two 36-unit projects) to PBV under RAD. We have a resident manager at each site. How is that unit treated for purposes of PBV HAP subsidy?
Answer:Manager units are not eligible for PBRA or PBV subsidy.

Posted:02/03/2014
Question:What is the impact if any of current operational vacancy levels on RAD? Specifically, if a development has say a 15% vacancy rate prior to conversion does this level impact the amount the RAD funds this development is eligible for?
Answer:If these are long-term vacancy units, you may not be receiving subsidy on these units today; however, once you renovate these units under RAD, the units will be eligible for subsidy once the units are occupied.

Posted:02/03/2014
Question:What options does the housing authority have with vacant projects where the ACC is removed?
Answer:If the ACC has been removed, the poject is no longer receiving subsidy and is ineligible for RAD.

Posted:12/09/2013
Question:If a PHA has “special purpose” units that are receiving subsidy today and wants to convert them to dwelling units as part of a RAD conversion, will they be eligible for subsidy?
Answer:If units under ACC will be operated as affordable housing for families eligible for Section 8 assistance, they can be included in the HAP contract and eligible for subsidy. However, if units will continue to be used for other purposes, they cannot be included in the HAP contract and will not be eligible for subsidy. . A PHA should define those units in its application.

Posted:12/04/2013
Question:A PHA is considering applying for RAD for a project that has already been demolished. Is this project still eligible for RAD?
Answer:No. Only projects with units under ACC and in PIC are eligible for RAD.

Posted:10/17/2013
Question:How would we change the unit count for the conversion? Currently one unit is offline, however, with the conversion we would want to convert all of the units.
Answer:If you have units that are offline but are still in PIC you can convert those units to RAD. If they are not reflected in pre-loaded data in the RAD Application, you may enter the corrected unit counts and enter any date under "Date PIC Ticket Submitted"

Posted:10/17/2013
Question:Under the RAD program can we do New Development? Reason is there, is a need for more safe, decent and sanitary units in our PHA's jurisdiction.
Answer:A RAD conversion involves removing a specified number of units from your ACC and replacing them with the same number of units under a PBRA or PBV contract. That is, RAD does not result in an increase in the total number of units with ACC / PBRA / PBV rental assistance. Accordingly, in RAD, new construction would typically be limited to situations in which the PHA wants to create new units to replace existing ACC units.

Posted:04/23/2013
Question:Our PHA has a large project spread among multiple buildings. Can we convert a portion of those buildings under RAD and apply for Section 18 demolition / disposition approval for the remaining buildings?
Answer:Yes. A PHA can propose to convert a part of an AMP as long as it can be considered a "project." The remainder of the AMP could continue to be operated as public housing or be demolished/disposed via Section 18.

Posted:01/22/2013
Question:What income limits are used to determine whether a family is income-eligible for PBV assistance under the second component of RAD, at Rent Supp and RAP properties?
Answer:The applicable answer depends on whether there is a prepayment of the mortgage that would trigger provision of enhanced vouchers. Where there is no prepayment of the mortgage: To be eligible for the PBV program under the second component of RAD, residents at these Rent Supp or RAP properties must be low-income (annual income of not more than 80% of the median income for the area). The PHA’s administrative plan must allow for the provision of PBV assistance to these low-income families. If the PHA’s administrative plan does not currently provide for these low-income families to be eligible, the PHA must amend its administrative plan in order to administer the RAD conversion. This administrative plan requirement is consistent with 24 CFR 982.201(b)(1)(iii). HUD will consider waivers of 24 CFR 982.201(b)(1)(iii) to allow a PHA to provide assistance to these low-income families without an amendment to the PHA’s administrative plan, when needed due to the timing of the conversion (for example, when the PHA is unable to amend its administrative plan before the PBV HAP contract is signed). Where there is a prepayment that would trigger provision of enhanced vouchers: To be eligible for the PBV program under the second component of RAD, residents at these RAP properties must be low-income, and there is no need to amend the PHA administrative plan to accommodate these families. Please note that a moderate-income family (annual income above 80% of but not more than 95% of the median income for the area) who is elderly or disabled or is residing in a low-vacancy area (3 percent or less vacancy rate, as determined by the HUD local office economist) is income-eligible for an enhanced voucher, but is over-income for PBV assistance. Such families will receive enhanced vouchers through the conversion, and the units occupied by such families shall not be included in the PBV contract.

Category:FHA Financing
Posted:05/19/2014
Question:Does the 221(d)(4) program require the lender’s architectural analyst review despite the RAD program requiring an RPCA, which is substituted for a MAP Guide required PCNA?
Answer:The RPCA is a RAD-requirement whereas the lender’s architectural analyst review (LAAR) is an FHA 221(d)(4) requirement. The LAAR is critical to FHA’s architecture and cost review and provides in-depth review of the plans/specs and the GC’s estimated cost, among other items. HUD will not waive the LAAR in its 221(d)(4) transactions, regardless of the scope or whether an RPCA was received.

Posted:02/28/2014
Question:I am a PHA utilizing FHA insurance along with LIHTCs for my RAD conversion. The RAD Notice and Mortgagee Letter 2012-20 have conflicting definitions regarding the calculation of the RAD Developer Fee for FHA/LIHTC transactions. Specifically, the Mortgagee Letter states that it cannot exceed 15% of total development costs (less acquisition, reserves and developer fee). The RAD Notice also states that it cannot exceed 15% of total development costs but does not require the PHA to subtract acquisition, reserves and developer fee costs prior to making the calculation. Which definition of the calculation should I use?
Answer:The definition in the RAD Notice is the correct definition.

Posted:08/13/2013
Question:We are preparing an appraisal for a RAD application and are following the HUD MAP 221(d)(4) appraisal requirements for the subject, a public housing property with 100% subsidized units. Are we required to also provide an As Is value for the subject property assuming its current HAP contract rents and expenses?
Answer:RAD does not have any appraisal requirements. Check with your FHA lender to see if FHA has any special appraisal requirements for 221d4s for RAD projects.

Posted:03/05/2013
Question:We are interested in the RAD program for public housing. If we refinance a property using Section 223f as part of the RAD transaction, what HUD office would process the Section 223f Firm Commitment application?
Answer:The RAD program has designated and trained a team of Transaction Managers who will process the RAD transactions, including 223(f) Firm Applications and FHA LIHTC pilot transactions. Once a CHAP is issued, the PHA will be assigned a HUD Transaction Manager who will also serve as the 223f FHA underwriter for the transaction. Transaction Managers are physically stationed at several different HUD offices.

Posted:01/09/2013
Question:What is EA Part 50? And what needs to happen so that HUD can get started on this?
Answer:“EA Part 50”, refers to the HUD environmental assessment (EA) in the Code of Federal Regulations under 24 CFR, Part 50. (See PIH 12-32 Attachment 1A.1D). For FHA transactions, the FHA lender will contract with a third-party contractor (environmental specialist) to complete the Phase 1 environmental assessment. The Lender’s underwriter will review the Phase 1 report to confirm it meets the FHA requirements, and/or recommend necessary mitigations. The Phase I is a required exhibit in an FHA Firm Application. Once submitted, HUD will complete an in-house environmental assessment as part of its' underwriting review.

Posted:10/22/2012
Question: We are planning a 4% LIHTC / tax exempt bond transaction under RAD, with construction and permanent financing through the FHA 221(d)(4) program. However, the full amount of the tax-exempt bonds needs to be issued at the start of construction and needs to remain outstanding through the placed-in-service date. Is FHA mortgage insurance available to cover the bond proceeds?
Answer: No. FHA mortgage insurance is available only for the actual construction advances. In typical tax exempt bond transactions, bond proceeds are escrowed and invested through the placed-in-service date (generating a “negative arbitrage” cost because the investment earnings are less than the actual interest costs for the bonds). In the type of transaction you describe, check with your financial and legal advisors to see if it will be possible to utilize bond proceeds to purchase the series of “construction loan certificates” issued by the FHA lender with respect to each insured loan advance; this approach (if available) will reduce (but not eliminate) the “negative arbitrage” cost.

Category:Financing Plan
Posted:06/02/2014
Question:In our state, the tax credit allocating agency allows a fee up to 20% of the development budget as long as the amount exceeding 15% is deferred/contributed to the project. Can the RAD project charge this higher fee?
Answer:Yes. RAD will allow (whether FHA or non-FHA financing) the higher fee, provided the amount over 15% is re-contributed to the project (and not expected to be repaid).

Posted:06/02/2014
Question:In the case of projects receiving tax credits, who will perform the SLR?
Answer:If an SLR will be completed by the tax-credit issuing agency prior to conversion, we will accept it in place of a HUD-performed SLR. In all other cases where an SLR is triggered, the RAD Transaction Manager will perform the SLR. Note: An FHA loan, in and of itself, does not trigger an SLR. It is only if the project receives other Federal assistance (e.g., HOME, Capital Fund, etc.) in addition to the PBV or PBRA subsidy. Also note that while HUD has the authority to accept a tax credit agency’s SLR, but HUD has no ability to compel such an agency to perform the SLR.

Posted:06/02/2014
Question:My PHA is converting a project using no debt. What standard should be used in reviewing the financing plan with respect to cash flow coverage?
Answer:Generally, the same standards as used in FHA, e.g., 1.11 if New Construction/Sub Rehab and 1.15 if there are modest or no repairs. Similarly, like FHA, there is no need to make assumptions about income and expense trending when examining long-term cash flow coverage.

Posted:06/02/2014
Question:Under what a converting project be subject to an Environmental Assessment under Part 50 vs Part 58, and who will perform that review?
Answer:• For all FHA transactions (PBRA or PBV), the Review will be completed by the Multifamily Environmental Reviewer under Part 50. • For non-FHA transactions that convert to PBRA, the Review will be completed by the Transaction Manager under Part 50. • For non-FHA transactions that convert to PBV, the review will be completed by the Responsible Entity under Part 58. If the RE declines to undertake the review, the Review will be completed by the local PIH Field Office.

Posted:02/03/2014
Question:Is there a HUD 2530 submission required as part of RAD?
Answer:If a PHA converts to PBVs, the 2530 process does not apply. If a PHA converts to PBRA, the PHA itself is exempt from the 2530 process, but any development partner with greater than a 25% stake in the project, or any management agent (other than the PHA) will be subject to the 2530 process. Please note that transactions utilizing FHA financing are subject to the existing 2530 procedures for FHA. Please discuss with your respective Transaction Manager.

Posted:02/03/2014
Question:Once awarded, what is the time frame to complete capital improvements?
Answer:The Financing Plan 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 closing the conversion and any financing, depending on the scope of rehabilitation funded. (Notice PIH-2012-32 REV-1 page 79).

Posted:12/09/2013
Question:If a PHA is performing a conversion without any rehabilitation or construction, is it necessary to provide an accessibility and relocation plan checklist?
Answer:Yes. All PHAs participating in RAD must fill out an accessibility and relocation plan checklist. There are only 2 questions that need to be completed on the checklist if the transaction does not involve any rehab or construction. A PHA will be required to fill out the checklist consistent with the provisions in Section 1.12 and Attachment 1A.1.E of PIH Notice 2012-32, REV-1.

Posted:12/09/2013
Question:Is it appropriate for a PHA to provide the accessibility and relocation plan checklist prior to submission of an application for firm commitment for FHA financing or submission of a financing plan?
Answer:Yes. PHAs must provide the accessibility and relocation checklist prior to submission of an application for firm commitment for FHA financing or submission of a financing plan. However, since approval of the checklist is required prior to closing, in order to avoid delays HUD strongly recommends that PHAs submit the checklist as soon as details of the transaction are known (i.e. before all of the other components of the Financing Plan or application for firm commitment is ready). Submission of the checklist in an earlier stage will help speed up transaction processing and allow HUD more time to work with a PHA to resolve any issues that may arise during review.

Posted:12/04/2013
Question:If a PHA owns excess personal property (i.e., vehicles) not currently considered part of any one AMP, may it include the property in its RAD conversion?
Answer:Yes, provided that either: (A) the PHA is converting its entire public housing portfolio; or (B) there is a sufficient nexus between the property and the proposed conversion (i.e., the vehicle will serve the project).

Posted:08/13/2013
Question:We are preparing an appraisal for a RAD application and are following the HUD MAP 221(d)(4) appraisal requirements for the subject, a public housing property with 100% subsidized units. Are we required to also provide an As Is value for the subject property assuming its current HAP contract rents and expenses?
Answer:RAD does not have any appraisal requirements. Check with your FHA lender to see if FHA has any special appraisal requirements for 221d4s for RAD projects.

Posted:05/20/2013
Question:In RAD deals with high expense ratios, at 2% & 3% rent/expense trending, NOI trends downward. This makes the debt sizing difficult if you need to keep the DSCR positive for 15 years. You have a very high DSCR in year 1 to get to a 1.05 or 1.10 in year 15. Has HUD considered any measures to mitigate this risk?
Answer:The RAD program does not have any requirements regarding how a lender or investor underwrites the transaction or what level of debt service coverage be maintained over time. You may use any trending assumptions that you think are reasonable. Please note though that because rents will increase each year by the OCAF, which incorporates market expense factors, that rents and expenses may trend at the same rate.

Posted:01/24/2013
Question:Our RAD conversions do not include any type of financing. How does this impact our potential closing date?
Answer:In your situation, you should be able to close much more quickly than if your transaction involved new financing. For planning purposes, please take the following into account. There would be no need for the 150 day milestone, and you would be able to submit your Financing Plan (the 180 day milestone) soon after you and HUD have reviewed the PCA. After you submit the Financing Plan, HUD will review it (anticipated to take 60 days or less, probably less in your situation) and issue a RAD Conversion Commitment. You would have 90 days from that point to close the transaction, and though you probably won't need all of that 90 days, your attorney will need some time to work with you and HUD to prepare closing documents and to schedule the closing.

Posted:01/14/2013
Question:As part of it financing plan, the PHA owner is supposed to submit an updated Operating Pro Forma on a template provided by HUD. (See PIH 12-32, Section 1A.1, Section I on page 69). Does the form exist?
Answer:Yes, an update-able Pro Forma log is a required entry on the RAD Resource Desk. It’s a very easy, automated process for the PHA to submit the updates through the RAD Resource Desk. You can access it by clicking on the Financing Plan Milestone.

Posted:01/09/2013
Question:The Financing Plan requires certification of previous participation. Are paper 2530s still acceptable or does information have to be in APPS?
Answer:Yes, submission of paper 2530s is still permitted. The lender has the option of submitting either paper (Form HUD 2530) or electronic “previous participation clearance” via APPS.

Posted:10/22/2012
Question: A PHA wants to revitalize a 333 unit project. They can finance 100 units with a 9% LIHTC deal and 233 units with a 4% bond deal. The maximum amount of rehab this financing will support is $40k/unit, which the PHA believes will be feasible. Suppose that they file for RAD and receive a CHAP, and then at the 90 day Milestone the more detailed PCA comes back and says that the units really need to be demolished. Can the PHA apply for Choice Neighborhoods (application in April, 2013) or other sources of funding that would allow them to demolish and rebuild new? How long would they be able to keep the CHAP?
Answer:HUD will consider granting additional time to overcome factors beyond the control of the PHA. A PHA that has received a CHAP and subsequently finds in the PCA that additional rehab (or demolition and new construction) is needed will have at least until the next Milestone to restructure the development to make it feasible. In the example you describe, if the project can be brought back on schedule in time to meet the 150 day Milestone there would be no problem. If the PHA recognizes that it will not be possible to meet the next Milestone, the PHA would formally request a waiver of the Milestone deadline, describing the factors beyond the PHA's control that caused the delay, requesting a specific amount of additional time to meet the Milestone, and noting whether the PHA is requesting that any future Milestone deadlines be moved as well.

Posted:10/22/2012
Question:Am I correct that the financing projections submitted in the RAD application may change without penalty before the Financing Plan is submitted? For example, the PHA might originally anticipate investing $250,000 of its own capital funds in the RAD transaction but may later find that a lower or higher amount is appropriate.
Answer: You are correct. Note, however, that for applications submitted during the Initial Application Period, the amount of rehab in the Financing Plan cannot change in such a way that would have affected the project’s selection in the competition. Thus, if the proposed amount of rehab exceeds the amount required to score all 50 points, and the actual amount of rehab still exceeds that amount, there will be no penalty. (Updated: Oct 22, 2012)

Posted:10/18/2012
Question: On a 4% tax credits application with tax exempt bonds, is it sufficient to have the financing letter signed by the potential syndicator instead of the state housing agency that will be issuing the credits?
Answer:Getting a financing letter from an investor is sufficient. Note that if there will be a permanent first mortgage loan, you will also need a financing letter from the first mortgage lender.

Posted:10/12/2012
Question:For the Financing Plan, the Notice (Attachment 1A-1.I.4.g) requires operating expenses (other than taxes and insurance) to be at least 85% of historical. If we believe that a lower amount is reasonable, what should we do?
Answer:Because this is a Notice requirement, your Financing Plan will need to comply unless HUD grants a waiver. If your Financing Plan would not be viable with expenses at the required level, and you believe you can make a convincing case, you can request that HUD waive this Notice requirement; such waivers will be case-by-case. The waiver request can be submitted with the Financing Plan or with any earlier Milestone submission. The waiver request should discuss each operating expense line item for which you expect post-RAD expense to be less than 85% of historical and should include documentation sufficient to demonstrate that your proposed lower expense level is reasonable and will be sufficient to support successful long-term operation of the property

Posted:10/10/2012
Question: Please confirm that the proposed transaction outlined in our RAD application may change from application submission until final closing. For example, if our application proposes to be financed with 9% LIHTCs, and we are then issued a CHAP, may we change our financing plan to 4%/Bonds within the 180 days following CHAP issuance, and reflect these changes in the required Financing Plan? Similarly, may we change our unit mixes originally proposed in the application before final closing?
Answer:Yes. Note, however, that for Applications submitted during the Initial Application Period the dollar amount of rehab proposed in the Application cannot be reduced in such a way that would have impacted your selection in the Demonstration.

Posted:10/09/2012
Question:My RAD transaction is expected to generate $500,000 of excess proceeds, which the PHA understands must be used to further its mission. Will any additional HUD requirements apply to these funds (e.g., would these funds have to be considered PHA Reserve funds)?
Answer:No additional HUD requirements would apply. As indicated, those funds must be used for purposes consistent with the PHA's mission, state-enabling legislation, and any local laws, if applicable.

Category:Funding Sources
Posted:07/21/2014
Question:Section 1.5A of the Notice says that “Prior to the approval of a project’s Financing Plan, a PHA may expend up to $100,000 in public housing program funds in related pre-development conversion costs per project without HUD approval.” Is that an absolute cap?
Answer:No. With the approval of the PIH field office, a PHA may expend additional public housing program funds. Other potential strategies include: using the PHA’s non-public-housing funds, and structuring the transaction so that development partners provide some of the pre-development capital (and receive repayment at the closing).

Posted:06/02/2014
Question:When a PHA contributes Capital Fund grants to a RAD development budget, are those funds treated as both obligated and expended at closing?
Answer:Yes. A PHA should withdraw those funds from LOCCS and deposit into the escrow account at closing, which will then also serve to obligate and expend the funds under the Capital Fund program.

Posted:05/14/2014
Question:We will use some of our Public Housing Operating Reserves to renovate the public housing units before we convert to RAD units. Do we need a Request for Release of FUNDS (RROF--HUD Form 7015.15) to be published for comment and the associated Authority to Use Grant Funds (HUD Form 7015.16) prior to drawing/expending the Operating Reserves? We are working on the Environmental Review presently and want to make certain we include every federal and HUD source to avoid delays and problems.
Answer:The RROF is the form that is completed by the Responsible Entity when there are HUD funds and the project is subject to Part 58. If the project is subject to Part 50, the forms 7015.15 and 7016.16 are not applicable.

Posted:04/10/2014
Question:Prior to the passage of Capital Fund Final Rule, October 24, 2013, 24 CFR part 905, subpart D, Capital Fund Formula, a public housing agency (PHA), following demolition or disposition of public housing, would be eligible for five years of RHF funding, which could be extended with appropriate justification for a second five-year increment. Under the October 24, 2013 rule, the RHF program is being replaced with the Demolition, Disposition, and Transitional Funding (DDTF) program. Further under this new rule, for newly eligible projects, PHAs will only receive five years of DDTF funding. Since the RAD Notice did not envision this new rule, what is the impact of the new rule on RAD transactions in process?
Answer:HUD has determined that the DDTF funding as specificed in the new Capital Fund rules may be used in the same way as RHF grants in a conversion under RAD.

Posted:02/20/2014
Question:A PHA will be using their 2012 funds for RAD and want to make sure they meet the obligation deadline. What is the process for doing this?
Answer:The PHA should send an extension request (to extend the obligation deadline) to the Capital Fund Office, attention: Alex Kaufman and Jeffrey Riddel.

Posted:02/03/2014
Question:Can a PHA use a new CFFP as a financing source in a RAD deal in addition to hard debt and 4% tax credits?
Answer:Check with your CFFP lender regarding whether the terms of the CFFP loan allow loan proceeds to be used for a RAD transaction.

Posted:02/03/2014
Question:Can housing authorities use sale proceeds from public housing units as a source for financing in a RAD development?
Answer:Yes; indeed, such proceeds are a common source of funding in RAD applications.

Posted:02/03/2014
Question:Our PHA recently applied for safety and security funding under PIH-2013-10 for its public housing project. If we are selected for a funding award under PIH-2013-10, can we utilize these funds while at the same time applying for inclusion under RAD? The funds under PIH-2013-10 are only for public housing.
Answer:Yes. If any safety and security funds remain unspent at the time of the RAD closing, you may contribute those remaining funds to the RAD transaction at the RAD closing.

Posted:02/03/2014
Question:We are preparing a RAD application. Approximately 75% of the units have already been rehabbed, and the rehab is being done 10 units at a time, so the vast majority of units will be in service at all times during the remainder of the rehab. The operating pro forma projects substantial positive cash flow from operations. Can this be used as a proposed funding source on the RAD application?
Answer:Positive operating cash flow during the development period can be reflected as a Source of Funds in the RAD Application. You will need to reflect those assumptions in your application.

Posted:12/09/2013
Question:When, under RAD, are Capital Funds considered obligated and/or expended?
Answer:If a PHA is contributing Capital Funds to the development budget (Sources & Uses), those Capital Funds are considered both obligated and expended as of the effective date of the RAD closing. If a PHA needs to extend the obligation end date for capital funds in order to use capital funds in the development budget, the PHA should send a request to the Office of Capital Improvements, to the attention of Jeff Riddell, with copies to the RAD Transaction Manager and the local PIH field office.

Posted:12/04/2013
Question:How do Capital Funds become part of a RAD conversion?
Answer:A PHA wishing to use Capital Funds in its conversion should include the Capital Funds in the Sources & Uses section of their RAD Financing Plan. Upon closing, a PHA including Capital Funds into a conversion will transfer the Capital Funds into a rehab escrow.

Posted:12/04/2013
Question:Is it possible to begin rehabilitating a converting a project using Capital Funds when a portion of the work will not be completed until after the conversion takes place?
Answer:Yes. However, since the project will be converting to Section 8 assistance upon closing, Capital Funds may only be pledged for work occurring prior to conversion. For this reason, HUD recommends that PHAs design the rehabilitation contract(s) with separate phases of work and clear indications of the source of funding provided for each phase (i.e., pre-development or work occurring pre-closing is paid with Capital Funds, all phases post-closing are funded by the Escrow Reserve Funds, etc.)

Posted:12/04/2013
Question:May a PHA use Capital Funds to begin preparing for rehabilitation of a converting project prior to closing?
Answer:PHAs may use Capital Funds to rehabilitate public housing units in anticipation of conversion under RAD. PHAs would enter into contractual arrangements under 24 CFR part 85 (or, if using force account labor, in accordance with 24 CFR part 905).

Posted:10/17/2013
Question:Is there any limit on how much of the developer fee can be deferred to finance a RAD conversion, assuming all project financing will be from Housing Authority sources?
Answer:While in tax credit deals only a certain amount of deferred developer fee can be counted towards basis, there’s no such rule outside of that context. As a general principle, the RAD team generally wants a material amount of non-deferred developer fee because it acts as an additional contingency (if there are cost overruns, the developer can defer more fee without having to invest more cash in the deal). Additionally, funding requirements may change based on the findings from the completed RAD Physical Condition Assessment (RPCA).

Posted:10/01/2013
Question:Can RAD and Choice Neighborhood Funds be used in the same unit for hard construction?
Answer:Yes. [Updated 7.29.13]

Posted:10/01/2013
Question:For purposes of Replacement Housing Funding (funds are permitted to be used 'for development'), are construction costs considered 'development'?
Answer:Yes. Under RAD, RHF funds may be used for renovation (of the converting site) or new construction. [Updated 7.29.13]

Posted:10/01/2013
Question:Our PHA is considering applying to convert all of its public housing to RAD. What can future RHF funds be used for? Can future RHF units be converted to RAD?
Answer:PHAs can contribute any existing/accumulated RHF to the converted projects. The converted units are not eligible to generate RHF, so you would not receive any RHF for the converted units. If you have a future stream of RHF funds due to your agency in future years, they may be used for convention RHF purposes (i.e. constructing new public housing units) or, under RAD you may choose to forgo any ongoing RHF grants and re-purpose the foregone subsidy to augment the initial RAD rent for a converting project. The RAD rent may be augmented by the following amount: 2012 RHF grant × Years of RHF funding the PHA is eligible to receive, but has not yet received = Total Anticipated RHF grants Total Anticipated RHF Grants ÷ 20 ÷ Number of Units converting under RAD ÷12 = PUM RAD Rent Augmentation The PUM RAD Rent Augmentation would be reflected in the initial rents established in the HAP contracts. The contract rents will still be subject to applicable rent caps. [Updated 7.29.13]

Posted:10/01/2013
Question:Under what circumstances can I use other public housing funds, such as operating reserves, unobligated Capital Funds, Replacement Housing Factor (RHF) funds, etc., to facilitate conversion under RAD?
Answer:PHAs can use available public housing funding, including Operating Reserves, Capital Funds, and RHF funds, as an additional source of capital to support conversion. Eligible conversion-related uses for these funds include pre-development, development or rehabilitation costs and establishment of a capital replacement reserve or operating reserve. As stated in the Notice, these funds must be identified in the Financing Plan submitted to HUD for review.[See RAD Final Notice Reference: Paragraph 1.5, A.] [Update 7.29.13]

Posted:10/01/2013
Question:We are trying to calculate our funding for the RAD Application and I have a couple questions regarding CFP Funding: 1. At time of closing, ACC Amendments will be signed, are the CFP and RHF funds pro-rated for the year or will we receive the entire amount of CFP and RHF Funding? 2. After closing, will we continue to receive future RHF funds that are due to us?
Answer:1. The RAD contract rents have already been calculated for every public housing project and loaded into the RAD Application as well as the RAD Inventory Assessment Tool. At the time of closing the HAP is signed and the project is removed from PIC. HUD will direct the PHA to use a pro-rata share of the capital funds attributable to the converting project, in addition to the Operating Funds, to fund the HAP subsidy payments. If the Capital Funds grants have not yet been awarded, HUD will make a special obligation of Capital Funds to the PHA to fund the converted property. 2 RHF can be contributed as a capital source (i.e. not an ongoing payment) to fund rehabilitation or capitalize reserves. As such, a PHA will receive RHF grant in the normal manner. Following closing the Agency will continue to receive remaining increments of RHF funds earned in connection with earlier ACC projects. PHAs will not receive new increments of RHF for projects removed from public housing as a result of RAD. Per Attachment 1C of the RAD Notice you may choose to forgo any ongoing RHF grants and re-purpose the foregone subsidy to augment the initial RAD rent for a converting project.

Posted:08/13/2013
Question:How do I submit a request to extend the obligation and expenditure dates of my capital funds?
Answer:Section 1.5A of the revised Notice (page 27) contains the following new language: "If the PHA requests, in accordance with section 9(j)(2)(A)((ii) of the United States Housing Act of 1937 and the relevant HUD Appropriation Acts, HUD will extend the obligation end date for Capital Funds used in the conversion for up to five years from the point when Capital Funds became available to the PHA for obligation. By extending the obligation end dates, the expenditure end dates will correspondingly be also extended. Such extensions will prevent PHAs from otherwise losing its unobligated Capital Funds prior to conversion." The PHA should send a request to the Office of Capital Improvements, to the attention of Jeff Riddell, with copies to the RAD Transaction Manager and the local PIH field office.

Posted:05/22/2013
Question:According to Section 1.5 Waivers, Alternatives, and Other Public Housing Requirements, paragraph A; RHF funds may be used for rehabilitation. Is the requirement for the 1/3 match of non-HUD funds also waived?
Answer:RHF funds may be used for development costs in RAD transactions and the requirement of a 1/3 match of non-HUD funds does not apply.

Posted:05/22/2013
Question:Do the TDC/HCC cost limits established by HUD apply to the RAD program?
Answer:No. During conversion the TDC/HCC cost limits do not apply. Post-conversion, a RAD project is not public housing, so public housing rules do not apply.

Posted:05/20/2013
Question:Is the financing form required if you have firm commitments of the funding source (ie, AHP award letter, signed LOI with syndicator, HOME funds award)?
Answer:Yes, the financing Letters of Intent are standard forms that are part of the RAD Application and are required to be submitted in order for your application to be considered complete and eligible for review and acceptance into the RAD Program.

Posted:03/05/2013
Question:Who will be conducting the subsidy layering reviews when required?
Answer:The RAD Subsidy Layering process is currently being finalized. Subsidy Layering Reviews will be done either by the RAD Transaction Manager or (for transactions involving certain non-RAD sources of funds) by another funder. For example, some state HFAs do the subsidy layering review for tax credit project.

Posted:03/04/2013
Question:The RAD conversion guide, page 15, states the amount required for the replacement reserve funding. I cannot find, however, the amount required for the operating reserve. Is it the same as the public housing guidelines? Where can I find this information?
Answer:HUD does not impose any requirement for operating reserve for RAD projects. You should check with your proposed lender or equity investor, if applicable, to see if they require any operating reserves. Typically, a LIHTC investor may require an operating reserve. For example, the standard in the LIHTC industry seems to be 6 months of operating expenses and debt service. FHA loans themselves do not require any operating reserves.

Posted:01/22/2013
Question:I understand that after financial closing, the RAD HAP contract will begin to fund the project. Are those funds required to be used in the RAD project? Or are they the unrestricted funds of the PHA?
Answer:Under RAD, all "Cash Flow" produced by the project is unrestricted and can be used for any purpose within the PHA's authority. Aside from paying for the project's operations, a lender will require timely payment of debt service and HUD will require regular deposits to the project's capital replacement reserve.

Posted:01/22/2013
Question:We will be converting a large portion of our public housing units through RAD. Will we be able to retain the current reserves and use them for affordable housing development?
Answer:If a PHA converts all of its units under RAD, it may bring all of its capital funds and operating reserves without restriction. However, if the PHA will have have projects remaining in the public housing program, aside from a safe harbor of Operating Reserves (the average the project has maintained over the past three years), the PHA may only contribute to the project what is needed for the projects rehabilitation and ongoing viability. HUD will perform a subsidy layering review in such cases to ensure that the project is not being excessively subsidized. As a result, a PHA will not be able to contribute public housing funds that will not be used on the project.

Posted:10/22/2012
Question: We are planning a 4% LIHTC / tax exempt bond transaction under RAD, with construction and permanent financing through the FHA 221(d)(4) program. However, the full amount of the tax-exempt bonds needs to be issued at the start of construction and needs to remain outstanding through the placed-in-service date. Is FHA mortgage insurance available to cover the bond proceeds?
Answer: No. FHA mortgage insurance is available only for the actual construction advances. In typical tax exempt bond transactions, bond proceeds are escrowed and invested through the placed-in-service date (generating a “negative arbitrage” cost because the investment earnings are less than the actual interest costs for the bonds). In the type of transaction you describe, check with your financial and legal advisors to see if it will be possible to utilize bond proceeds to purchase the series of “construction loan certificates” issued by the FHA lender with respect to each insured loan advance; this approach (if available) will reduce (but not eliminate) the “negative arbitrage” cost.

Posted:10/19/2012
Question:Local sources of funds with whom we have talked are not interested in investing their funds into a project that they already view as affordable.
Answer:Perhaps if you shared information on the future capital needs of the project the potential funder might better understand that although the project is affordable and viable today, its long term viability is not necessarily assured. Preservation is a key factor in meeting local affordable housing needs.

Posted:10/18/2012
Question: When you convert a project under RAD, are the converted units eligible for RHF funds?
Answer: No, but if you have existing RHF funds, you can use those to help pay for the conversion.

Posted:10/10/2012
Question:Our client is expecting its property to appraise at a level that will allow take-out of seller equity. In addition to conventional debt and 9% credit equity, the PHA also plans to use 1) capital funds; 2) operating reserves; and 2) Replacement Housing Factor funds as sources, so a subsidy layering review is required. Do you think that the PHA's use of the reserves, capital, and RHF funds will restrict their ability to take out equity from the property sale?
Answer:You will need to check with your first mortgage lender to determine the value the lender will recognize for the existing property, for purposes of loan underwriting. Note that the loan amount will be dually constrained, not only by the appraised (as-rehabbed) value of the property, but also by its post-rehab cash flow. If there are sufficient sources of funds, without contributing PHA funds, to cover development costs (including allowable developer fee), the subsidy layering review will not allow PHA funds to be contributed (except in the case of Operating Reserves, where a PHA can contribute up to the average amount the project has held in Operating Reserves over the past three years without triggering an SLR). Otherwise, the effect of contributing PHA funds would be to convert restricted PHA funds into unrestricted cash proceeds to the PHA. So, as a practical matter, in order to achieve cash-out to the PHA, there will need to be sufficient sources of funds, without contributing PHA funds, to cover development costs and to pay out equity to the PHA.

Posted:10/03/2012
Question:My RAD transaction will utilize a $2 million construction loan. How should I reflect that in the Excel application form?
Answer:Be sure to include any construction loan fees, plus construction loan interest costs, in the Uses of Funds section. Following are two reasonable options for the construction loan itself: (1) show the construction loan as a $2 million Source of Funds, and in the Uses of Funds section utilize one of the 'other' line items to show $2 million of 'Construction Loan Repayment'; or (2) Use an 'other' line in the Sources of Funds for 'Construction Loan (net)' but show the amount at zero; in the comment column include an appropriate explanation such as '$2M; will be repaid at final closing'.

Posted:10/03/2012
Question:My RAD transaction will utilize a construction loan from a local bank, which will be paid off when the permanent loan (from a large national lender) closes after completion of rehab. Do I need to submit a Financing Letter of Intent / Interest from the local bank (the proposed construction lender)?
Answer: Yes.

Posted:10/03/2012
Question:My RAD transaction will utilize Low Income Housing Tax credits. The LIHTC investor will also provide permanent financing. Does the LIHTC investor need to submit two Financing Letters of Intent / Interest (one for the LIHTC equity and one for the permanent financing)?
Answer: Yes.

Category:Green Building
Posted:10/22/2012
Question:Can we wait until the Financing Plan to decide on which Green designation we will pursue?
Answer:No, you must identify a designation in your Application. This choice can be changed later, in your Financing Plan.

Posted:10/22/2012
Question:Is the State of Washington's "Evergreen Sustainable Development Standard" (ESDS) an acceptable Green Building designation for earning the 10 points offered for the Green Building and Energy Efficiency Ranking Factor in the RAD application?
Answer:Yes. At an applicant's request, HUD reviewed and approved the ESDS as an acceptable Green Building designation.

Posted:10/22/2012
Question:We plan to pursue the Green Building Ranking Factor. In the Application, do we need to state which industry-recognized designation we will pursue? Can we change our mind later, based on the PCA?
Answer:Yes, you do need to identify your planned designation in Section 14 of the Application. Yes, you can modify your selection when you submit your Financing Plan (at which time your selection becomes final). HUD recognizes that once you see the results of the PCA you may determine that a different designation is better suited to your property.

Category:HAP Contract
Posted:07/08/2014
Question:Does a PHA have discretion to set a policy that would give preference to PBV contracts in the event that voucher funding is reduced?
Answer:The PHA does have discretion to set such a policy, but it must be included in the PHA’s Administrative Plan. (See 982.54(d)(2) for a full description of what must be included in the Administrative Plan related to this issue.)

Posted:07/08/2014
Question:My current public housing project consists of scattered sites on multiple parcels and I am considering a conversion to PBV under RAD. Under what conditions will I be allowed to combine these units under one CHAP (and one HAP)?
Answer:In the PBV program, multiple single-family buildings may be on the same HAP Contract (i.e. scattered-site single family buildings). However, if the scattered sites are not single-family buildings, each project must have its own HAP contract. A project can be defined as a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. HUD interprets project to apply to all these structures (i.e., single building, multiple contiguous buildings, etc.), and a PHA must consider the entire definition and apply this definition to proposed PBV units. For purposes of RAD application, the PHA will need to submit an application for each AMP (or each portion of an AMP). If the scattered-sites are eligible to be under one HAP, as described above, and are already under one AMP, one CHAP will be issued. If the scattered-sites are eligible to be under one HAP as described above, but are not currently under one AMP, separate applications should still be submitted using the “Many-to-One” application instructions found here: http://portal.hud.gov/huddoc/manyto1_appinstr.docx.

Posted:06/02/2014
Question:Does the project retain its fiscal-year or does it create a new fiscal year depending on the month in which the new HAP is effective?
Answer:The project’s fiscal year is defined by the organizational documents/organizational fiscal year. So, if the owner’s organization has a fiscal year ending 12/31, then that would be the fiscal year-end date for PBRA or PBV.

Posted:05/19/2014
Question:When a project involves a demo of existing public housing units and new construction into RAD units, what happens to the HAP payments while units are demolished and being newly constructed?
Answer:The RAD PBRA HAP Contract (Part 2) and the RAD PBV HAP Contract Rider each include a per unit "rehab assistance payment" amount that certain units would be eligible to receive during the construction period (units that were occupied prior to the start of construction). Units are eligible for Rehab Assistance Payments if 1) they were eligible for Operating Subsidy prior to conversion (according to Form 52723) and 2) they are uninhabitable as a result of repairs.

Posted:05/12/2014
Question:How would the rental assistance start date be affected if one wanted to transfer assistance from one development to a new construction site or to an acquired site that has units?
Answer:The Housing Assistance Payment (HAP) Contract is effective the first day of the first month following closing regardless of the transaction type. Where the assistance is being transferred, the HAP becomes effective at the new site following conversion, even in cases where the units are not yet constructed.

Posted:05/12/2014
Question:In the "Rental Assistance Demonstration Conversion Guide" bottom of page 13 under Cap on Number of Assisted Units, it states: "Under RAD, only 50% of the units in a PBV project can be assisted, with exceptions...." Question - What does that mean?
Answer:Under RAD conversions to PBV, no more than 50% of the units in a property may be assisted by the PBV contract unless at least 50 percent of the units at the project qualify for the exceptions for elderly, disabled, or families receiving supportive services, or are within single-family properties. See PIH Notice 2012-32 Rev 1 Section 1.6.A(2)

Posted:03/31/2014
Question:If a PHA is converting to PBVs under the first component of RAD, can the PHA be its own HAP contract administrator?
Answer:Under the PBV program, the Contract Administrator and the Owner cannot be the same legal entity (i.e., the PHA cannot execute a contract with itself). To avoid this situation, the PHA has several options, including: 1) The PHA can form a separate corporation to administer (manage) the Section 8 voucher program; 2)The PHA can transfer the ownership of the project to a non-profit affiliate or instrumentality of the PHA, or 3) The PHA can form a Limited Liability Corporation (LLC) that is a wholly-owned subsidiary of the PHA to act as the leasing agent for the PBV units (like a management contract), where the HAP is then executed between the PHA and the LLC. Additionally, where the PHA has an interest in the ownership of the property covered under the PBV contract, the PHA must seek an independent entity, approve by HUD, to perform the HQS inspections and rent reasonableness (24 CFR 983.59). The independent entity that performs these tasks can be the unit of general local government for the PHA jurisdiction (unless the PHA it itself the unit of general local government or an agency of such government), or any other HUD-approved public or private independent entity.

Posted:10/01/2013
Question:Has HUD released the actual text for the RAD Use Agreement and other documents? We need to see it ASAP to coordinate with LIHTC investor.
Answer:Yes, a final version of all contractual documents is available on the RAD website. [Updated 7.29.13]

Posted:10/01/2013
Question:Since the new RAD HAP Contract will be executed simultaneously with construction closing, can HAP income be used as "income from operations" for the rehab (assuming that operating expenses temporarily fall during the construction period)? Can the income be used for temporary relocation expenses?
Answer:The RAD Notice indicated that public housing conversions would be eligible for a RAD Rehab Assistance Payment. Essentially, the PHA would continue to receive the subsidy portion of the HAP contract rent during the initial rehab period. Essentially, any unit that was receiving subsidy at the time of conversion will continue to receive subsidy during the initial period of repairs, which you may use to support the operations of the project, pay for relocation costs, or other costs of development. [Update 7.29.13]

Posted:03/05/2013
Question:On what date does a RAD project cease being a public housing project?
Answer:The project ceases to be a public housing project at the effective date of the HAP contract, which is the first of the month following closing.

Posted:03/04/2013
Question:If a PHA agreed to administer a PBV Contract, would the PHA be required to amend its Annual Plan and go through the 45 day comment period before it could take any of the required actions for the conversion?
Answer:Yes, if the PHA administrative plan does not already include project-basing of vouchers and the required PBV policies. If the PHA administrative plan already includes those provisions, no further amendment is required.

Posted:03/04/2013
Question:Presently under Public Housing, the income limits are at the 80% and below AMI for eligibility. If the RAD conversion goes with PBRA will the income eligibility requirements be set at 80% - Low Income or at 50% - very low income requirements? This will make a difference in income because the application income is based on our current admissions of 80% and below.
Answer:For conversions to PBRA, the income limits will be the same as for public housing, i.e., below 80% of the median. (The Department will issue a formal notice shortly clarifying this point.) However, like public housing, PBRA properties have "income targeting provisions" where at least 40% of admissions must be below 30% of area median incomes.

Posted:03/04/2013
Question:This is for the 2nd component of RAD. If a PHA agreed to administer a PBV Contract, would the PHA be required to amend its Section 8 Administrative Plan even if the Section 8 Admin Plan includes verbiage on project-basing vouchers that complies with 24 CFR 983?
Answer:So long as the PHA's administrative plan already provides for project-basing vouchers and already includes the appropriate policies regarding project-based vouchers (e.g., appropriate policies for tenant selection), no further amendment to the administrative plan is required in order to administer PBVs under the 2nd component of RAD.

Posted:03/04/2013
Question:Will PHA's converting to Project Based Vouchers receive an extra one time "special housing fee" of $200 per unit when they convert to PBVs? Does the answer depend on the type of RAD PBV conversion?
Answer:The answer depends on the type of PBV conversion. Generally, the special housing fee is allowable only if the PHA is not already administering rental assistance for the project: 1. The special housing fee is not applicable to conversions of public housing to PBVs. 2. The special housing fee is not applicable to conversions of Mod Rehab to PBV, whether the conversion occurs under the 1st or 2nd component of RAD. 3. The special housing fee is applicable to prospective conversions of RAP and Rent Supplement under the 2nd component of RAD. 4. The special housing fee is not applicable to retroactive conversions under the 2nd component of RAD.

Posted:03/04/2013
Question:Will the units converting to RAD be considered PBV units at the time of closing or after the rehabilitation is done?
Answer:The PBV HAP contract goes into effect at the RAD closing, so the units would become Section 8 PBVs at the beginning of the following month. For example, if the closing is on March 15, the effective date of the HAP contract would be April 1. Please note that, for most conversions, the HAP is executed prior to construction taking place.

Posted:02/19/2013
Question:In the sample RAD PBRA HAP contract for former Mod Rehab properties, it appears an AFS Audit will be required. Is this correct?
Answer:Yes, after the RAD closing the converted PBRA project would be subject to the REAC-FASS annual financial statement requirements. This is not applicable to PBV conversions.

Posted:02/19/2013
Question:The template PBRA HAP Contract for former Mod Rehab properties that is on the RAD website includes a provision that surplus cash can only be distributed once a year. Can this requirement be waived or modified for projects that do not have FHA financing?
Answer:No. The RAD template legal documents must be used without alteration. The restriction on cash flow only after closing of financial statements is true regardless of financing source.

Posted:01/22/2013
Question:How does the switch to a RAD HAP Contract affect the PHA's Admissions and Continued Occupancy Policy?
Answer:A project that converts under RAD will no longer be under the public housing program. Therefore, the ACOP will not apply. The owner must establish admissions and occupancy policy consistent with the program to which the project is applying. For conversions to PBV, these policies can be found in CFR 24 Part 983. For conversions to PBRA, these policies can be found in Handbook 4350.3

Posted:01/22/2013
Question:I understand that after financial closing, the RAD HAP contract will begin to fund the project. Are those funds required to be used in the RAD project? Or are they the unrestricted funds of the PHA?
Answer:Under RAD, all "Cash Flow" produced by the project is unrestricted and can be used for any purpose within the PHA's authority. Aside from paying for the project's operations, a lender will require timely payment of debt service and HUD will require regular deposits to the project's capital replacement reserve.

Posted:11/12/2012
Question: The RAD application asks for the utility allowance. We are proposing to convert an entire AMP which is composed of several different buildings with different utility allowances. How do you handle that (the Application asks for one utility allowance)? Can you convert only one project in an AMP?
Answer: The entire AMP can be converted. For the purposes of the application, you should calculate a weighted average utility allowance for each unit type. For example, if there are 10 2BR units with a utility allowance of $100 and 15 2BR units with a utility allowance of $115, you would calculate: 10 x $100 plus 15 x $115 = $2,725, divided by 25 units = $109 weighted average utility allowance for all 25 2BR units. If the project is selected and eventually reaches closing, the Section 8 HAP contract can accomodate multiple utility allowances, if needed.

Posted:10/16/2012
Question:24 CFR 880.603(c)(1) seems to be saying that under PBRA an adjustment to the Tenant Rent payment (and the corresponding adjustment to the Housing Assistance Payment) due to a change in tenant income becomes effective immediately upon owner determination that there has been a change in tenant income. The provision in the HUD Multifamily Model Lease for changes in the tenant payment during the term of the lease appears to support this reading. Is this correct? Is this true for PBV as well?
Answer:In PBRA, typically decreases in tenant contribution are implemented immediately and increases in tenant contribution require prior notice to the tenant household. Please check with the Performance Based Contract Administrator for your area. For RAD PBV conversions, income redeterminations and the resulting changes in tenant contribution will be handled indentically to other Housing Choice Voucher situations.

Posted:10/16/2012
Question:For projects for which tenants will be paying some utilities, do utility allowances have to be deducted from the RAD Contract Rent, as shown on the RAD PHA Application, or are they already deducted?
Answer:The RAD formula rents presented in the PHA Application are contract rents (after deducting any utility allowance). No further deduction needs to be made to account for tenant-paid utilities.

Posted:10/03/2012
Question:What will be the effective date of the post-RAD HAPs?
Answer:The date of closing. The Notice details the steps that must take place prior to closing.

Category:Income-Mixing
Posted:10/15/2012
Question: We have a High Rise Building of 180 units all of 3 Bedrooms. The property is under the Mod Rehab Program and has 168 units under the HAP Contract only. The contract expired on June 14, 2009, since that time we have renewed year to year. We would like to apply under the RAD program (Section 2 of the Notice) for the option of PBV. But we need the conversion for all HAP units. Is this possible (Section 2.2.5 A 2 of the Notice mentions that the assistance is for only 50% of the units)?
Answer: The Section of the Notice that you mention in your question generally limits the number of units at any given site that can be assisted by project-based vouchers to 50% unless there are "exception" units at the site. Exception units include scattered site units, units occupied by the elderly or disabled, or units occupied by families receiving supportive services. In effect, no more than 50% of the units at a site can be assisted by project-based vouchers and occupied by families not receiving supportive services. Assuming your project is primarily occupied by families, to maintain all 168 units of assistance at the current site, you would need to provide or arrange for supportive services for at least 78 families. You may also want to consider a conversion to PBRA, in which all 168 HAP units would be eligible for conversion without a supportive service requirement.

Category:Milestone - 60 Day
Posted:02/03/2014
Question:If a Housing Authority converts all their amps to RAD and submitted an Amendment to their 5 year plan, do they need to submit a 5 year plan again? We believe the HA would not have to because they would no longer be considered public housing.
Answer:You are correct that the Housing Authority would not have to submit a 5 Year Plan if all AMPs are being converted to RAD. However, the AMPs will not "officially" leave public housing until the RAD closing so if a 5 Year Plan is due prior to the RAD closings of all of the Housing Authorities AMPs, the Housing Authority would still need to comply with the current public housing rules in place regarding a 5 Year Plan submission.

Posted:05/22/2013
Question:Should the HCV Administrative Plan also be amended to include the RAD program/language?
Answer:If the PHA is going to do a RAD conversion to PBV, the PBV Administrative Plan should be amended to reflect the Agency's plans as part of the 60 Day Milestone. There are no additional RAD requirements.

Posted:03/22/2013
Question:We have a Mod Rehab property, under the first component of RAD. We are working on the 60 days Milestone. Do we need to submit a Significant Amendment?
Answer:No. The Significant Amendment to the Annual/Five Year Plan is only applicable to PHAs. For your Mod Rehab property, to complete the 60 day milestone you will only need to upload a document indicating your decision to convert via PBV or PBRA as well as the milestone complete certification.

Category:Milestone - 90 Days
Posted:06/02/2014
Question:When is the RPCA required?
Answer:The RPCA is required in all instances, except the following: 1) New Construction; 2) Gut Rehab (essentially, down to the stud); 3) Recently modernized or constructed buildings (based on the recommendation of your RAD Transaction Manager and approval by the RAD Team Lead); or 4) Any FHA 221(d)(4) transaction.

Posted:10/01/2013
Question:We are a small HA and we are concerned about the cost of the RPCA. We did not receive any subsidy in 2012 and have not budgeted our CFP for this item either. Do we have permission to use our PH funds to cover the cost of the RPCA? Where should this amount be accounted for? Should we budget it into our CFP and if so, what line item should we use?
Answer:The RPCA is an eligible transaction cost. It can also be paid for by operating/capital funds. The Notice specifics that a PHA can engage consultants up to $100,000 in public housing funds for pre-development expenses, which would include the cost of the RPCA. For example, a PHA could use operating reserves to fund this expense. Alternatively, a PHA can charge it to the Capital Fund Program and include it under Budget Line Item 1430 (Fees and Costs). [Updated 7.29.13]

Posted:05/22/2013
Question:There are a couple of different formulas for the Weather normalized adjustment factor. Which method does HUD prefer?
Answer:HUD does not require a specific weather normalization method but does require that a discussion of the methodology is included in the Narrative portion of the RPCA.

Posted:05/20/2013
Question:Are there any restrictions on what functions an RPCA contracting firm can perform in addition to completing the RPCA? Can they perform the work and serve as a GC?
Answer:The RAD Notice does not impose any requirements.

Posted:05/20/2013
Question:Is mold addressed in the environmental assessment?
Answer:Yes. The Scope of Work requires the RPCA report to "provide a description of directly observed potential on-site environmental hazards."

Posted:04/25/2013
Question:Due to LEED goals and a desire to move to a non-mastered tenant billing scenario, our client is considering a conversion to all electric powered apartments. Currently heating systems and several appliances are powered by natural gas. It appears that the RPCA excel tool does not allow the user to "switch fuels" when considering an electric powered green alternative for a gas powered system. Can you advise on how we enter savings into the tool in this scenario?
Answer:The measure of consumption must be the same to compare the two alternatives. Either convert all consumption to kwH, therms, or dollars.

Posted:04/25/2013
Question:If we are planning to install PV panels (solar panels) as part of the green alternative, where can we enter this item in the RPCA too?
Answer:You can use any blank utility-saver line item in the CNI page. There will be no existing component, no traditional component, just the green component. Record the usage as a negative number as it will be generating power. If it generates more than can be used, note whether it can be sold to the grid. If not, only include power that can be consumed at the property

Posted:04/04/2013
Question:In the RAD notice, the discussion of the 90 day milestone states that financing sources may require a current survey report. What type of survey are you referring to?
Answer:HUD understands that first mortgage lenders often require a current ALTA survey in order to identify easements, encroachments and other issues that may affect title insurance and/or that may affect risk to the lender.

Posted:04/02/2013
Question:Page 2 of the PCA Statement of Work and Contractors Qualifications states: "The contractor must. . . B. Have the designation of Leadership in Energy and Environmental Design Accredited Professional (LEED AP), in either the United States Green Building Council’s LEED New Construction and Major Renovation or the LEED Existing Building Maintenance and Operations examination tracks, or an equivalent designation." Our architect is LEED certified, but is not certified in one of these two specific tracks. Does that mean he's not qualified?
Answer:Since the architect referenced is LEED accredited, that falls into the "or an equivalent designation" category referenced in the Scope of Work and is thus acceptable.

Posted:03/22/2013
Question:Are we supposed to include the critical items (code, safety, health related) in 2014 ( 0 year) rehab cost column which will become part of the rehab specifications and rehab escrow needs and rest of the immediate needs in 2014 year 1 (one) which will become part of the cap needs?
Answer:Generally, critical repairs are items that should be addressed immediately without waiting for the RAD closing. Any critical repairs that will be completed after the RAD closing must be included in year zero (rehab). Components that are not functioning (that are "broken") at the time of the PCA inspection must also be either (a) completed prior to the RAD closing or (b) included in year zero (rehab). For components that are functioning at the time of the PCA inspection but that are expected to require replacement in the first twelve months following the RAD conversion, the PCA provider and the PHA can decide whether replacement should be included in year zero (rehab) or in year one (to be paid from replacement reserve funds). The above procedures should be followed by the firm conducting the RPCA. However, at time of application, the PHA should make its best estimate of critical, immediate, and long-term repairs.

Posted:03/07/2013
Question:Do the RAD appraisal requirements include an estimate of demand capture, penetration, etc., and an absorption rate, like the market rate 221d4 requirements? What level of Market Analysis will be required in the appraisal?
Answer:There aren’t any special underwriting rules for RAD FHA transactions related to the market study requirements. FHA requires a market study on all Section 221(d) (4) projects. You should follow the MAP Guide requirements and should specifically review the guidance+/- at 7.5 (D-6), and 7.5 J- “Practitioners should be capable of analyzing the impact of the programs in the local subsidized housing submarket, as well as in the general market that is unaffected by subsidized housing programs, and must be aware of possible political changes that will affect the continued availability of the subsidies and must fully understand the requirements for subsidy programs. A lack of knowledge and understanding of the impact of the unique influences that affect subsidized housing projects could lead to misleading conclusions.” One thought is to hire one contractor to complete both the market study and appraisal report. HUD allows this, when the substantial rehabilitation doesn’t result in significant resident displacement, or in negative cash flow during the rehabilitation period, the appraisal and market study can be completed by the same firm. This could eliminate the duplication of efforts, as the appraiser could complete both and use his/her analysis in both reports.

Posted:03/04/2013
Question:Is there a requirement to inspect 100 percent of the accessible units, not just the 25 percent representative sample?
Answer:The RAD PCA Statement of Work requirement regarding the sample states:" In no event shall the inspection be of less than 25% of occupied units, and 100% of all vacant units and common areas." Accordingly, there is no requirement to inspect a 100% sample of accessible units. Please note that the Statement of Work depends on the contractor to use its judgment regarding how many and which dwelling units to sample, for example in relation to the size of the project or the condition of the project. Accordingly, the requirement above represents a minimum sample size, and HUD expects the contractor to increase the sample size whenever doing so is needed in order to allow for an accurate assessment.

Posted:01/22/2013
Question:Do we have to use an outside contractor to do the Physical Condition Assessment if we do not intend to use outside financing?
Answer:Yes, the PCA must be performed by a third-party contractor. A PCA that meets the requirements outlined in the RAD PCA Statement of Work must be completed regardless of the type of financing sought; the one exception is new construction in which a PCA is not required. Please review the RAD PCA Statement of Work which outlines the required qualifications one must have in order to complete each section of the PCA.

Posted:01/22/2013
Question:Do we need to complete the RAD PCA tool if we are not using FHA or HUD financing or can we use a standard ASTM PCA?
Answer:Yes. The RAD PCA specified in the Notice must be used for all RAD transactions (except for new construction).

Posted:01/22/2013
Question:The RPCA Statement of Work and Contractor Qualifications document states that owners should provide releases from tenants so that energy consumption data necessary for completion of the Energy Audit can be collected from utility providers. Are your energy consumption data requirements similar to the requirements regarding PBRA utility allowance setting, i.e., owners should secure releases for 12 months of utility bills from a minimum of 10% of households occupying each unit type at each property? (I.e., in a 90-unit building, with 30 units each of 1BRs, 2BRs, and 3BRs, an owner should secure 12 months of data from 3 x 1BRs, 3 x 2BRs, and 3 x 3BRs, for a total of 9 units?). These samples can then produce an average for each unit type. Or is there some other minimum sampling number for the utility releases, such as 25% of occupied units? The RAD PCA Excel Tool appears to require specific data for each tenant meter. However, this would seem to be unduly burdensome, given that several hundred units are involved and it is virtually impossible to get utility billing releases from every tenant. Further guidance is most appreciated.
Answer:The objective is to establish a reliable, whole-building utility consumption baseline against which future consumption can be measured. Therefore the goal is to collect 100% of the property’s utility consumption data, including owner-paid and tenant-paid utilities, or, at a minimum, a sampling that is a reliable proxy for the whole building. There is no specified minimum sampling requirement, due to the different configurations of buildings. The RPCA contractor and the Utility Baseline Consumption subcontractor, if one is used, musthave enough data to ensure they can produce such a baseline on which HUD can rely. The RAD PCA Tool maps to each meter for a complete usage estimate. Information on all owner accounts is required. If there are tenant accounts, you need to start approaching tenants immediately to get utility information or releases so that utility companies will release information. Depending on the protocol required by the utility, this may have to be to you for delivery to the RPCA contractor or its subcontractors (energy auditor or utility baseline consumption provider) or the contractor may be able to use the releases itself in a request with the utility. Check with your utility.. The requirement is 12 months of utility usage data at the property For tenants, while 100% is the goal, it is hard to achieve. For example, some tenants of the last 12 months may no longer reside at the property, and other tenants may not cooperate. While all tenants should be approached, the results may be less than 100% availability. The tenant responses must at least yield a representative sample of utility information. The result must include different unit sizes, floors and exposures. If there are different cooking fuels, heating fuels or cooling approaches in the same complex, bring this detail to the RPCA contractor’s attention as it will expand the necessary numeric sample. If the tenant response rate does not provide a reliable sample size, as dictated by the needs of the RPCA, it is important enough that this portion of the RPCA may be delayed, with HUD approval, so that additional outreach may be undertaken.

Posted:01/22/2013
Question:We are submitting a 9% LIHTC application in May, 2013, for the substantial rehab of a project to be converted to RAD. We will need to do a third party report (Physical Needs Assessment) to determine the rehabilitation scope for the LIHTC application. Should we just go ahead and order a PCA in accordance with the requirements on the RAD website?
Answer:PHAs are encouraged to order a PCA through their proposed lender/investor prior to the submission of the LIHTC application. This ensures that the PHA requests the appropriate amount of tax credits to cover the full scope of rehab. PHAs should request that the PCA provider also agree to provide an update to the PCA within 60 days of closing at an agreed-upon price. Further, HUD encourages the PHA to consult with the tax-credit issuing agency to ensure that the RAD PCA meets their requirements.

Posted:01/16/2013
Question:What are typical costs for a PCA and will an approved PCA vendor list be published?
Answer:HUD in unable to provide a list of PCA providers. National Equity Fund, Inc., CLPHA and Enterprise Community Investment created a third party website - www.radmarketplace.com - to serve as a portal for PHAs, consultants, lenders, and developers to connect in regards to RAD applications and transactions. However, this site and its contents are not endorsed by HUD. Please discuss PCA costs with your lender.

Category:Milestones
Posted:04/07/2014
Question:Once I receive a CHAP, I will be applying for 4% tax credits to an agency that accepts rolling applications. The RAD notice is very specific on the timing of 9% LIHTC applications, but does not provide requirements on when I should submit my 4% application. When am I required to submit my tax credit application?
Answer:Generally, PHAs should submit their 4% tax credit application within 90 days of receiving a CHAP. However, some PHAs have indicated that they would like to have a completed PCA in-hand before they submit their tax credit application. Consequently, where a PHA wants to have a completed PCA prior to submission of its 4% credit, or where the tax credit agency requires market studies or other third-party reports that require substantial lead time submitted with their tax credit application, HUD will extend the submission milestone to 150 days. Any requests for an extension must include the proposed application submission and award notification dates. Reasonable requests will be approved with the requirement that the 30, 60, and 90-day milestone are met prior to award notification. This allows a PHA to move towards financing plan approval as soon as the tax credits are awarded, preventing any unnecessary delays.

Posted:01/10/2013
Question:The Financing Plan requires updated engagement letters from equity partners and the lender/HUD containing this approval. Does this apply to 1) Public Housing Capital and Operating funds pledged to the project? and 2) Deferred Developer fees?
Answer:Yes, the requirement applies to all of the above, except for the deferred developer’s fee. The PHA’s financing plan is due by 180 day milestone; however, in the case of RAD transactions with FHA financing, it’s due by the 150th day when the FHA Firm Commitment is to be submitted. As part of the underwriting, the FHA lender will need to confirm the owner equity to be contributed and any other funding commitments including secondary financing. The lender can’t do this without getting confirmation of the pledged funds, and confirmation of tax credit funding commitments. The deferred developers’ fee will be a secondary financing, in the form of a surplus cash note.

Posted:01/09/2013
Question:At the 30-day CHAP milestone, the PIH Notice states that the Lender’s Engagement Letter must include “language, specified by HUD”, (See PIH Notice 12-32, Section 1.12, sub-para. 1). We need this language. Where can we find it?
Answer:The PIH Notice’s requirement is oddly worded. There is no standard “language specified by HUD” which the lender must use. The phrase simply denotes that lender must state in its engagement letter that it is aware of all relevant RAD policies including RAD Use Agreement provisions and ongoing requirements in the case of foreclosure or bankruptcy.

Posted:01/09/2013
Question:Does the HUD Field Office want copies of anything sent through the RAD Resource Desk as part of the RAD Milestones?
Answer:No, the HUD Transaction Manager assigned to each RAD Transaction will take care of communicating with the Field Office.

Posted:01/09/2013
Question:The Financing Plan requires certification of previous participation. Are paper 2530s still acceptable or does information have to be in APPS?
Answer:Yes, submission of paper 2530s is still permitted. The lender has the option of submitting either paper (Form HUD 2530) or electronic “previous participation clearance” via APPS.

Posted:01/09/2013
Question:Typically, a title policy is obtained immediately before closing, but this is identified as a 90-day CHAP milestone. Are we talking about the same thing? Does the title company need to provide a preliminary version for inclusion with the financing plan in addition to an updated version for closing?
Answer:Yes, a preliminary/pro forma title insurance policy must be obtained in the financing plan. It should be submitted with the financing plan at the 180 day milestone or, if has FHA financing, at the 150 day milestone. It is a required exhibit for FHA firm commitment application. Note: At the 90 day milestone, the PHA owner is required to submit to HUD: 1) a certification to HUD that all the due diligence lending has been completed, and 2) a copy of the PCA. The PHA owner isn’t required to provide all the 3rd party reports which the lender has received by then, only the PCA. The lender will submit the other reports with its FHA application.

Posted:01/09/2013
Question:What is EA Part 50? And what needs to happen so that HUD can get started on this?
Answer:“EA Part 50”, refers to the HUD environmental assessment (EA) in the Code of Federal Regulations under 24 CFR, Part 50. (See PIH 12-32 Attachment 1A.1D). For FHA transactions, the FHA lender will contract with a third-party contractor (environmental specialist) to complete the Phase 1 environmental assessment. The Lender’s underwriter will review the Phase 1 report to confirm it meets the FHA requirements, and/or recommend necessary mitigations. The Phase I is a required exhibit in an FHA Firm Application. Once submitted, HUD will complete an in-house environmental assessment as part of its' underwriting review.

Posted:10/22/2012
Question: A PHA wants to revitalize a 333 unit project. They can finance 100 units with a 9% LIHTC deal and 233 units with a 4% bond deal. The maximum amount of rehab this financing will support is $40k/unit, which the PHA believes will be feasible. Suppose that they file for RAD and receive a CHAP, and then at the 90 day Milestone the more detailed PCA comes back and says that the units really need to be demolished. Can the PHA apply for Choice Neighborhoods (application in April, 2013) or other sources of funding that would allow them to demolish and rebuild new? How long would they be able to keep the CHAP?
Answer:HUD will consider granting additional time to overcome factors beyond the control of the PHA. A PHA that has received a CHAP and subsequently finds in the PCA that additional rehab (or demolition and new construction) is needed will have at least until the next Milestone to restructure the development to make it feasible. In the example you describe, if the project can be brought back on schedule in time to meet the 150 day Milestone there would be no problem. If the PHA recognizes that it will not be possible to meet the next Milestone, the PHA would formally request a waiver of the Milestone deadline, describing the factors beyond the PHA's control that caused the delay, requesting a specific amount of additional time to meet the Milestone, and noting whether the PHA is requesting that any future Milestone deadlines be moved as well.

Posted:10/22/2012
Question: How flexible will HUD be with closing milestones and LIHTC deals? Does it make a difference whether they are 4% or 9%?
Answer: Applicants with 9% LIHTC deals and applicants with 4% deals in states with fixed application deadlines will be expected to apply at the first feasible application deadline following the award of the CHAP. In 9% LIHTC deals, in some cases, exceptions to the milestones described in the Notice will be necessary. In states with a rolling 4% allocation application, PHAs should apply for the 4% allocation within 90 days of issuance of the CHAP and these PHAs should be prepared to meet the remaining milestones as set forth in the Notice. In 4% LIHTC deals, HUD believes there will generally be sufficient time to with the milestones established in the Notice, but will work with applicants if exceptions are needed.

Posted:10/22/2012
Question: Regarding the 30 day milestone where the development team is required to be submitted, we are concerned about that deadline because procurement for co-development won’t be started until after application submission, and if the CHAPs are issued quickly after the end of the Initial Application Period there might not be enough time.
Answer: The milestones are intended to help PHAs remain on track towards closing wihtin 360 days. If you are making reasonable progress towards that goal, HUD will work with the PHA in terms of these intermediate milestones.

Posted:10/15/2012
Question: The Notice requires all due diligence received by lender or investor by 90 days from the issuance of the CHAP. Assuming the CHAP is issued 11/23/2012 (30 days after the application window closes). These items would be due by 2/21/13. Our proposed transaction includes an allocation of 9% LIHTC. The application date for those credits is 1/10/2013 with awards in April 2013. Initial scoring (which is an indicator of the final award would be available at the end of January) We would typically not complete items such as the survey, appraisal, etc. until AFTER that award is secured or at a minimum until the intital scoring is availabe late January, which would not allow enough time for the third party reports to be completed. The HA does not want to expend funds until is is reasonably assured that the transaction will move forward as all of these reports are time sensitive. Is there any flexibility within the CHAP timeline of milestones to fit the specific needs of the transaction? I do not foresee any problem in meeting the overall deadline of closing on the RAD conversion and equity within 360 days of issuance of the CHAP.
Answer: HUD agrees that due diligence materials should not be ordered until the 9% LIHTC reservation letter is in hand. For this reason, the Notice provides that Milestone dates for 9% LIHTC transactions will be customized to each individual transaction. 9% LIHTC transactions will have the standard dates for the 30 day Milestone (lender engagement letter, development team) and 60 day Milestone (significant amendment, PBV-PBRA decision). However, for 9% LIHTC transactions, the remaining Milestone dates will be transaction-specific and will be based on the QAP allocation cycle. Each 9% LIHTC transaction will have a special Milestone by which you must submit the LIHTC reservation letter. The timing of this MIlestone will be based on your responses in Section 13 of the Application. The remaining Milestones (starting with the "90 day" Milestone) would be established based on when you actually provide the LIHTC reservation letter. For purposes of illustration, based on your example, say that you provide the LIHTC reservation letter on April 25, 2013. One approach would be as follows: the 90 day and future milestones (that would ordinarily run from CHAP issuance) will run instead from April 25, 2013 (that is, the 90 day due diligence Milestone would fall on July 24, 2013, and the 150 day MIlestone for firm commitment applications would fall on September 22, 2013). HUD expects that this approach will be workable for most 9% LIHTC transactions, but if there is something unusual about your transaction that would call for a different approach, HUD is open to alternative approaches.

Category:Mixed Finance
Posted:06/02/2014
Question:Can an existing mixed-finance project developed with tax credits be converted to RAD without a change in ownership?
Answer:Yes. Essentially, the underlying funding program is changing, not the nature of the ownership. However, the PHA must still evidence that it has an “interest” in the project.

Posted:12/04/2013
Question:Can a PHA choose to give a mixed-finance project a lower contract rent than included in the RAD Application and retain the rest?
Answer:No. Unless adjusted through rent bundling, all projects will receive the full RAD contract rent. However, in the context of mixed-finance public housing projects, a PHA may negotiate with the owner(s) of the project such terms as participation in cash flow or ground lease payments. All terms of the transaction will be reviewed by HUD in the context of the Financing Plan and long-term viability of the mixed-finance project.

Posted:10/17/2013
Question:We have mixed-finance ACC on two properties. As such we assume that since the public housing funding will disappear at RAD conversion, we will not need anyone's sign-off from HUD's Office of Public Housing Investments(OPHI) prior to RAD conversion. Is this a correct assumption? If there is a sign-off needed we assume the RAD team will obtain this, is this correct?
Answer:Converting a Mixed Finance deal via RAD will be coordinated through your RAD Transaction Manager. You will not need to separately contact other HUD offices. We strongly suggest that you consult with your counsel on documentation. In addition to the Mixed Finance ACC, there are other Mixed Finance documents that will likely be impacted by the conversion- Declaration of Restrictive Covenents, the existing Regulatory & Operating Agreement, a Subordination Agreement for the existing debt (unless it will be paid off prior to closing), as well as amendments to the Partnership Agreement, Ground Lease (if applicable), existing loan documents and other management documents.

Posted:10/01/2013
Question:Is there still a 1200 unit cap on Public Housing units that are currently part of mixed-finance developments?
Answer:No. That cap was removed with the publication of PIH Notice 2012-32 REV-1. [Update 7.29.13]

Posted:10/15/2012
Question:Our understanding is that the requirement to submit a mixed finance affidavit (Section 1.9 paragraph A.3 on p. 48 of PIH 2012-32) applies only when the public housing proposed for conversion to PBRA or PBV is already part of a mixed-finance development. It does not apply simply because the post-conversion project will be a mixed-finance project. Is this correct?
Answer:You are correct. The Mixed Finance Affidavit is required only when the project is already mixed-finance public housing. If the project was not developed as mixed-finance public housing and is converting through RAD and planning to use Low Income Housing Tax Credits, the Mixed Finance Affidavit is not required.

Category:Mod Rehab
Posted:10/01/2013
Question:I am preparing a Conversion application for a project that involves consolidating two mod rehab contracts (and properties) under one new ownership and LIHTC financing structure. Is there a way that we can submit a single RAD application rather than having to submit individual applications for each Mod Rehab contract? All of the financing is interwoven.
Answer:Yes, you can. When completing the Mod Rehab RAD Application, which is only used for the first component, fill out a single application, including the total units at the project and make sure you attach both Mod Rehab contracts. For data for which the two contracts may have different numbers (e.g. rents and utility allowances) use the weighted average.[Updated 7.29.13]

Posted:10/01/2013
Question:Is there still a 1,250 unit cap for Mod Rehab conversions under the 1st component?
Answer:No. That cap was removed with the publication of PIH Notice 2012-32 REV-1. [Updated 7.29.13]

Posted:10/01/2013
Question:There are two different rents for the same size unit. Would these rents be kept different in the RAD HAP or averaged?
Answer:If there is a sound business reason to maintain a different rent for the different 2-bedroom units, we would consider it (i.e., one with 1 1/2 baths and the other with just 1 bath). Otherwise, we would consolidate into one contract rent for all two bedrooms. [Updated 7.29.13]

Posted:05/22/2013
Question:For Mod Rehab applications under the first component, if you choose PBRA the limited dividend is eliminated (2.2.6.a.5). Why is the LD not eliminated if choosing PBV?
Answer:The Notice provision you mention simply clarifies that no new limited distribution requirement is imposed if your Mod Rehab (first component) project selects PBRA. Similarly, there would be no new limited distribution requirement if you selected PBVs (the PBV program does not limit distributions). However, neither PBV nor PBRA would eliminate an existing limited distribution requirement (if, for example, your project had an existing mortgage loan that imposed a limited distribution requirement).

Posted:10/23/2012
Question:In the standard PBV program, if a family is overhoused they are required to move to a right-sized unit. Will this be the same policy for RAD?
Answer:Owners may request a waiver to allow over-housed residents to remain in their units and receive PBV assistance if no right-sized unit is available.

Posted:10/23/2012
Question:What should we do if the Mod Rehab contract is expected to expire before the RAD conversion is completed?
Answer:If the Mod Rehab contract is expected to expire before the RAD conversion is completed, the Owner may request a short term renewal contract for the period necessary to complete the conversion.

Posted:10/15/2012
Question:There are four buldings with four HAP contracts. I assume they could be consolidated into one RAD contract.
Answer:Indeed, there are some Mod Rehab projects where there is one legal entity but multiple HAP contracts. It would be acceptable (and advisable) for the owner to consolidate these into one HAP following conversion.

Category:New Construction
Posted:05/12/2014
Question:We are the developer of a RAD project that has already received a CHAP. We are working to finalize our construction costs. Because Davis Bacon applies, we have pulled down our wage rate classification and have found a number of trades that are not included in it. DOL advises that we must go through our "contracting officer" to make a request to them for additional wage classifications. Who would our contracting officer be in this case?
Answer:The housing authority will need to request a specific wage decision for each missing labor category (for example, for 'residential site grading') from the Department of Labor. When you and the housing authority eventually sign the construction contract, the complete Davis-Bacon wage decision should be an attachment to the contract.

Posted:12/09/2013
Question:What is the trigger for Davis-Bacon and Section 3 under a RAD conversion?
Answer:Davis-Bacon and Section 3 are triggered by any any rehabilitation or new construction performed as part of the “Year One” repair schedule defined by the RPCA, Financing Plan and Rad Conversion Commitment. In addition, and substantial repairs undertaken prior to conversion (i.e., pre-conversion rehabilitation with Capital Funds).

Posted:10/17/2013
Question:Under the RAD program can we do New Development? Reason is there, is a need for more safe, decent and sanitary units in our PHA's jurisdiction.
Answer:A RAD conversion involves removing a specified number of units from your ACC and replacing them with the same number of units under a PBRA or PBV contract. That is, RAD does not result in an increase in the total number of units with ACC / PBRA / PBV rental assistance. Accordingly, in RAD, new construction would typically be limited to situations in which the PHA wants to create new units to replace existing ACC units.

Posted:10/01/2013
Question:If a HA is proposing to do a RAD conversion of Public Housing that involves demolishing an existing project and rebuilding an equal or greater number of units on the same site, is this treated in essentially the same way as for a RAD conversion with rehab? Is it unnecessary to do a transfer of assistance as long as the units are being rebuilt on the same site? Where and how does the RAD PCA fit into this scenario?
Answer:In the situation you describe, a transfer of assistance would not be needed, because the RAD project would be located on the same site as the current public housing. In demolition-and-reconstruction projects, a RAD PCA is not required. See Notice PIH-2012-32, page 26, footnote 6; and Attachment 1A.1 paragraph B. [Updated 7.29.13]

Posted:04/04/2013
Question:Can Capital Funds be used for relocation cost under the program?
Answer:HUD does not have any requirements regarding how the cost of temporary tenant relocation will be funded in a RAD conversion. Temporary relocation cost can be covered from any source of funds (including, without limitation, first mortgage proceeds, soft loans, tax credit equity, and contributions from the PHA), so long as whomever is providing the funds allows the funds to be used for that purpose. Contributions to the transaction by the PHA itself can be used for any purpose but are subject to subsidy layering requirements (that is, the PHA's contribution is limited to legitimate costs of the transaction that cannot be funded from the remaining sources of funds). Please note that RAD cannot result in any permanent involuntary relocation of tenants.

Posted:10/13/2012
Question:Are we required to have a co-developer?
Answer: No, this will be largely based on your experience.

Posted:09/24/2012
Question: As part of a RAD conversion, can my PHA demolish the existing structure and undertake new construction?
Answer: The RAD program was designed to help address the large backlog of capital needs in public housing. A PHA may use RAD to rehabilitate an existing project or, where circumstances warrant, demolish a project and build new replacement housing, including atoff-site locations. However, this type of redevelopment will very likely require more than debt financing to be feasible. Additional funding possibilities include LIHTC equity, soft financing sources such as green funding products, CDBG, HOME, the Affordable Housing Program of the Federal Home Loan Banks, local housing trust funds or foundation funding and PHA sources such as Operating Funds, Capital Fund and, Replacement Housing Factor Funds. Other public housing development funds targeted to distressed housing may be available under the HUD’s Choice Neighborhoods Initiative. A separate Section 18 Demo/Dspo approval is not required under RAD. However, PHAs should keep in mind that they must follow the Uniform Relocation Act with respect to resident relocation and that current residents of the project being converted under RAD have the right to return to the site without re-screening. [See Final RAD Notice References: Paragraphs 1.5, B and 1A.1,C.]

Category:Notice
Posted:10/22/2012
Question: Under RAD, are there any reporting requirements, such as electronic quarterly reporting under the Recovery Act?
Answer:No.

Posted:10/22/2012
Question: We are working with a housing authority that has a large public housing development that they want to demolish and rebuild. Can RAD be used for this purpose to transition the existing acc subsidy into long term section 8 vouchers? We are unclear if this program only applies to rehab projects.
Answer: RAD allows new construction, and RAD also allows transfer of assistance to a different site at the time of the RAD conversion. Accordingly, the type of project you describe is eligible for RAD.

Posted:10/22/2012
Question:Is a nonprofit agency (not a housing authority), who owns/operates a nursing home or assisted living facility (currently with an FHA-insured loan), eligible to apply under RAD to convert units to PBV?
Answer:No. In the first component of RAD, eligibility is limited to units that are already assisted under the public housing units or Section 8 Mod Rehab programs. In the second component of RAD, eligibility is limited to units that are already assisted under the Mod Rehab, RAP or Rent Supplement programs.

Posted:10/13/2012
Question:The Notice provides that, after RAD, leases must be renewed unless there is cause. How will that be addressed in later years?
Answer:For PBVs, this requirement is permanent for RAD unless Congress provides otherwise (see the Notice, Section 1.6.C.3). For PBRA, this requirement comes from existing law and will continue unless Congress provides otherwise.

Posted:10/09/2012
Question:In Section 1.7.A.7 the Final Notice states: "Distributions. Regardless of type of financing, converted projects will not be subject to any limitation on distributions, contingent on the availability of surplus cash as determined by year-end audited or certified financial statements." Does this refer to surplus cash from the converted project only?
Answer:Yes (please note, though, that Section 1.7 is specific to PBRA conversions under RAD; there is no similar requirement for PBV conversions under RAD). Additionally, while there is no restriction on distributions, the project may be subject to a subsidy layering review, as applicable.

Category:PHA Certifications
Posted:07/08/2014
Question:Who should prepare Exhibits H and I of the RCC?
Answer:Exhibits H and I are no longer required to be completed. The RAD Transaction Manager should note Ex. H and Ex. I as "Not Applicable" when issuing the RAD Conversion Commitment (RCC) to the PHA. In lieu of completing these exhibits, the PHA must instead submit a certification prior to or at closing which has been added to the Consolidated Owner Certification template which can be found on www.radresource.net > Contracts & Closing Documents. Please consult your Transaction Manager or assigned RAD Closing Coordinator if you have any questions.

Category:Physical Condition Assessment (PCA)
Posted:01/30/2013
Question:All public housing agencies are required to conduct a Green Physical Needs Assessment using the HUD GPNA Tool. The final rule is projected to be published in March. Agencies with a December 31 fiscal year must submit the GPNA to HUD on September 1, 2013. My question is if a project is converting all units to RAD, does the project need to complete the GPNA? And, if a project is only converting some of the units to RAD and the remaining will stay in public housing, will the RAD units need to be part of the GPNA?
Answer:The public housing GPNA requirement will not become effective until the publication of its final rule. PHAs that have entered RAD and whose converted units are no longer recorded as ACC units in PIC as of their GPNA submission due date (and are reflected in the PIC data set provided by HUD for import into the GPNA tool) are not required to make the PNA submission from the GPNA tool for that portion of their inventory that has left public housing for RAD. PHAs that have been awarded a Commitment to Enter into a HAP (CHAP) under RAD as of the due date of their public housing GPNA will be required to make the PNA submission from the GPNA tool accounting for the entire inventory of units remaining in public housing (and remaining reflected in the PIC data set provided by HUD for import into the GPNA tool) but recording “0” needs for that portion under the CHAP. If the entire inventory of any AMP is under a CHAP as of the GPNA due date, no submission will be required as it will be considered likely that the entire AMP will be leaving public housing. Should public housing inventory under a CHAP not ultimately convert to RAD and remain in public housing, a GPNA submission will become required. Any subsequently required submission must be made from the automated reporting feature of the GPNA tool. Information from a RAD PCA may be used for the submission but it must be migrated to the GPNA tool.

Posted:01/16/2013
Question:What are typical costs for a PCA and will an approved PCA vendor list be published?
Answer:HUD in unable to provide a list of PCA providers. National Equity Fund, Inc., CLPHA and Enterprise Community Investment created a third party website - www.radmarketplace.com - to serve as a portal for PHAs, consultants, lenders, and developers to connect in regards to RAD applications and transactions. However, this site and its contents are not endorsed by HUD. Please discuss PCA costs with your lender.

Posted:10/22/2012
Question: If we are doing all new construction (looking to demolish the building), what do we do about the PCA?
Answer: You won't be required to do a PCA when you are doing new construction.

Posted:10/19/2012
Question: We are working with a housing authority that is: 1) planning to convert their entire conventional public housing portfolio (under 1,000 units) to PBRA, and 2) contemplating NO additional improvements / financing associated with this RAD conversion. Will HUD still require a detailed Physical Conditions Assessment for that portfolio?
Answer: Yes, even if you’re not contemplating any improvements or financing, you will be required to complete a PCA following CHAP issuance and prior to conversion. We want to make sure that the project is viable over the long-term. It is fine that the PHA is not contemplating any improvements at the time of conversion, if that’s what the PCA shows, but then we want to make sure that the reserve deposits are sufficient for work in the out-years,

Category:Post Closing Operations
Posted:07/18/2014
Question:The RAD Project Based Rental Assistance (PBRA) Housing Assistance Payment (HAP) contract, HUD Form 52624, is inconsistent with the Multifamily Assisted Housing Reform and Affordability (MAHRA) PBRA HAP contract with respect to future changes in key terms. Can a PHA request that the RAD contract include language that would conform with MAHRA in this area?
Answer:Yes. At the request of the PHA, the parties may amend the RAD PBRA HAP by adding a sentence to the end of Section 1.2(c), and by adding a new Section 1.2(d), as noted below in CAPS. (c) HUD Requirements. The Contract shall be construed and administered in accordance with Notice PIH 2012-32 (Notice). With the exception of the provisions of 24 C.F.R. Part 880 and section 8 of the Act that are identified in Appendix I and Appendix II of the Notice, respectively, as inapplicable, the Contract shall further be construed and administered in accordance with all statutory requirements and all HUD regulations and other requirements, including any amendments to and/or changes in statutory requirements, HUD regulations (including 24 C.F.R. Part 880), and other requirements. HOWEVER, ANY CHANGES IN HUD REQUIREMENTS, EXCEPT TO THE EXTENT REQUIRED BY STATUTE, THAT ARE INCONSISTENT WITH THE PROVISIONS OF SECTIONS 2.5(a)(1) AND 2.8, SHALL NOT BE APPLICABLE. (d) STATUTORY CHANGES DURING TERM. IF ANY STATUTORY CHANGE DURING THE TERM OF THE CONTRACT IS INCONSISTENT WITH SECTION 2.5(A)(1) OR 2.8 OF THE CONTRACT, AND IF HUD DETERMINES, AND SO NOTIFIES THE CONTRACT ADMINISTRATOR AND THE OWNER, THAT THE CONTRACT ADMINISTRATOR IS UNABLE TO CARRY OUT THE PROVISIONS OF SUCH SECTIONS BECAUSE OF SUCH STATUTORY CHANGE, THEN THE CONTRACT ADMINISTRATOR OR THE OWNER MAY TERMINATE THE CONTRACT UPON NOTICE TO THE OTHER PARTY. NOTWITHSTANDING SUCH TERMINATION, THE PROJECT SHALL REMAIN SUBJECT TO THE RAD USE AGREEMENT ENCUMBERING THE PROPERTY ON WHICH THE PROJECT IS LOCATED. These changes will conform the RAD PBRA HAP to the MAHRA PBRA HAP with respect to “future changes.” HUD will shortly prepare a formal change request under the Paperwork Reduction Act to incorporate these new provisions. The above changes will ensure the commensurate private investment necessary to improve the physical condition for residents and will also ensure the long term affordability restrictions remain in place.

Posted:07/17/2014
Question:How is RAD responding to concerns of commercial lenders and Low-Income Housing Tax Credit (LIHTC) investors with regard to foreclosure matters and continued rental assistance?
Answer:HUD has posted a standard rider to the public housing conversion RAD HAP contracts to address the concerns LIHTC investors have raised while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. These riders document and set forth conditions for: providing notice to LIHTC investors; accepting the investor’s offer to cure on behalf of a defaulted owner; providing HUD consent to the transfer of the investor’s interest in the ownership; and pre-approving replacement of the general partner or managing member with the special limited partner or similar entity for a limited period of time in order to facilitate an acceptable permanent replacement. To access these riders, go to www.radresource.net > Contracts & Closing Documents. HUD is also in the process of drafting standard riders to the Use Agreement and the public housing conversion RAD HAP contracts to clarify that HUD will not assert an interest to prohibit a lender from foreclosing when there is cause, but that the Use Agreement -- which establishes affordability requirements -- survives foreclosure by its terms and that continuation of HAP assistance requires HUD consent. It is also HUD’s goal through these riders to provide for a limited continuation of HAP assistance if the lender or its designee comes into ownership of the project in accordance with its rights under the loan documents. When final, these riders will be published on the RAD website. Until these riders are finalized, HUD has developed several provisions that can be provided by the RAD Closing Coordinator to assist with transactions currently moving into the closing phase. These provisions address lender concerns while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. Importantly, neither rider changes RAD statutory and RAD notice requirements around ownership and control. The RAD Use agreement and RAD HAP contract – two means through which long-term affordability for residents are secured – survive foreclosure, leaving current and future residents protected.

Posted:07/17/2014
Question:My PHA is the recipient of a ROSS Service Coordinator Grant and plans to submit a RAD Application. Will we be permitted to continue assisting families (who, because of the RAD conversion) will be residing in non-public housing units) after the conversion?
Answer:Yes. Section 1.5H of the Notice provides that residents who are currently participating in ROSS may continue to participate after the RAD conversion for the term of ROSS grant. Also, with the PBRA HAP, the converted properties will be eligible to apply for the Multifamily Housing Service Coordinator Grants which are available to subsidized properties. These competitive grants are offered through a Notification of Funding Availability to serve properties designated as elderly and/or disabled. [Revised 7.17.14]

Posted:07/15/2014
Question:For a RAD PBV conversion, I understand that the public housing lease is terminated and a new lease must be effective as of the effective date of the HAP contract. I also understand that there is a RAD Unit Lease Rider that needs to be attached to the lease for all PBV conversions. However, once the public housing lease is terminated, is there a specific form of lease required to be used? An existing FAQ states that "the normal voucher lease requirements are applicable." What does that mean and where can I find the requirements?
Answer:24 CFR part 983.256 describes the lease requirements under the PBV program. This regulation (24 CFR part 983.256) outlines the form of lease, the required information within the lease, and the required tenancy addendum. There is not a specific form that owners must use as the PBV lease, however, in all cases the lease must include the additional tenant rights specified in PIH Notice 2012-32 REV 1 (the RAD notice) as well as the HUD-required tenancy addendum (as discussed in the regulation).

Posted:07/15/2014
Question:Who is responsible for monitoring the provision of supportive services, the PHA or the owner? Any guidance that you can provide would be greatly appreciated
Answer:The responsibility for monitoring, per 24 cfr 983.56(b)(2)(ii)(C), is on the PHA. “The PHA must monitor the excepted family’s continued receipt of supportive services and take appropriate action regarding those families that fail without good cause to complet either supportive services requirement. The PHA administrative plan must sate the form and frequency of such monitoring.”

Posted:07/08/2014
Question:Can a PHA ask for a waiver of certain regulations in order to establish a site-specific utility allowance schedule for a property converted to a Project-Based Voucher contract under RAD?
Answer:Yes. A PHA can ask for a waiver of 24 CFR 983.301(f)(2)(ii) and 982.517 in order to establish a site-specific utility allowance schedule for a property converted to a Project-based Voucher contract under RAD. In considering such waiver requests, HUD will take into consideration whether the project had a site-specific utility allowance prior to conversion, the extent to which the voucher-wide utility allowance schedule can be appropriately applied to the site without causing undue burden to the residents or over-subsidizing the residents, and other factors HUD may request in order to assess good cause.

Posted:07/08/2014
Question:Can an owner administer the PBV waitlist?
Answer:The obligation that the waiting list be maintained by the administering PHA is statutory. A PHA may choose to use a broad HCV waiting list, a PBV waiting list, or a project-specific PBV waiting list, but it is still the responsibility of the PHA to maintain that waiting list.

Posted:07/08/2014
Question:Does a PHA have discretion to set a policy that would give preference to PBV contracts in the event that voucher funding is reduced?
Answer:The PHA does have discretion to set such a policy, but it must be included in the PHA’s Administrative Plan. (See 982.54(d)(2) for a full description of what must be included in the Administrative Plan related to this issue.)

Posted:07/08/2014
Question:My current public housing project consists of scattered sites on multiple parcels and I am considering a conversion to PBV under RAD. Under what conditions will I be allowed to combine these units under one CHAP (and one HAP)?
Answer:In the PBV program, multiple single-family buildings may be on the same HAP Contract (i.e. scattered-site single family buildings). However, if the scattered sites are not single-family buildings, each project must have its own HAP contract. A project can be defined as a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. HUD interprets project to apply to all these structures (i.e., single building, multiple contiguous buildings, etc.), and a PHA must consider the entire definition and apply this definition to proposed PBV units. For purposes of RAD application, the PHA will need to submit an application for each AMP (or each portion of an AMP). If the scattered-sites are eligible to be under one HAP, as described above, and are already under one AMP, one CHAP will be issued. If the scattered-sites are eligible to be under one HAP as described above, but are not currently under one AMP, separate applications should still be submitted using the “Many-to-One” application instructions found here: http://portal.hud.gov/huddoc/manyto1_appinstr.docx.

Posted:07/01/2014
Question:Are OCAFs each year to be calculated, for both PBV and PBRA projects, by the owners using Housing Form 9625 (OCAF Rent Adjustment Worksheet) and then reviewed by the project's subsidy administrator? How will funds be added each year, for both types of projects but particularly to a PHA's voucher funding in the case of PBV?--a separate new voucher increment covering the OCAF amount for each project?
Answer:Yes. PHAs administering RAD PBV contracts would use Housing Form 9625 to adjust the rents at the anniversary date of each contract, subject to rent reasonableness. HUD calculates the amounts provided to PHAs for voucher renewal costs based on VMS reporting and adjusts the overall amount by an Annual Adjustment Factor, which PHAs use to support the overall inflation of voucher costs in their jurisdiction. HAP spent on RAD PBV projects will be include in VMS reporting and HUD's normal voucher renewal calculation. There will not be a separate additional voucher increment covering the OCAF increase for each project each year.

Posted:06/02/2014
Question:If a public housing-only PHA converts its entire inventory to RAD, does it need to submit one last FASS-PH report (for that last partial or full year)?
Answer:Yes. Because it received Federal funds for a portion of that fiscal year, the PHA will need to submit a close-out FDS.

Posted:05/14/2014
Question:Our PHA is pursuing a RAD conversion, and we will be transferring the property to a new single asset entity. Does the new entity have to have a separate board of directors?
Answer:There is no RAD requirement that a new single asset entity have a separate board of directors. Check with your financing partners (and your local legal counsel) to see if they have any requirements. Outside the public housing community, it is common for nonprofit housing owner-developers to have a single board of directors governing the nonprofit itself and all of its 100% owned single asset entities.

Posted:05/14/2014
Question:Our PHA is pursuing a RAD conversion. In what situations must we create a new entity to own the converted project?
Answer:If the conversion will use PBVs, and the PHA itself will administer the PBVs, HUD rules that prohibit the PHA from signing a HAP with itself. Consequently, the PHA will either need to create a single-purpose entity to own the PBV units (typically, through a related non-profit) or the PHA may want to form a separate company to serve as the leasing agent or management agent for the PBV program. But other than this requirement in the PBV program that the PBV administrator and the PBV owner cannot be the same entity, which is actually a PBV program requirement and not a unique RAD requirement, there is no RAD requirement for creating of new ownership entities. That said, in almost all situations where the PHA is seeking private financing, the lender or investor will the property be owned by a “single asset entity” (usually a limited liability company or a limited partnership but sometimes a corporation, that owns nothing other than the property). FHA requires a single asset entity if FHA multifamily mortgage insurance is being utilized. Another common example is Low Income Housing Tax Credits, which necessarily entail sale of the property, and the tax credit investor is almost certain to require a single asset entity.

Posted:05/14/2014
Question:Our PHA is pursuing a RAD conversion. We are converting to PBRA, we are not using tax credits, and we do not plan on taking out a first mortgage loan. Accordingly, there is no requirement that we transfer the property to a single asset entity. However, the RAD Notice strongly encourages a single asset entity. Why is that?
Answer:The short answer is that single asset entities are the industry standard form of ownership for apartment properties, single asset entities facilitate accurate accounting and management reporting, and single asset entities make it easier for management and the board to understand trends in the portfolio.

Posted:04/04/2014
Question:The Quick Reference Guide to MF Housing Requirements states that properties converting to PBRA under RAD will use their current PIH approved utility allowances for the first contract year after conversion. Then after one year the existing MF Housing policies would need to be followed to adjust the property’s utility allowances. I believe that our current utility allowances would increase under the way MF does their utility allowances. My question is after one year when we are required to implement new utility allowances acceptable to MF methods, and the utility allowance increases, does the gross rent increase by that amount or does the contract rent decrease by that amount?
Answer:The gross rent would change based on the change in utility allowance, but the contract rent would not be effected. For example, if the utility allowance increases from $23 to $50 (a $27 difference), the gross rent will go up by $27 when the new higher utility allowance is implemented, while the contract rent would remain the same.

Posted:03/31/2014
Question:If a PHA is converting to PBVs under the first component of RAD, can the PHA be its own HAP contract administrator?
Answer:Under the PBV program, the Contract Administrator and the Owner cannot be the same legal entity (i.e., the PHA cannot execute a contract with itself). To avoid this situation, the PHA has several options, including: 1) The PHA can form a separate corporation to administer (manage) the Section 8 voucher program; 2)The PHA can transfer the ownership of the project to a non-profit affiliate or instrumentality of the PHA, or 3) The PHA can form a Limited Liability Corporation (LLC) that is a wholly-owned subsidiary of the PHA to act as the leasing agent for the PBV units (like a management contract), where the HAP is then executed between the PHA and the LLC. Additionally, where the PHA has an interest in the ownership of the property covered under the PBV contract, the PHA must seek an independent entity, approve by HUD, to perform the HQS inspections and rent reasonableness (24 CFR 983.59). The independent entity that performs these tasks can be the unit of general local government for the PHA jurisdiction (unless the PHA it itself the unit of general local government or an agency of such government), or any other HUD-approved public or private independent entity.

Posted:02/03/2014
Question:Can a PHA continue to recognize and fund an existing resident council organization formed under Part 964, even though it is not required to do so?
Answer:Yes.

Posted:02/03/2014
Question:Eligibility is grandfathered for public housing residents that occupy units converted to PBV via RAD. Would this grandfathering also apply to residents that were working through their Earned Income Disregard periods? In public housing, the EID eligibility is not limited to persons with disabilities as it is in Section 8. I am assuming that their EID eligibility would continue through to completion and during their tenancy in the PBV unit. However, wanted to confirm that here.
Answer:See pages 42 and 43 of Notice PIH-2012-31 REV-1 that discuss the continuation of Earned Income Disregard. Also see pages 39 and 40 that discuss the process for phasing in the rent increase that would occur at the end of the EID period.

Posted:02/03/2014
Question:If a PHA converts a complex or AMP to RAD, is the property still maintained by the PHA’s maintenance staff and office staff?
Answer:Under RAD, the project owner (in this case, the PHA) would be free to implement any property management approach that is acceptable under the HAP and that is acceptable to lenders and other funders. If you convert to PBRA, and you self-manage, you will be required to complete a Management Agent Certification, HUD Form 9839.

Posted:02/03/2014
Question:Is post-conversion entity allowed to remain a Housing Authority if full agency conversion is approved? For property tax purposes, this is important under Georgia state law.
Answer:While recommended that a single-asset entity be formed for each conversion, there is no RAD requirement to do so. However, most lenders and investors will require each project to be set up as a single-asset entity.

Posted:02/03/2014
Question:Our inventory of Scattered Site homes and duplexes is in very good condition. Current residents have expressed an interest in possible ownership. If we convert them to RAD, at some future date could these units be disposed of in place for home ownership to those residents; the RAD PBV converted to a homeownership voucher and the RAD PBV assigned to another unit (i.e. new construction) together with the RAD Use Agreement?
Answer:You are correct that units could be released for homeownership only if there is a transfer of RAD assistance to an acceptable replacement unit. Any such transaction would require the prior written approval of HUD, which would be granted on a case by case basis.

Posted:02/03/2014
Question:We hope to convert 72 PH units (two 36-unit projects) to PBV under RAD. In the PBV program families who are underhoused or overhoused must move but we understand that all tenants in place at the time of RAD conversion cannot be required to move. Can we let the under and overhoused families remain after conversion? We have no available units in the project to which we can move them.
Answer:If there are not appropriately-sized units for the families to move to, they may remain after conversion; RAD does not permit permanent involuntary displacement of any existing tenant.

Posted:02/03/2014
Question:We hope to convert 72 PH units (two 36-unit projects) to PBV under RAD. We have 10 families who pay flat rents. Do they continue to pay flat rents after conversion?
Answer:The flat rents no longer apply after the RAD conversion. Post-conversion, rents will be in accordance with the PBV HAP contract. If the resulting rent increase is more than 10%, the RAD phase-in rules would apply (see Notice PIH-2012-32 REV-1 page 39 concerning phase-in of tenant rent increases for PBV conversions).

Posted:12/04/2013
Question:May a PHA adjust or reexamine its rent bundle after conversion takes place?
Answer:No. Just as with other aspects of financing a conversion, a PHA must ensure that rent bundling leaves all converting properties with sufficient cash flow to maintain long-term financial viability.

Posted:10/17/2013
Question:Can PHAs put RAD Developments up for sale? If so, what will be some of the requirements?
Answer:A RAD converted development must remain under public or non-profit ownership, except in rare cases of foreclosure or bankruptcy, or when tax credits are used. However, even when tax credits are used, the PHA must maintain sufficient interest in the project as defined in PIH Notice 2012-32 REV 1. The RAD Use Agreement requires HUD permission for the PHA to transfer the project.

Posted:10/17/2013
Question:In considering a RAD conversion from public housing to PBRA, would the Form HUD-90105a Model Lease for Subsidized Programs be required under PBRA?
Answer:Yes. The current form of model lease, and instructions for implementing the model lease, are contained in Handbook 4350.3 Occupancy Requirements of Subsidized Multifamily Housing Programs (see Appendices 4-A and 4-E). Additionally, PIH Notice 2012-32 REV 1 requires additional resident rights be included in the lease.

Posted:10/17/2013
Question:Looking for documentation that explains the process of phasing-in rents, the duration of the phase-in process, etc., if applicable, in RAD projects once they convert.
Answer:Phase-in of tenant rent increases for PBV is discussed in Section 1.6.C.4 of Notice PIH-2012-32. Phase-in of tenant rent increases for PBRA is discussed in Section 1.7.B.3. For example, if a tenant's monthly rent is $100 pre-conversion and would be $130 post-conversion (an increase greater than 10% and greater than $25), the $30 increase could be phased in by $10 (one-third) per year for three years. The tenant's monthly rent would be $110 for the first year. In the second year, the tenant's monthly rent would be the lesser of $120 or the appropriate rent based on the tenant's recertified income (if the tenant's income decreases, the phase-in would be considered completed). In the third year, the tenant's monthly rent would be the lesser of $130 or the appropriate rent based on the tenant's recertified income. Continuing the example, the PHA could choose to phase in the increase over a period longer than three years and up to five years. There is no need for PHAs to submit their rent phase-in plans for RAD approval.

Posted:10/17/2013
Question:Once conversion is completed, are there restrictions regarding the form of lease used or can a PHA use a lease of their choosing?
Answer:For RAD PBV conversions, the normal voucher program lease requirements are applicable. For RAD PBRA conversions, the normal PBRA lease requirements are applicable. See HUD Handbook 4350.3 Chapter 6. In both cases, the lease must include the tenant rights as required in PIH Notice 2012-32 REV 1

Posted:10/17/2013
Question:What accounting/book-keeping measures must be instituted if only a portion of our properties participate in RAD (some remain traditional PHA properties receiving funds from HUD while others convert)? As a part of that financial question, can staff be allocated to each program or will separate staff need to be used?
Answer:Be sure to talk to each of your funders. First mortgage lenders, in particular, are likely to have accounting / bookkeeping requirements. RAD itself has very few such requirements: a) All RAD conversions are subject to a requirement to provide access to records (including project financial statements and operating data), if HUD so requests. b) RAD PBRA conversions must submit annual financial statements electronically to HUD; see the REAC-FASS website at http://www.hud.gov/offices/reac/products/prodmf.cfm. c) RAD projects that utilize FHA-insured first mortgage financing will be subject to FHA's accounting and bookkeeping requirements; contact your FHA multifamily lender. Your question concerning whether it is acceptable to allocate staff costs to the RAD project should be posed to your first mortgage lender. If you will be using FHA-insured financing, HUD recommends that before adopting any allocations, you consult with accountants, property managers, or other experts who are very familiar with applicable FHA requirements.

Posted:10/17/2013
Question:What is the document HUD will use to flow the Section 8 rent from closing of the conversion? We understand the Section 8 rents begin immediately and can be used for temporary housing and relocation, please confirm.
Answer:The HAP contracts include the provision for Rehab Assistance Payments.

Posted:10/17/2013
Question:Will Private Management Companies (i.e. Companies Managing Multifamily Properties) be able to manage RAD developments for the PHAs? If so, what will be the steps the Private Management Companies will take to manage RAD Developments?
Answer:The RAD program does not have any requirements concerning management agent selection. Your lender is likely to have requirements regarding management agent selection.

Posted:10/01/2013
Question:We have a situation where we might have to do relocation in phases of rehab because of the availability of suitable relocation housing. We could have a situation where we could have tenants living in un-rehabbed units, some relocated, some in rehab units finished; do all of the units convert at the time we convert when we start on the construction loan and relocation?
Answer:Yes. All units convert at the RAD closing. [Updated 7.29.13]

Posted:10/01/2013
Question:When an authority has a CHAP Agreement, but has not yet closed, are those units still to be inspected by REAC if that is scheduled prior to the closing?
Answer:Upon CHAP award, affected units will be exempt from PHAS scoring. However, normal public housing inspections continue until the RAD closing. [Updated 7.29.13]

Posted:08/13/2013
Question:We are converting almost all of our public housing through RAD. What happens to the community centers during this conversion, maintenance buildings, central office, etc.? All are non-Residential units but are there to support the residential units.
Answer:These are decisions that you will need to make. First, any non-dwelling structures that are on the same footprint of a converting project will become defederalized with the RAD conversion (assuming they do not receive any special federal funding). HUD expects that, in your situation, you will be operating a central office cost center after the RAD conversions. If you will be providing property management, the central office cost center would receive property management fees. The central office cost center would also receive cash flow distributions. From those revenues, the central office cost center would bear the expenses of providing property management services and of being the owner. If you follow this approach, most likely your central office would be retained by the PHA (not transferred to any RAD project) and used to house the central office cost center. Most likely, community centers and maintenance buildings that fall within the 'footprint' of a RAD project would be transferred to the RAD project along with the residential buildings. You would want to talk with your legal and financial advisors regarding a central community center (serving multiple properties) and regarding a central maintenance facility (serving multiple properties); the best option for these types of central facilities will vary depending on your specific circumstances.

Posted:05/22/2013
Question:How will the replacement reserve account be handled by the Housing Authority? Is this a separate checking account that will be administered by the HA?
Answer:RAD requires a replacement reserve account, that must be funded at the level required in Notice PIH-2012-32. RAD does not, however, impose specific requirements on how the replacement reserve account is controlled. HUD expects that, in most situations, your new first mortgage lender (and investor, in the case of LIHTC) will want to hold and/or approve release of the replacement reserve funds. If your project does not have a standard commercial first mortgage loan, or if your first mortgage lender (or investor, in the case of LIHTC) does not want to control the replacement reserve funds, you should include a proposal in your Financing Plan addressing who will maintain custody of the funds, how the funds will be invested, and how withdrawals will be reviewed and approved. HUD also encourages you to discuss these issues with your Transaction Manager in advance of submitting your Financing Plan.

Posted:05/21/2013
Question:Relative to future audits, I'm guessing a PH development converted to PBRA via RAD would be treated like any other 4350.1 property (Section 8 New Construction, 236, etc.) in that a separate audit would be required, but that the former PH property would no longer be included in the Housing Authority's Financial Data Schedule - is that right?
Answer:The RAD PBRA contract will require the electronic submission of annual financial statement data to HUD. However, the PHA will also record financials for the property under "Other Business" in FASS-PH.

Posted:05/20/2013
Question:Will the housing authority administering the project based vouchers receive any ongoing fee for administering the vouchers in the case of a conversion from public housing to project based vouchers? This question has to do with the ongoing monthly voucher administration fee and not with any initial special lease-up fee.
Answer:RAD PBV contracts provide for ongoing monthly administration fees, to the PHA that is administering the PBVs.

Posted:04/23/2013
Question:When the RAD conversion is approved, we would like to transfer our property to a private, non-profit entity. This would allow us an opportunity in the future to access financial resources to complete any needed property improvements. Once RAD conversion is approved, can this be completed & if so, what is the process we would need to follow?
Answer:Yes, projects can be transferred at or following the RAD conversion. You would need to demonstrate to HUD that the transfer would satisfy the RAD 'ownership or control' requirement (see Notice PIH-2012-32). HUD would also have to approve transfer of the HAP contract. If the transfer is taking place as part of the initial financing, then it would be part of the closing process. If the transfer occurs at a later time, you would need to consult with your lender(s) and/or investor regarding any requirements they may have.

Posted:03/05/2013
Question:Can a RAD project take on an Energy Performance Contract (EPC) after RAD closing?
Answer:After the RAD closing, the project will no longer be public housing, and the public housing EPC program would not be applicable. However, many PHAs are finding that RAD allows them, essentially, to create their own EPC. By locking in the current funding under RAD, the PHA will benefit from utility savings.

Posted:03/05/2013
Question:For a RAD project, is the utility consumption frozen at the RAD conversion?
Answer:Utility consumption, as a factor in determining utility subsidy, is only important in the public housing program. When the PHA converts, the RAD contract rents will be based on “current funding.” So, if a PHA has a high Utility Expense Level (UEL) under the public housing program, and the PHA can reduce that consumption following conversion (say, by making energy improvements),the PHA will benefit from those energy savings, i.e., HUD is locking in the funding to the PHA based on these higher consumption levels.

Posted:03/04/2013
Question:Presently under Public Housing, the income limits are at the 80% and below AMI for eligibility. If the RAD conversion goes with PBRA will the income eligibility requirements be set at 80% - Low Income or at 50% - very low income requirements? This will make a difference in income because the application income is based on our current admissions of 80% and below.
Answer:For conversions to PBRA, the income limits will be the same as for public housing, i.e., below 80% of the median. (The Department will issue a formal notice shortly clarifying this point.) However, like public housing, PBRA properties have "income targeting provisions" where at least 40% of admissions must be below 30% of area median incomes.

Posted:03/04/2013
Question:The RAD conversion guide, page 15, states the amount required for the replacement reserve funding. I cannot find, however, the amount required for the operating reserve. Is it the same as the public housing guidelines? Where can I find this information?
Answer:HUD does not impose any requirement for operating reserve for RAD projects. You should check with your proposed lender or equity investor, if applicable, to see if they require any operating reserves. Typically, a LIHTC investor may require an operating reserve. For example, the standard in the LIHTC industry seems to be 6 months of operating expenses and debt service. FHA loans themselves do not require any operating reserves.

Posted:02/19/2013
Question:If a Mod Rehab property converts to PBRA under RAD, who administers the Tenant Certifications (the Housing Authority that now administers the Mod Rehab contract or a Performance Based Contract Administrator)?
Answer:Assuming that the owner converts to PBRA under the first component, the owner will administer the contract. If the owner converts to PBV, it will be the PHA.

Posted:02/19/2013
Question:If a Mod Rehab property converts to PBRA under the first component of RAD, would the property have HUD REAC inspections, or continue with local Housing Authority inspections?
Answer:Following the RAD closing, physical inspections would be through REAC for PBRA conversions.

Posted:02/19/2013
Question:In the sample RAD PBRA HAP contract for former Mod Rehab properties, it appears an AFS Audit will be required. Is this correct?
Answer:Yes, after the RAD closing the converted PBRA project would be subject to the REAC-FASS annual financial statement requirements. This is not applicable to PBV conversions.

Posted:02/19/2013
Question:The template PBRA HAP Contract for former Mod Rehab properties that is on the RAD website includes a provision that surplus cash can only be distributed once a year. Can this requirement be waived or modified for projects that do not have FHA financing?
Answer:No. The RAD template legal documents must be used without alteration. The restriction on cash flow only after closing of financial statements is true regardless of financing source.

Posted:01/22/2013
Question:How does the switch to a RAD HAP Contract affect the PHA's Admissions and Continued Occupancy Policy?
Answer:A project that converts under RAD will no longer be under the public housing program. Therefore, the ACOP will not apply. The owner must establish admissions and occupancy policy consistent with the program to which the project is applying. For conversions to PBV, these policies can be found in CFR 24 Part 983. For conversions to PBRA, these policies can be found in Handbook 4350.3

Posted:01/22/2013
Question:The RAD rent for our project is less than the FMR. If we convert a project to RAD will the RAD rents be included in the calculation of average rent for Section 8 and thus drop our agency's allocation and fee income?
Answer:RAD rents do not affect the baseline Section 8 rent calculation for the Agency and thus will not impact allocation or fees. The new voucher subsidy that will be issued to fund conversions to PBV will get renewed in the same manner as other Section 8 HAP. Further, a PHA will receive an admin fee for each new RAD unit.

Posted:10/22/2012
Question: Why wouldn’t the PHA be tax exempt from the real estate taxes?
Answer: Real estate tax exemption is governed by state and local law. In most cases, HUD believes PHAs will be able to retain their PILOT agreement. You should consult local counsel to make such a determination. Additionally, In some jurisdictions, nonprofits that provide affordable rental housing are exempt from real estate taxes, and such an exemption might be available to your PHA.

Posted:10/22/2012
Question: Since RAD is a demonstration program, do we have the option to use the HQS or UPCS?
Answer: It depends on whether you convert to PBV or PBRA. If you convert to project based vouchers, you are governed by the project based voucher rules, which is HQS. If you convert to multi-family section 8, or PBRA, that program, like public housing, is covered by uniform physical condition standards (UPCS) and there will be a UPCS inspection every year or once every 3 years depending on the score you receive.

Posted:10/22/2012
Question: The properties we are considering for RAD pay all of the utilities now. We think it would be more prudent to have residents pay the utilities and for us to establish a utility allowance. How should we handle that in the Application?
Answer: The Application should use the current utility configuration (all utilities project paid, using your example). If you eventually decide to change the utility configuration, there would be an adjustment: the residents would get a higher utility allowance and your contract rent would be adjusted downward.

Posted:10/22/2012
Question: We are assuming project cash flow to the PHA is treated as unrestricted income and not program income. Is that correct?
Answer: Yes, post-RAD cash flow is unretricted.

Posted:10/22/2012
Question:Under RAD, are there any requirements to buy American, like under the Recovery Act?
Answer:No.

Posted:10/18/2012
Question:Is RAD PBV eligible for vacancy loss and damages claim?
Answer:For the PBV program, vacancy loss is governed by 24 CFR 983.352; we did not change the rules for vacancy payments.

Posted:10/18/2012
Question:Under RAD, is the cash flow federal or non-federal?
Answer:Non-federal, so can stay with the PHA to use for its mission.

Posted:10/16/2012
Question:We plan to utilize LIHTCs. In Section 4 of the Application (Capital needs), all rehab costs are loaded in year 1. For years 2-5 and 6-20, what is placed here?
Answer:Years 2-20 will reflect anticipated replacements of items that you initially replaced during rehab. For example, refrigerators would be replaced again roughly at year fifteen. The 20 year accumulation of your annual replacement reserve funding (assuming that this is sufficient to meet your calculated replacement needs) can be entered in years 6-20.

Posted:10/15/2012
Question: After a RAD conversion, is it correct that utility savings would accrue to the new ownership entity? If so, can those savings be used to support new first mortgage debt? What information is required in order to document expected utility savings?
Answer: Yes, utility savings accrue to the project owner. Yes, utility savings can be used to support new mortgage debt (assuming your lender agrees). For FHA financing, the RAD PCA will be sufficient to meet the lender’s requirements for documenting the expected utility savings. If you plan to utilize non-FHA financing check with your lender (and LIHTC investor, if applicable) regarding the level of documentation that the lender (or investor) will need.

Posted:10/15/2012
Question: The 100 unit project I am thinking of converting through RAD generates $100,000/year in capital funds. I have been taking $20,000/year (20%) of these funds and using them for Central Office Costs (as permitted by the PIH regulations). I have also been taking PEL add-on fees for IT, accounting, etc. These total about $11 pupy or $13,200 per year. How will these payments be treated under RAD?
Answer: Following a RAD conversion, the project will no longer receiving Operating subsidy, nor will these units be included in the PHA's capital fund grant. Instead these amounts will be provided through the section 8 HAP contract. Under RAD, project revenues can be used to pay project expenses, including management fees, and cash-flow is unrestricted. As such, you can earn income from the project directly to cover overheard/management expenses and you can earn any and all cash flow from the project after covering operating expenses, replacement reserve deposit, and debt service. Note that RAD is structured so that PHAs can earn developer fees and cash flow that should more than compensate for the loss of the 20% CF allocation to Central Office costs or any alternate treatment of add-ons.

Category:Procurement
Posted:12/09/2013
Question:A PHA has either not applied or has applied but not received a CHAP. May this project apply for a waiver of the $100,000 cap in pre-development expenses per project?
Answer:No. HUD will only consider a waiver once the project receives a CHAP.

Posted:10/01/2013
Question:Are there any federal bidding or procurement requirements for the selection of developer or development partners (investors, lenders, contractors, architects/engineers, legal, consultants, etc.) associated with a public housing conversion and the completion of initial repairs?
Answer:PHAs must comply with conflict of interest requirements in the respective Project-Based Rental Assistance (PBRA) and Project-Based Voucher (PBV) programs. Additionally, PHAs must comply with any state and local requirements as well as any requirements established by the lenders or funders. Otherwise, the RAD program does not impose any federal bidding or procurement requirements in the selection of developer or development partners. Aside from the issue of selection of developer or development partners, public housing conversions may be subject to subsidy layering review (see Section 1.5.A of the Notice) as well as Davis-Bacon and Section 3 (see Sections 1.6.D.3 and 1.7.C.2). Additionally, with respect to pre-development costs, Section 1.5.A of the Notice reads: Prior to the approval of a project’s Financing Plan, a PHA may expend up to $100,000 in public housing program funds in related pre-development conversion costs per project. Predevelopment funds may be used to pay for materials and services related to proposed development and may also be used for preliminary development work. Public housing program funds spent prior to the effective date of the HAP are subject to public housing procurement rules. These rules continue to apply. [Updated 7.29.13]

Posted:10/01/2013
Question:The Notice provides that a PHA may use up to $100,000 in pre-development funds without prior HUD approval. We anticipate spending about $300,000 in architectural work, due diligence, legal, etc. prior to financial closing. Can the PHA put in these additional funds? Would they need to seek approval from their Transaction Manager?
Answer:If the PHA needs to spend more than $100,000 in pre-development costs, it can do one of the following: (1) request approval from HUD to exceed this amount, which would need to follow the normal public housing (24 CFR part 85) procurement rules, unless the PHA submitted a good-cause waiver, or (2) use non-public housing funds for these purposes, which would then be reimbursed at closing, if necessary. [Updated 7.29.13]

Posted:10/01/2013
Question:What are the PHAs' procurement rules following award of the CHAP? Are the PHA's RAD post-award development activities exempted from HUD PHA procurement rules (e.g. Part 85) ? The RAD FAQs provides guidance on pre-award procurement requirements but not after the CHAP issuance.
Answer:Public housing procurement rules apply until the RAD closing has occurred. [Updated 7.29.13]

Posted:10/01/2013
Question:What are the procurement rules for a PHA to submit an application? Does a developer have to be formerly procured by the PHA or can they engage consultants up to $100,000 in public housing funds for RAD pre-development expenses.
Answer:A PHA can engage consultants up to $100,000 in public housing funds for pre-development expenses. However, the consultant should be procured through small purchase procedures (http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/pihh/74608). [Updated 7.29.13]

Category:Project Based Vouchers (PBVs)
Posted:07/28/2014
Question:What is the definition of "project" under the PBV program?
Answer:A project may be the following: a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. HUD interprets project to apply to all these structures (i.e., single building, multiple contiguous buildings, etc.), and a PHA must consider the entire definition and apply this definition to proposed PBV units. Note: If you are pursuing FHA financing or conventional financing, please be sure to check with your lender for any additional requirements they may have.

Category:RAD Physical Condition Assessment (RPCA)
Posted:07/15/2014
Question:In a RAD FAQ (WEB11102012_22_04070), the Department offered the following response regarding capturing tenant utility data to complete the UCB: “There is no specified minimum sampling requirement, due to the different configurations of buildings. The RPCA contractor must have enough data to ensure that they can produce such a baseline in which HUD can rely.” Can the Department further clarify the sampling size for the UCB?
Answer:The PCA provider should seek to obtain data on resident-paid utilities from 25% of the units, which is a threshold percentage for the PCA provider to provide reasonable estimates of whole-building energy consumption. Please note that in the near future HUD anticipates the publication of tools that will help PHAs and other industry partners manage the UCB data, so the flexibility and the 25% threshold provided in this FAQ is subject to change pending new HUD guidance and tools. Any UCB data submitted to HUD prior to publication of these standards will be grandfathered in to this sampling standard.

Posted:07/14/2014
Question:The RAD Notice requires that the RAD Physical Condition Assessment (RPCA) be completed within 90 days of award. We expect to complete the RPCA within this timeframe, except for the Utility Consumption Baseline (UCB), which, because of the need to obtain individual utility data from tenants, will take longer. Since the UCB isn’t actually used for underwriting purposes, can we submit the UCB along with the Financing Plan, which is due within 180 days of award?
Answer:The UCB is an important feature of the RPCA and is part of HUD’s broader initiative to establish baseline utility data for our entire rental housing stock. However, since the data is not used as part of Underwriting, HUD will consider waiver requests from PHAs to submit the UCB at the time of the Financing Plan, or after the closing/RAD conversion. If you seek a waiver, please alert your Transaction Manager in writing. Please note: this flexibility extends to non-FHA transactions. For FHA transactions, until further notice, the UCB must be part of the RPCA document submitted with the FHA Firm Commitment application. Furthermore, in the near future HUD anticipates the publication of tools that will help PHAs and other industry partners manage the UCB data, so the flexibility provided in this FAQ is subject to change pending new HUD guidance and tools.

Posted:07/08/2014
Question:My project currently does not meet the accessibility standards of 5% physically-impaired and 2% visually-impaired. However, the only immediate work identified in the RPCA is for a small amount of roof repairs. Can I perform the roof work if the project does not yet meet the 5/2% standard?
Answer:Yes. Where the scope of work does not include alterations to dwelling units and the project does not currently meet the accessibility standards of 5% physically-impaired and 2% visually-impaired, the PHA/owner does not need to expand the scope of work to include modification of additional units to meet the 5%/2% standard.

Posted:06/03/2014
Question:My PHA previously met the standard for accessibility across the public housing portfolio. However, now that we are converting to RAD, there are individual projects that exceed the standard and some that do not meet the standard (but, again, overall we are in compliance). When we convert to RAD, will we be “grandfathered” in, or will we have to have all projects meet the accessibility standards on their own?
Answer:Each project covered under a HAP contract must meet the 5%/2% accessibility standards under Section 504 if the project is undergoing substantial alterations.

Posted:06/02/2014
Question:Under what a converting project be subject to an Environmental Assessment under Part 50 vs Part 58, and who will perform that review?
Answer:• For all FHA transactions (PBRA or PBV), the Review will be completed by the Multifamily Environmental Reviewer under Part 50. • For non-FHA transactions that convert to PBRA, the Review will be completed by the Transaction Manager under Part 50. • For non-FHA transactions that convert to PBV, the review will be completed by the Responsible Entity under Part 58. If the RE declines to undertake the review, the Review will be completed by the local PIH Field Office.

Posted:06/02/2014
Question:When is the RPCA required?
Answer:The RPCA is required in all instances, except the following: 1) New Construction; 2) Gut Rehab (essentially, down to the stud); 3) Recently modernized or constructed buildings (based on the recommendation of your RAD Transaction Manager and approval by the RAD Team Lead); or 4) Any FHA 221(d)(4) transaction.

Posted:05/19/2014
Question:If a PHA is not awarded a CHAP can it use the RAD PCA instead of the PIH PCNA?
Answer:The RAD PCA and PIH’s PCNA are in different formats. However, all of the data collected for the RAD PCA can be transposed into the PCNA to satisfy its requirements

Posted:05/14/2014
Question:Is SHPO or Section 106 review required on a RAD conversion project that is more than 40 years old? ?Does it matter whether it's minor rehab, gut rehab or demolition?
Answer:RAD requires Environmental Review approval (see Notice PIH-2012-32 REV-1 pages 84-85).? The required Environmental Review includes consultation with SHPO.

Posted:05/14/2014
Question:We are a PHA and have been unable to get the Responsible Entity to complete the Environmental Review to ensure the property meets requirements for 24 CFR Part 50 or Part 58, as applicable. Is the Environmental Review still required in this instance?
Answer:In cases where the Responsible Entity chooses not to complete the assessment, HUD will complete the assessment under Part 50. Please contact your Transaction Manager for further instruction.

Posted:05/14/2014
Question:We are converting our entire portfolio to PBV, as a result, we are subject to EA part 58. However our properties were all?assessed post Hurricane Katrina. Hence, can we use those recently completed assessments for submission with our 90 day milestone requirement?
Answer:Although an environmental assessment under Part 58 is required when conversion to PBV, it is quite likely that the Responsible Entity will be able to use the prior assessment in completing its review. But you will need to work with your respective Responsible Entity.

Posted:05/14/2014
Question:What is the required format of a Phase I Site Assessment to meet RAD Environmental requirements?
Answer:If you are using FHA financing, the Phase I will be ordered by your FHA lender, and the format will be in accordance with Chapter 9 of the MAP Guide. Otherwise, check with the agency that will be issuing the Environmental Review approval; the Phase I will need to be acceptable to the approving agency. It is a good idea to procure the Phase I from a firm that has experience preparing reports that have been found acceptable by the specific agency that will be issuing the Environmental Review approval. If you are not using FHA insurance, you should check with the entity performing the assessment to determine if a full Phase I will be required.

Posted:05/12/2014
Question:Can you please clarify repairs in the RPCA. On the 20 Year Schedule there is a 2014 Rehab column, then there is a 2014 Year 1 column and then there is a Critical Needs tab. Also compared to a standard PCNA which has Critical and Non-Critical Repairs, where would one enter the Critical and Non-Critical Repairs and how does this differ from Rehab repairs?
Answer:Critical repairs are repairs that must be done on an accelerated schedule; examples are health and safety issues (such as an improperly vented gas appliance), and accessibility modifications. All critical repairs must be completed prior to the RAD closing. Rehab items also must be done, but the schedule is governed by the rehab provisions of the RAD Conversion Commitment. Year One items typically reflect systems or components that were functioning at the time of the inspection and are anticipated to require replacement in the first year. Whether and when these are done will be up to the property owner. A typical example would be a 20 year roof that is not leaking but that either has reached 20 years of age or will reach 20 years of age within the first year after the closing. The Reserve for Replacement would contain sufficient funds to pay for the roof replacement, and the timing of the roof replacement would be up to the owner.

Posted:05/12/2014
Question:In a previous Q&A, HUD stated that 100% tenant consents is the desired objective but that a smaller sample would be acceptable if 100% tenant consents is not achievable. What level of tenant consents (below 100%) would HUD find acceptable?
Answer:HUD seeks 100% tenant consents. If 100% tenant consents is not achievable, the PCA provider will need to include in the report a discussion of the level of tenant consents that was achieved, why a greater level of tenant consents was not feasible, and why (in the professional opinion of the PCA provider) the actual level of tenant consents is sufficient to provide a reliable utility baseline.

Posted:02/14/2014
Question:Is there any restriction on how early the RPCA can be done? We have a project where we would like go ahead and order the RPCA before we submit the application. The project will be funded entirely with Housing Authority funds, so there is no issue with having the RPCA provider approved by a lender. Is this acceptable?
Answer:Obviously the more current the RPCA, the better it is for the Owner, HUD, and all funding partners to understand the property and what repair and replacement needs have to be addressed. Typically HUD uses an RPCA for 12 months after which time, it will have to be updated if the RAD transaction has not closed. It is also important to document significant replacements that are made and changes made to the property after the RPCA has been completed and while HUD is reviewing the RAD transaction. However, if the transaction is using FHA insurance, the RPCA can be no more than 6 months old at the time of Firm Commitment issuance, otherwise it will need to be updated. Please keep your HUD Transaction Manager apprised of these significant changes. [Updated 2.14.14]

Posted:10/01/2013
Question:We are a small HA and we are concerned about the cost of the RPCA. We did not receive any subsidy in 2012 and have not budgeted our CFP for this item either. Do we have permission to use our PH funds to cover the cost of the RPCA? Where should this amount be accounted for? Should we budget it into our CFP and if so, what line item should we use?
Answer:The RPCA is an eligible transaction cost. It can also be paid for by operating/capital funds. The Notice specifics that a PHA can engage consultants up to $100,000 in public housing funds for pre-development expenses, which would include the cost of the RPCA. For example, a PHA could use operating reserves to fund this expense. Alternatively, a PHA can charge it to the Capital Fund Program and include it under Budget Line Item 1430 (Fees and Costs). [Updated 7.29.13]

Posted:07/26/2013
Question:How should contractors approach an RPCA for a scattered site project under the RAD process?
Answer:Many RAD projects received CHAPs for scattered site projects which require additional instruction for PCA reports. If your RAD conversion involves a scattered site, please contact your RAD transaction manager as soon as possible to determine if any additional special instruction is needed, particularly with regard to any proposed FHA financing. All scattered site PCA proposals should be closely reviewed with the HUD Transaction Manager who will provide written approval to the PHA before they or their lender place an order for these reports. When bidding on, and producing, an RPCA for a scattered site project associated with a RAD conversion, the RPCA contractor needs to determine the physical characteristics of the property and obtain all available information from the PHA regarding condition and recent rehab, especially property-wide rehab, and identify which sites are commonly managed. This guidance addresses three possible situations: 1) Contiguous group of five or more units; 2) Multiple contiguous groups of five or more units; 3) Non-contiguous group of fewer than five units. To the extent that all of the buildings/units are either contiguous, or have contiguous groups of five or more units, these configurations should be treated as individual “buildings” with, potentially, different unit types. For example, model A is a two bedroom single family home and model B is a three bedroom single family home, with all 50 buildings located on a single parcel of land. This configuration would be considered a single building with two unit types. To produce this RPCA, the contractor follows the guidelines in the Scope of Work for individual unit sampling, with the caveat that the exterior of each individual building must be inspected. However, a single RPCA Tool can be used, with the two unit types being presented in the Tool as appropriate. If the property has multiple locations with five contiguous units each, the contractor addresses each location of contiguous units as if it were one site, and then follows the guidance in the prior paragraph, providing a Tool for each site, which HUD will roll up into a cumulative RPCA Tool once all of the individual site Tools are complete. If, however, the project does not have contiguous groups of five or more units, the contractor needs to determine if there is a logical grouping of buildings, despite their not being contiguous, that can be established. This could include cases where all of the buildings are the same or similar construction, located in close proximity and under common management. In this case, the contractor treats each group of buildings as a single “sub-property” with different unit types. The contractor samples units and produces one PCA Tool for each of these “sub-properties”. Once completed, that set of RPCA Tools should then be sent to HUD so that HUD can produce a single, “roll up” RPCA Tool. However, if there is no logical grouping of the buildings, each building, or each unit if single units, should be treated individually, with a separate RPCA Tool produced for each. (The only exception would be where the PHA has detailed records of property-wide substantial rehab in the last three years. In that case the contractor can review those records to establish that enough similarity in age and type of components exists to allow sampling.) As with the other grouping above, once the Tools have been completed they should be sent to HUD so that HUD can produce the “roll up” RPCA Tool.

Posted:06/18/2013
Question:Could you further explain the Occupancy adjustment factor and how it’s calculated?
Answer:The utility usage should be adjusted when there are vacancies that impacted utility usage so that the consumption represents 100% occupancy. For example, if your property was 90% occupied during the year, and vacant units consume half as much electricity as occupied units, then the actual consumption represents about 95% of the amount of electricity that the property would have consumed if all units had been occupied for the full year. HUD does not dictate how the occupancy adjustment is made but does ask that you explain how you made your calculation in the narrative portion of the utility baseline.

Posted:06/18/2013
Question:Please explain how the weather normalized adjustment factor is supposed to work.
Answer:The point of the weather normalization is to convert the actual utility consumption into what the consumption would have been in a normal weather year. For example, if the winter was warmer than normal, the heating utility consumption should be adjusted upwards to reflect the higher consumption that would have occurred in a normal (colder) winter. Similarly, if the summer was warmer than normal, the air conditioning consumption should be adjusted downwards to reflect the lower consumption that would have occurred in a normal (cooler) summer. HUD relies on the professional expertise of the utility baseline contractor and does not dictate the type of weather normalization calculation that should be utilized. Please be sure to make a note of the method utilized in the narrative portion of the utility baseline.

Posted:05/22/2013
Question:There are a couple of different formulas for the Weather normalized adjustment factor. Which method does HUD prefer?
Answer:HUD does not require a specific weather normalization method but does require that a discussion of the methodology is included in the Narrative portion of the RPCA.

Posted:05/20/2013
Question:Are there any restrictions on what functions an RPCA contracting firm can perform in addition to completing the RPCA? Can they perform the work and serve as a GC?
Answer:The RAD Notice does not impose any requirements.

Posted:05/20/2013
Question:Is mold addressed in the environmental assessment?
Answer:Yes. The Scope of Work requires the RPCA report to "provide a description of directly observed potential on-site environmental hazards."

Posted:04/25/2013
Question:Due to LEED goals and a desire to move to a non-mastered tenant billing scenario, our client is considering a conversion to all electric powered apartments. Currently heating systems and several appliances are powered by natural gas. It appears that the RPCA excel tool does not allow the user to "switch fuels" when considering an electric powered green alternative for a gas powered system. Can you advise on how we enter savings into the tool in this scenario?
Answer:The measure of consumption must be the same to compare the two alternatives. Either convert all consumption to kwH, therms, or dollars.

Posted:04/25/2013
Question:If we are planning to install PV panels (solar panels) as part of the green alternative, where can we enter this item in the RPCA too?
Answer:You can use any blank utility-saver line item in the CNI page. There will be no existing component, no traditional component, just the green component. Record the usage as a negative number as it will be generating power. If it generates more than can be used, note whether it can be sold to the grid. If not, only include power that can be consumed at the property

Posted:04/02/2013
Question:Page 2 of the PCA Statement of Work and Contractors Qualifications states: "The contractor must. . . B. Have the designation of Leadership in Energy and Environmental Design Accredited Professional (LEED AP), in either the United States Green Building Council’s LEED New Construction and Major Renovation or the LEED Existing Building Maintenance and Operations examination tracks, or an equivalent designation." Our architect is LEED certified, but is not certified in one of these two specific tracks. Does that mean he's not qualified?
Answer:Since the architect referenced is LEED accredited, that falls into the "or an equivalent designation" category referenced in the Scope of Work and is thus acceptable.

Posted:03/22/2013
Question:Are we supposed to include the critical items (code, safety, health related) in 2014 ( 0 year) rehab cost column which will become part of the rehab specifications and rehab escrow needs and rest of the immediate needs in 2014 year 1 (one) which will become part of the cap needs?
Answer:Generally, critical repairs are items that should be addressed immediately without waiting for the RAD closing. Any critical repairs that will be completed after the RAD closing must be included in year zero (rehab). Components that are not functioning (that are "broken") at the time of the PCA inspection must also be either (a) completed prior to the RAD closing or (b) included in year zero (rehab). For components that are functioning at the time of the PCA inspection but that are expected to require replacement in the first twelve months following the RAD conversion, the PCA provider and the PHA can decide whether replacement should be included in year zero (rehab) or in year one (to be paid from replacement reserve funds). The above procedures should be followed by the firm conducting the RPCA. However, at time of application, the PHA should make its best estimate of critical, immediate, and long-term repairs.

Posted:03/04/2013
Question:Is there a requirement to inspect 100 percent of the accessible units, not just the 25 percent representative sample?
Answer:The RAD PCA Statement of Work requirement regarding the sample states:" In no event shall the inspection be of less than 25% of occupied units, and 100% of all vacant units and common areas." Accordingly, there is no requirement to inspect a 100% sample of accessible units. Please note that the Statement of Work depends on the contractor to use its judgment regarding how many and which dwelling units to sample, for example in relation to the size of the project or the condition of the project. Accordingly, the requirement above represents a minimum sample size, and HUD expects the contractor to increase the sample size whenever doing so is needed in order to allow for an accurate assessment.

Posted:01/30/2013
Question:All public housing agencies are required to conduct a Green Physical Needs Assessment using the HUD GPNA Tool. The final rule is projected to be published in March. Agencies with a December 31 fiscal year must submit the GPNA to HUD on September 1, 2013. My question is if a project is converting all units to RAD, does the project need to complete the GPNA? And, if a project is only converting some of the units to RAD and the remaining will stay in public housing, will the RAD units need to be part of the GPNA?
Answer:The public housing GPNA requirement will not become effective until the publication of its final rule. PHAs that have entered RAD and whose converted units are no longer recorded as ACC units in PIC as of their GPNA submission due date (and are reflected in the PIC data set provided by HUD for import into the GPNA tool) are not required to make the PNA submission from the GPNA tool for that portion of their inventory that has left public housing for RAD. PHAs that have been awarded a Commitment to Enter into a HAP (CHAP) under RAD as of the due date of their public housing GPNA will be required to make the PNA submission from the GPNA tool accounting for the entire inventory of units remaining in public housing (and remaining reflected in the PIC data set provided by HUD for import into the GPNA tool) but recording “0” needs for that portion under the CHAP. If the entire inventory of any AMP is under a CHAP as of the GPNA due date, no submission will be required as it will be considered likely that the entire AMP will be leaving public housing. Should public housing inventory under a CHAP not ultimately convert to RAD and remain in public housing, a GPNA submission will become required. Any subsequently required submission must be made from the automated reporting feature of the GPNA tool. Information from a RAD PCA may be used for the submission but it must be migrated to the GPNA tool.

Posted:01/22/2013
Question:Do we have to use an outside contractor to do the Physical Condition Assessment if we do not intend to use outside financing?
Answer:Yes, the PCA must be performed by a third-party contractor. A PCA that meets the requirements outlined in the RAD PCA Statement of Work must be completed regardless of the type of financing sought; the one exception is new construction in which a PCA is not required. Please review the RAD PCA Statement of Work which outlines the required qualifications one must have in order to complete each section of the PCA.

Posted:01/22/2013
Question:Do we need to complete the RAD PCA tool if we are not using FHA or HUD financing or can we use a standard ASTM PCA?
Answer:Yes. The RAD PCA specified in the Notice must be used for all RAD transactions (except for new construction).

Posted:01/22/2013
Question:The RPCA Statement of Work and Contractor Qualifications document states that owners should provide releases from tenants so that energy consumption data necessary for completion of the Energy Audit can be collected from utility providers. Are your energy consumption data requirements similar to the requirements regarding PBRA utility allowance setting, i.e., owners should secure releases for 12 months of utility bills from a minimum of 10% of households occupying each unit type at each property? (I.e., in a 90-unit building, with 30 units each of 1BRs, 2BRs, and 3BRs, an owner should secure 12 months of data from 3 x 1BRs, 3 x 2BRs, and 3 x 3BRs, for a total of 9 units?). These samples can then produce an average for each unit type. Or is there some other minimum sampling number for the utility releases, such as 25% of occupied units? The RAD PCA Excel Tool appears to require specific data for each tenant meter. However, this would seem to be unduly burdensome, given that several hundred units are involved and it is virtually impossible to get utility billing releases from every tenant. Further guidance is most appreciated.
Answer:The objective is to establish a reliable, whole-building utility consumption baseline against which future consumption can be measured. Therefore the goal is to collect 100% of the property’s utility consumption data, including owner-paid and tenant-paid utilities, or, at a minimum, a sampling that is a reliable proxy for the whole building. There is no specified minimum sampling requirement, due to the different configurations of buildings. The RPCA contractor and the Utility Baseline Consumption subcontractor, if one is used, musthave enough data to ensure they can produce such a baseline on which HUD can rely. The RAD PCA Tool maps to each meter for a complete usage estimate. Information on all owner accounts is required. If there are tenant accounts, you need to start approaching tenants immediately to get utility information or releases so that utility companies will release information. Depending on the protocol required by the utility, this may have to be to you for delivery to the RPCA contractor or its subcontractors (energy auditor or utility baseline consumption provider) or the contractor may be able to use the releases itself in a request with the utility. Check with your utility.. The requirement is 12 months of utility usage data at the property For tenants, while 100% is the goal, it is hard to achieve. For example, some tenants of the last 12 months may no longer reside at the property, and other tenants may not cooperate. While all tenants should be approached, the results may be less than 100% availability. The tenant responses must at least yield a representative sample of utility information. The result must include different unit sizes, floors and exposures. If there are different cooking fuels, heating fuels or cooling approaches in the same complex, bring this detail to the RPCA contractor’s attention as it will expand the necessary numeric sample. If the tenant response rate does not provide a reliable sample size, as dictated by the needs of the RPCA, it is important enough that this portion of the RPCA may be delayed, with HUD approval, so that additional outreach may be undertaken.

Posted:01/22/2013
Question:We are submitting a 9% LIHTC application in May, 2013, for the substantial rehab of a project to be converted to RAD. We will need to do a third party report (Physical Needs Assessment) to determine the rehabilitation scope for the LIHTC application. Should we just go ahead and order a PCA in accordance with the requirements on the RAD website?
Answer:PHAs are encouraged to order a PCA through their proposed lender/investor prior to the submission of the LIHTC application. This ensures that the PHA requests the appropriate amount of tax credits to cover the full scope of rehab. PHAs should request that the PCA provider also agree to provide an update to the PCA within 60 days of closing at an agreed-upon price. Further, HUD encourages the PHA to consult with the tax-credit issuing agency to ensure that the RAD PCA meets their requirements.

Category:RAP/Rent Supp Projects
Posted:05/20/2013
Question:Can a PHA that does not currently administer Housing Choice Vouchers administer the RAD HAP contract with HUD’s approval? And, if so, is approval easily obtained?
Answer: A PHA that does not have a HCV program cannot administer a PBV HAP contract. There are no exceptions made specifically for the Rental Assistance Demonstration. Unfortunately, there is no ability at this time to obtain HCV status for those PHAs that do not currently have an HCV program.

Posted:05/20/2013
Question:Does Davis Bacon Wages rates apply to a Section 236 De-coupling project (State HFA insured) and converting from 20% RAP/80% 236 Basic Rent to a 100% Project Based Voucher Contract? As part of the de-coupling, the project will go through unit and common area renovation work.
Answer:The project you describe would be eligible for RAD if it is a prospective Rent Supp or RAP conversion that involves the decoupling and prepayment of the Section 236 mortgage. The prepayment would trigger Enhanced Vouchers for all units that could be included in the PBV contract. The 2nd component of RAD (non-competitive conversion of RAP, Rent Supp and Mod Rehab units to PBVs under Section 3 of the Notice) does not add a unique requirement for Davis-Bacon prevailing wage compliance. However, per the PBV regulations, if the project does not meet the HQS requirements, the Owner will need to enter into an AHAP (Agreement to Enter into a HAP) for the construction period and this will require Davis Bacon wage rates. You may wish to work closely with your PHA to understand HQS standards, and to asses whether the project meets these standards prior to the prepayment and decoupling.

Posted:05/20/2013
Question:We are considering applying for a Prospective Conversion under the 2nd component of RAD, for a Rent Supplement project. Who would administer the PBV contract? Also, how are the initial rents for the PBVs determined?
Answer:The PBV contracts are administered by Public Housing Authorities (PHAs). While HUD ultimately determines the PHA that will administer a given PBV contract, you (the project owner) are encourage to reach out to a PHA in your jurisdiction to gauge their interest and begin the conversation about a potential RAD conversion and related project rents (see section 3.6 of Notice PIH-2012-32 for additional information on the application process). Since PBV HAP contracts are contracts between an owner and PHA, the PHA determines the PBV rents. The regulations for PBVs (24 CFR Part 983), however, require that PHAs set their PBV rents at the lessor of: a. Reasonable Rent (ie Comparable Market), b. 110% of FMR, or c. rent requested by the owner.

Posted:03/04/2013
Question:Are there any start-up fees or other special fees for PHAs who are administering project-based vouchers for a conversion under the second component of RAD (conversions of Rent Supplement, RAP or Mod Rehab contracts)?
Answer:For prospective Rent Supp and RAP conversion under the 2nd component of RAD, a PHA will be eligible for the “special housing fee” that accompanies certain “conversion actions” as established in PIH Notice 2001-41. While Special Fees were established in PIH Notice 2001-41, PIH Notice 2012-09 reestablished the amount at $200.00/unit. The purpose of this special fee is twofold: (1) to compensate PHAs for any extraordinary administrative costs associated with these special purpose allocations; and (2) to ensure PHAs will receive reimbursement for their efforts in the rare instances where the pending conversion action does not ultimately happen because of a decision by the owner or HUD. Please refer to PIH Notices 2001-41 and 2012-09 for more information regarding these Special Fees. The PHA will not earn a special housing fee for Mod Rehab conversions (since the PHA already administers those contracts).

Posted:02/28/2013
Question:Is there an example of the proper type of tenant notice that owners can post to inform tenants for the different cases of either accepting or rejecting RAD?
Answer:Sample tenant notification letters can be found in the appendix of Section III (assuming this is a question for a Rent Supp or RAP owner) of the notice (PIH Notice 2012-32). The Notice is on the RAD website (www.hud.gov/rad).

Posted:12/04/2012
Question: We plan on submitting a RAD application under Component Two. Our Rent Supp contract will expire on 1/1/13 so this is fewer than 60 days as referenced on Page 131. Since we are less than 60 days it is our understanding that we first must submit the RAD application, then request a one year extension. to the Rent Supp contract. If we ask for this extension, the contract will expire on 1/1/14. Since this would be later than the date of 9/30/13, then should the Owner submit the submission request per Section 3.6.1 of PIH-2012-32 or 3.6.3(B)?
Answer:Many owners have contracts with fast approaching expiration dates. If you contract will expire within 120 days, we strongly encourage you to pursue what is called a Retroactive conversion, as described in Section III of Notice 2012-32. Under a Retroactive conversion, you will work with the Multifamily field office to request tenant protection vouchers for the project residents (TPVs are provided fto income eligible residents for all units on the original contract that have been occupied at some point in the prior 24 months). After the TPVs are provided, you may work with the PHA to request conversion of the assistance to Project Based Vouchers. HUD has extremely limited funds to support short term extensions of Rent Supp and RAP contracts. Since your contract will expire within 60 days, we recommend pursuing the retroactive conversion described above. If an Owner has a contract expiring further out, HUD will consider contract extensions on a case by case basis for the purpose of facilitating a RAD conversion. To discuss this option, please contact your Multifamily field office who will set up a meeting with you and include the RAD team.

Posted:12/04/2012
Question:We have a HUD 236 project totaling 80 units of which 31 units are under a Rent Supp contract. When requesting a RAD Prospective Conversion, do we notify only the 31 tenants who will be impacted (conversation of TBV to PBV) or all 80 units?
Answer:. The resident briefing and required tenant notification and comment period are applicable to all residents, not just the 31 Rent Supp units; this is particularly important in partially-assisted properties because residents will need to understand if the assistance in their unit will be converted.

Posted:11/13/2012
Question:If a project with Flexible Subsidy loan has a Rent Supplement or RAP contract expiring in FY13, may an owner include in the RAD conversion the Enhanced Vouchers that would be provided because of the Flexible Subsidy loan?
Answer:Yes. Pursuant to Section 201 of the Housing and Community Development Amendments of 1978, residents of a project which received Flexible Subsidy are entitled to enhanced vouchers if it is part of a preservation transaction as determined by the Secretary. If the Owner prepays the mortgage, this would terminate the Rent Supp or RAP contract, constituting a triggering event for RAD. If HUD opts to make EVs available under this discretionary authority, these may be included in the RAD conversion to Project Based Vouchers.

Posted:10/15/2012
Question: Assume that 100% of the units in a multifamily family project are covered by the original Rent Supp contract. In an application for a prospective conversion under the 2nd component of RAD, how many of the Rent Supp units can be converted to PBVs?
Answer: See Section 3.5A of the Notice (pages 128 and 129). The Notice provides that 100% of the Rent Supp units can be converted to PBVs so long as at least 50% of the units at the project quality for one or more of the exceptions described in the Notice. Note that one of these exceptions is for 'families receiving supportive services. If less than 50% of the units at the project qualify for an exception, then only 50% of the Rent Supp units can be converted to PBVs; the remaining Rent Supp households would receive tenant-based vouchers.

Category:Rehabilitation
Posted:07/08/2014
Question:My project currently does not meet the accessibility standards of 5% physically-impaired and 2% visually-impaired. However, the only immediate work identified in the RPCA is for a small amount of roof repairs. Can I perform the roof work if the project does not yet meet the 5/2% standard?
Answer:Yes. Where the scope of work does not include alterations to dwelling units and the project does not currently meet the accessibility standards of 5% physically-impaired and 2% visually-impaired, the PHA/owner does not need to expand the scope of work to include modification of additional units to meet the 5%/2% standard.

Posted:06/03/2014
Question:My PHA previously met the standard for accessibility across the public housing portfolio. However, now that we are converting to RAD, there are individual projects that exceed the standard and some that do not meet the standard (but, again, overall we are in compliance). When we convert to RAD, will we be “grandfathered” in, or will we have to have all projects meet the accessibility standards on their own?
Answer:Each project covered under a HAP contract must meet the 5%/2% accessibility standards under Section 504 if the project is undergoing substantial alterations.

Posted:06/02/2014
Question:A PHA receives a CHAP award and, because of the scope of repairs, chooses not to re-fill vacancies, waiting instead until conversion to make repairs. How would these units be treated under the Operating Fund Program for the period prior to conversion?
Answer:Units vacant for RAD can be considered as “Under Vacant for Modernization” per the 990 regulation. For 2014, the RAD conversion would have to be in the PHA Plan. The months in 2013 during the reporting period when the unit was vacant for RAD purposes must be reflected in PIC as a unit status change. Additionally, if it is intended that the unit receive funding in 2014 as “Unit Vacant undergoing Modernization” but the current eligibility in the HUD-52723 indicates the unit as simply vacant then a revision will need to be submitted. The revision deadline for 2014 is June 27th. The PHA can also reference the Notice PIH 2011-7 Guidance IMS/PIC Development

Posted:06/02/2014
Question:How can I forecast the income my project is eligible to receive in Rehab Assistance Payments?
Answer:Rehab Assistance Payments are provided under the HAP contract to provide subsidy payments to the property during the period of rehab. Units are only eligible for Rehab Assistance Payments if they were eligible for Operating Subsidy prior to conversion (i.e., included in “Eligible Unit Months” in the Form 52723 for the Calendar Year of conversion) and are uninhabitable during the period of rehab or construction. Rehab Assistance Payments are sized by HUD based on the Operating Fund and Capital Fund subsidy that formed the basis of a property’s RAD rent. For example, a property has a RAD rent of $500 PUM, which was based on Operating and Capital subsidy of $300 and tenant rents of $200. The HAP contract would include a Rehab Assistance Payment of $300 (adjusted by the OCAF, if the rents were due an OCAF adjustment). The PHA can find these amounts in the validation tab of the original RAD application.

Posted:06/02/2014
Question:When does HUD require a separate escrow arrangement?
Answer:If there is no new debt in the transaction, the PHA can provide an agreement or certification stating that the repairs in Exhibit F of the RCC will be completed as required by the RCC and in compliance with HUD program rules.

Posted:05/30/2014
Question:What is the process for clearing critical repairs that have been completed?
Answer:The RAD Conversion Commitment contains an exhibit (Ex. G) for all critical repairs associated with the RAD conversion and states that they must be completed prior to closng. The Owner must provide a written certification that all critical repairs listed in Exhibit G of the RCC have been completed prior to closing. This certification can be made via the Consolidated Owner Certification template which is available on www.radresourc.net > Contracts & Closing Documents. [Updated 5.30.14]

Posted:05/19/2014
Question:When a project involves a demo of existing public housing units and new construction into RAD units, what happens to the HAP payments while units are demolished and being newly constructed?
Answer:The RAD PBRA HAP Contract (Part 2) and the RAD PBV HAP Contract Rider each include a per unit "rehab assistance payment" amount that certain units would be eligible to receive during the construction period (units that were occupied prior to the start of construction). Units are eligible for Rehab Assistance Payments if 1) they were eligible for Operating Subsidy prior to conversion (according to Form 52723) and 2) they are uninhabitable as a result of repairs.

Posted:04/29/2014
Question:I am a PHA with a CHAP and would like to complete some repairs prior to the closing of the RAD conversion. Is this allowed?
Answer:All repairs identified as "critical" in the RAD PCA must be completed prior to closing. If the PHA wishes to complete additional repairs to the property prior to closing, it is permitted to do so but must follow all applicable Public Housing rules. It is important to remember that until the RAD conversion has closed, the property is still considered Public Housing and is subject to Public Housing rules. The PHA must also make sure the Financing Plan and RAD PCA are updated to reflect the changes to the repair schedule and scope of work. Please note that RAD conversions pursuing FHA financing should discuss the completion of additional repairs with their Transaction Manager as additional approvals may be necessary.

Posted:02/03/2014
Question:Once awarded, what is the time frame to complete capital improvements?
Answer:The Financing Plan 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 closing the conversion and any financing, depending on the scope of rehabilitation funded. (Notice PIH-2012-32 REV-1 page 79).

Posted:12/09/2013
Question:What is the trigger for Davis-Bacon and Section 3 under a RAD conversion?
Answer:Davis-Bacon and Section 3 are triggered by any any rehabilitation or new construction performed as part of the “Year One” repair schedule defined by the RPCA, Financing Plan and Rad Conversion Commitment. In addition, and substantial repairs undertaken prior to conversion (i.e., pre-conversion rehabilitation with Capital Funds).

Posted:12/04/2013
Question:Is it possible to begin rehabilitating a converting a project using Capital Funds when a portion of the work will not be completed until after the conversion takes place?
Answer:Yes. However, since the project will be converting to Section 8 assistance upon closing, Capital Funds may only be pledged for work occurring prior to conversion. For this reason, HUD recommends that PHAs design the rehabilitation contract(s) with separate phases of work and clear indications of the source of funding provided for each phase (i.e., pre-development or work occurring pre-closing is paid with Capital Funds, all phases post-closing are funded by the Escrow Reserve Funds, etc.)

Posted:12/04/2013
Question:May a PHA use Capital Funds to begin preparing for rehabilitation of a converting project prior to closing?
Answer:PHAs may use Capital Funds to rehabilitate public housing units in anticipation of conversion under RAD. PHAs would enter into contractual arrangements under 24 CFR part 85 (or, if using force account labor, in accordance with 24 CFR part 905).

Posted:04/04/2013
Question:Can Capital Funds be used for relocation cost under the program?
Answer:HUD does not have any requirements regarding how the cost of temporary tenant relocation will be funded in a RAD conversion. Temporary relocation cost can be covered from any source of funds (including, without limitation, first mortgage proceeds, soft loans, tax credit equity, and contributions from the PHA), so long as whomever is providing the funds allows the funds to be used for that purpose. Contributions to the transaction by the PHA itself can be used for any purpose but are subject to subsidy layering requirements (that is, the PHA's contribution is limited to legitimate costs of the transaction that cannot be funded from the remaining sources of funds). Please note that RAD cannot result in any permanent involuntary relocation of tenants.

Posted:10/22/2012
Question:In a 10/9/2012 FAQ, HUD notes that “For applications submitted during the Initial Application Period, the amount of rehab in the Financing Plan must be at least the amount that was estimated in the Application.” Is this statement still true if the Application lists an amount greater than that which would achieve the maximum point score? (The FAQ seems to take a slightly different position from the notice which states that “HUD will revoke a CHAP if the scope of rehabilitation changes in such a way that would have affected the project’s selection in the competition.”)
Answer:The Notice is correct. HUD will only revoke the CHAP if the scope of rehab changes in such a way that would have affected the project's selection in the competition. Thus, if the proposed amount of rehab exceeds the amount required to score all 50 points, and the actual amount of rehab still exceeds that amount, there will be no penalty.

Posted:10/22/2012
Question:Under RAD, are there any requirements to buy American, like under the Recovery Act?
Answer:No.

Posted:10/06/2012
Question: Does Davis-Bacon apply to all RAD conversions? What about Section 3?
Answer: Davis-Bacon applies to all initial repairs identified in the financing plan, provided that the project has at least 9 units. Section 3 applies to all initial repairs. However, repairs and replacements following the initial repairs are not subject to Davis-Bacon or Section 3. Davis-Bacon and Section 3 are not requirements of the PBRA or PBV programs.

Category:Rents
Posted:07/08/2014
Question:Can a PHA ask for a waiver of certain regulations in order to establish a site-specific utility allowance schedule for a property converted to a Project-Based Voucher contract under RAD?
Answer:Yes. A PHA can ask for a waiver of 24 CFR 983.301(f)(2)(ii) and 982.517 in order to establish a site-specific utility allowance schedule for a property converted to a Project-based Voucher contract under RAD. In considering such waiver requests, HUD will take into consideration whether the project had a site-specific utility allowance prior to conversion, the extent to which the voucher-wide utility allowance schedule can be appropriately applied to the site without causing undue burden to the residents or over-subsidizing the residents, and other factors HUD may request in order to assess good cause.

Posted:07/08/2014
Question:Can an owner administer the PBV waitlist?
Answer:The obligation that the waiting list be maintained by the administering PHA is statutory. A PHA may choose to use a broad HCV waiting list, a PBV waiting list, or a project-specific PBV waiting list, but it is still the responsibility of the PHA to maintain that waiting list.

Posted:07/08/2014
Question:My project currently has a mix of project-paid and tenant paid utilities. We are attempting to determine whether to switch to all tenant-paid or all project-paid utilities. How will those changes affect my RAD rents?
Answer:If you are prepared to make the change in utility combination at the time of conversion, we will adjust the RAD rents at that time, based on the following: 1) If you are converting from tenant-paid utilities to project-paid utilities, we will add to your contract rent the amount of the associated utility allowance. For example, if your contract rent is $400, and your utility allowance is $100, then your new contract rent will be $500 if you convert all tenant-paid utilities to project-paid. 2) If you are converting from project-paid to tenant paid utilities, we will reduce your contract rent by the utility allowance that will now be assigned to those units. For example, if your current contract rent is $500, but there is no utility allowance, and if you plan to convert to tenant-paid utilities and the utility allowance will be $100, we will then reduce your contract rent from $500 to $400. If conversion of utilities occurs after the RAD conversion date say, after completion of repairs), the utility conversion must be effective at the property’s contract anniversary date. Chapter 12, Section 5 of HUD Handbook 4350.1 describes the procedural requirements for these conversion requests.

Posted:07/08/2014
Question:My project has a family that is currently paying a “flat rent.” Per PIH Notice 2014-12, PHAs are now required to update these flat rents, where applicable, and offer residents a phase-in of 35% a year. How will this phase-in of flat rents impact the resident when we convert to RAD?
Answer:Let’s assume the tenant is now paying $200 in rent but the new amount, under public housing flat rent, is $400. The family’s recertification is July 1. So, the PHA raises the rent in July to $270. Let’s further assume that the project converts in August. The flat rent phase-in "schedule" that a tenant was going to undergo in public housing is now irrelevant. If, at the time of conversion this tenant was paying $270, but the tenant's TTP under section 8 is $500, then the rent will phase in from $270 to $500 over 3 or 5 years (note: the public housing flat rent target of $400 doesn't matter anymore). Since the next recertification would be the following July, the 3-5 year phase in for RAD wouldn't start until July 2015. As a result, the PHA will not run into the problem of a tenant's rent increasing twice in one year.

Posted:07/01/2014
Question:Are OCAFs each year to be calculated, for both PBV and PBRA projects, by the owners using Housing Form 9625 (OCAF Rent Adjustment Worksheet) and then reviewed by the project's subsidy administrator? How will funds be added each year, for both types of projects but particularly to a PHA's voucher funding in the case of PBV?--a separate new voucher increment covering the OCAF amount for each project?
Answer:Yes. PHAs administering RAD PBV contracts would use Housing Form 9625 to adjust the rents at the anniversary date of each contract, subject to rent reasonableness. HUD calculates the amounts provided to PHAs for voucher renewal costs based on VMS reporting and adjusts the overall amount by an Annual Adjustment Factor, which PHAs use to support the overall inflation of voucher costs in their jurisdiction. HAP spent on RAD PBV projects will be include in VMS reporting and HUD's normal voucher renewal calculation. There will not be a separate additional voucher increment covering the OCAF increase for each project each year.

Posted:06/02/2014
Question:At conversion, what utility allowance shall I use – the utility allowance that was in my application (2012) or the utility allowance in effect at the time of conversion?
Answer:The PHA should use the most recent utility allowance at the time of conversion.

Posted:06/02/2014
Question:How does a change in classification of bedroom size impact my RAD rents?
Answer:If a PHA can demonstrate that the current units are not competitive because of size or other factors, and therefore the PHA requests to re-classify the units to a smaller bedroom size, HUD will retain the current funding, subject to the applicable RAD rent caps. For example, assume that a PHA currently has 10 5-brm units with a RAD contract rent of $500. However, these units are extremely small by market standards and, as a result, the PHA has difficulty leasing these units to families otherwise eligible for a 5-brm unit. With supporting documentation, the PHA shows that these units would more appropriately be treated as 4-brm units. HUD will convert the units to 4-brm, but retain the funding at $500, subject only to the 4-brm rent cap.

Posted:06/02/2014
Question:HUD will assign to a mixed-finance project, as with all RAD conversions, a RAD Contract Rent. Can the PHA negotiate with the owner of that project for such things as land lease payments, participation in cash flow, etc.?
Answer:Yes. HUD will underwrite each project to determine that all costs are reasonable and related to the project, and that the financing plan is feasible. Otherwise, the PHA and the mixed-finance owner are free to negotiate such matters.

Posted:06/02/2014
Question:If my RAD conversion involves a change in bedroom distributions (due to a transfer of assistance, demolition/new construction, or rehab), how will this affect the RAD contract rents?
Answer:Whether or not the actual number of units changes, the RAD team will assign to the project the contract rents associated with the bedroom sizes prior to the change in bedroom distribution. Thus, if the property had 40 2-brms with a RAD rent of $500 and 60 3-brms with a RAD rent of $600, but the PHA plans to change the distribution to 100 3-brm units, all those units will be funded at $600. Similarly, if the new project included all 2-brms, the rents for the 2-brms would be $500.

Posted:06/02/2014
Question:In either PBV or PBRA, can an owner charge for excess utilities?
Answer:No. Although the public housing program has a provision for “check-metering” and surcharges for excess resident utility usage (24 CFR 965.506), there is no such provision in PBV or PBRA. If a converting project currently has surcharges for excess consumption of PHA-supplied utilities, the PHA may ask HUD to adjust the rent by the amount in Row 19 of the HUD-52722 (Calculation of Utility Expense Level) used in the Fiscal Year in which the RAD contract rents were calculated.

Posted:06/02/2014
Question:My agency is scheduled to receive Replacement Housing Factor (RHF) or Demolition/Disposition Transition Funds (DDTF) as a result of other public housing properties that were removed from our inventory through demolition or disposition. We would like to augment our RAD contract rent instead? How do we determine the amount the RAD rent can be increased?
Answer:Provide your request to your Transaction Manager, who will coordinate with the RAD team and the Capital Fund office to determine the total amount of RHF or DDTF that your agency is scheduled to receive and that can be exchanged for an increase in the RAD contract rent for one or more properties. Your TM will provide you with a RHF/DDTF Cancellation Form for you to sign.

Posted:06/02/2014
Question:The property I wish to convert to RAD currently contains efficiencies which are hard to market. I'd like to convert them into 1 bedrooms. How will this impact my RAD contract rents?
Answer:Where a PHA wants to eliminate efficiencies because the units are hard-to-market, and does so by combining two units into one, HUD will fund the reconfigured units according to the appropriate bedroom size. In addition, for the “lost” units, HUD will treat these as “special purpose”, meaning that the subsidy for the lost units will be distributed across the remaining units, subject to the RAD rent caps and in no event more than what the PHA would have received in subsidy prior to conversion. For example, a project has 100 efficiencies with RAD contract of $400 PUM, which was calculated based on combined Operating and Capital Fund subsidy of $200 and tenant rents of $200. The PHA wants to convert the 100 efficiencies into 50 one-bedroom units. As such, all 50 1-BR units could convert at a $600 PUM contract rent (subject to applicable 1-BR rent caps).

Posted:05/21/2014
Question:We are a PHA converting to PBRA which currently has Flat Rent tenants. Is there some provision in the 50059 to allow us to phase in their rent according to our policy that it not increase by more than $25 per month as a result of conversion? We will need to phase these individuals in for five years.
Answer:The 50059 form does not currently have such a provision, but TRACS will allow the phase-in. The RAD team has been advised that "TRACS accepts the 50059 and sends an error message to the owner indicating the rent paid by the tenant does NOT meet 30% of adjusted income. However, it’s not a fatal message error. TRACS 202d will implement a rent override indicator for audit purposes."

Posted:05/19/2014
Question:If a Housing Authority wishes to do a conversion to PBV and the CHAP rents are capped below current funding by the reasonable rents in effect at the time of CHAP award, can the Housing Authority, subsequent to receiving the CHAP award, implement an increase in the reasonable rents and receive revised RAD contract rents when the RCC is issued? For example, suppose a HA has a longstanding reasonable rent of $300 per month, current funding is $500 per unit per month, and FMR is $573 per month. Suppose the HA submits an application for conversion to PBV, and receives a CHAP showing a contract rent of $300. If the HA, after receiving the CHAP, adjusts the reasonable rent to the FMR of $573, will the RCC grant contract rents of the full $500 justified by current funding?
Answer:PHAs must determine Rent Reasonableness for all units covered under a HAP contract in accordance with 24 CFR 982.507. The PHA must determine whether the rent to owner is a reasonable rent in comparison to rent for other comparable unassisted units. Prior to conversion, the PHA should perform or contract for a rent reasonable analysis. The reasonable rent is NOT the flat rent that a PHA has used in the public housing program. It is more akin to the comparable market rent of units or what an unassisted tenant would pay to live in the unit.

Posted:05/19/2014
Question:We want to be sure we understand the RAD rule for grandfathering tenant income eligibility. Our reading of the Final Notice is that if, post conversion, a tenant’s income increases to where the tenant would no longer have been eligible for the Public Housing unit the tenant occupied prior to the RAD conversion, and the tenant does not meet eligibility requirements for the converted unit, then the tenant is no longer eligible to remain at the project. Is this correct? It’s not entirely clear, but our interpretation is that if a tenant is over-income for Public Housing at the time of conversion (because the tenant’s income has increased since the last review), the tenant would be allowed to remain at the converted project as long as there was no further increase in income. Is this correct?
Answer:The following are applicable whether the tenant has PBRA assistance or PBV assistance: (1) The only consequence of the increase in income is that the PBRA (or PBV) subsidy will decrease or be eliminated. (2) The tenant may not be evicted (or denied renewal of an expiring lease) solely because of income. (3) When the above-income tenant moves out, the unit must be leased to an eligible family.

Posted:05/12/2014
Question:For a PHA submitting a portfolio application - Is it correct that so long as: (1) one half or more of the applications are submitted by 12/31/2013,(2) the portfolio was approved within the original 60,000 unit RAD ceiling, and (3) the remaining applications in the portfolio are completed and submitted within the 365 day limit established in the Notice (REV-1), then the PHA retains the right to use the RAD rents based on 2012 appropriations for both the applications submitted in 2013 and the balance of the portfolio?
Answer:Yes.

Posted:05/12/2014
Question:If an over-housed household remains in their unit and continues to receive PBV assistance under the RAD program, will the assistance received be based on the unit size, and not on the household size?
Answer:The contract rent, and HAP assistance, will be based on the unit size, for both PBVs and for PBRA. If there is no appropriately sized unit available to move the family into and the over-housed household is therefore permitted to remain in the unit, it will not impact the rent due from the tenant or the subsidy provided under the contract.

Posted:04/15/2014
Question:We understand that the RAD rules indicate that all residents residing in the property have the right to retain their tenancy and will be grandfathered in the project even if they do not meet new program rules. In that vein, if we have a household that is inappropriately housed because they are a one person household in a two bedroom unit, will the RAD voucher issued for that unit be a 2 bedroom voucher or a one bedroom voucher?
Answer:In all cases subsidy due to the owner is based on the HAP contract. The fact that in some cases a family may be over-housed does not impact the contract rents, the tenant’s contribution, or the subsidy due to the owner.

Posted:04/04/2014
Question:The Quick Reference Guide to MF Housing Requirements states that properties converting to PBRA under RAD will use their current PIH approved utility allowances for the first contract year after conversion. Then after one year the existing MF Housing policies would need to be followed to adjust the property’s utility allowances. I believe that our current utility allowances would increase under the way MF does their utility allowances. My question is after one year when we are required to implement new utility allowances acceptable to MF methods, and the utility allowance increases, does the gross rent increase by that amount or does the contract rent decrease by that amount?
Answer:The gross rent would change based on the change in utility allowance, but the contract rent would not be effected. For example, if the utility allowance increases from $23 to $50 (a $27 difference), the gross rent will go up by $27 when the new higher utility allowance is implemented, while the contract rent would remain the same.

Posted:02/03/2014
Question:Following a RAD conversion (to PBRA or PBVs): (1) What is the applicable income limit; and (2) What is the tenant's contribution toward rent and tenant-paid utilities?
Answer:For PBRA conversions, the income limit for new admissions is 80% AMI (all existing tenants must be allowed the opportunity to remain, so there is no income limit for existing tenants). For PBVs, it is 50% of median, unless the PHA amends its Administrative Plan. For PBRA and PBV conversions, generally, the tenant's contribution toward rent and utilities is 30% of adjusted income. However if that would result in a rent increase of 10% or more, Notice PIH-2012-32 REV-1 provides a rent phase-in process.

Posted:02/03/2014
Question:I have a PHA with a question about the rent reasonableness section of the RAD application. Their question is: Does a 3rd party have to furnish the rent reasonableness information or can the PHA supply the information based on the information that they have obtained from the 3rd party? For example, the PHA has a rent reasonableness comparison report from a contractor. Can the PHA just supply the information in the application and refer to the 3rd party report or does the application need to contain the actual 3rd party contractor information?
Answer:For purposes of the application, simply use your best guess. If your project is awarded a CHAP and closes, and your PHA also administers the voucher program, a third-party will be required to conduct the rent reasonableness determination each year (see 24 CFR 983).

Posted:02/03/2014
Question:We hope to convert 72 PH units (two 36-unit projects) to PBV under RAD. We have 10 families who pay flat rents. Do they continue to pay flat rents after conversion?
Answer:The flat rents no longer apply after the RAD conversion. Post-conversion, rents will be in accordance with the PBV HAP contract. If the resulting rent increase is more than 10%, the RAD phase-in rules would apply (see Notice PIH-2012-32 REV-1 page 39 concerning phase-in of tenant rent increases for PBV conversions).

Posted:12/09/2013
Question:How does an increase or reduction in the number of bedrooms of a replacement unit impact contract rents under RAD?
Answer:A project changing its bedroom distribution will be paid a contract rent for the new post-conversion bedroom distribution. This adjustment occurs automatically in the RAD application when one inputs the desired bedroom distribution (it also is performed automatically on the Inventory Assessment Tool). These amounts are then inserted into the CHAP. Please Note: Regardless of HUD approval of unit or bedroom reconfigurations, a PHA must continue to offer all existing tenants a right to return to the property or obtain appropriate voluntary waiver of this right before HUD will allow conversion.

Posted:12/04/2013
Question:Can a PHA choose to give a mixed-finance project a lower contract rent than included in the RAD Application and retain the rest?
Answer:No. Unless adjusted through rent bundling, all projects will receive the full RAD contract rent. However, in the context of mixed-finance public housing projects, a PHA may negotiate with the owner(s) of the project such terms as participation in cash flow or ground lease payments. All terms of the transaction will be reviewed by HUD in the context of the Financing Plan and long-term viability of the mixed-finance project.

Posted:12/04/2013
Question:In both the RAD application and in the RAD Inventory Assessment Tool, HUD uses the 2012 FMRs to establish the rent setting caps. When a project finally closes, will HUD update the rent setting caps with the FMRs in the year of conversion?
Answer:Yes. HUD will apply the 2012 FMRs at the time of issuance of the CHAP and will check the contract rents against the most recent FMRs at time of conversion.

Posted:12/04/2013
Question:May a PHA adjust or reexamine its rent bundle after conversion takes place?
Answer:No. Just as with other aspects of financing a conversion, a PHA must ensure that rent bundling leaves all converting properties with sufficient cash flow to maintain long-term financial viability.

Posted:10/17/2013
Question:Am I correct in thinking rent reasonableness does not factor into calculating PBRA Contract Rents?
Answer:Yes. However, because the PBRA-PBV decision can be changed after the Application is submitted, HUD is requiring a reasonable rent estimate for each RAD application, even if PBRA is preliminarily selected. If your agency administers a Housing Choice Voucher program, you will make the reasonable rent determination yourself, in accordance with voucher program requirements. If you do not have a voucher program, you may enter your best estimate of comparable market rents (the rents that the property would command in the local market, without subsidy), but please note somewhere in the Application that you do not have a voucher program and that your reasonable rent estimate did not follow voucher program requirements.

Posted:10/17/2013
Question:If a PHA completes their RAD conversion by November 2013, will the RAD rents that begin on January 1, 2014 be the 2012 rents listed in the CHAP, or include an OCAF increase for 2013?
Answer:For a RAD conversion that closes and is effective on November 1, 2013, the initial contract rents will be those posted in your RAD Application and the OCAF will be applied for the first time on its anniversary date - Nov 1, 2014. For a RAD conversion that closes and is effective on Feb 1, 2014, HUD will apply the 2014 OCAF to the rent posted in your RAD Application to establish your initial contract rents. The OCAF will then be applied again at the anniversary date of the contract - Feb 1, 2015.

Posted:10/17/2013
Question:Looking for documentation that explains the process of phasing-in rents, the duration of the phase-in process, etc., if applicable, in RAD projects once they convert.
Answer:Phase-in of tenant rent increases for PBV is discussed in Section 1.6.C.4 of Notice PIH-2012-32. Phase-in of tenant rent increases for PBRA is discussed in Section 1.7.B.3. For example, if a tenant's monthly rent is $100 pre-conversion and would be $130 post-conversion (an increase greater than 10% and greater than $25), the $30 increase could be phased in by $10 (one-third) per year for three years. The tenant's monthly rent would be $110 for the first year. In the second year, the tenant's monthly rent would be the lesser of $120 or the appropriate rent based on the tenant's recertified income (if the tenant's income decreases, the phase-in would be considered completed). In the third year, the tenant's monthly rent would be the lesser of $130 or the appropriate rent based on the tenant's recertified income. Continuing the example, the PHA could choose to phase in the increase over a period longer than three years and up to five years. There is no need for PHAs to submit their rent phase-in plans for RAD approval.

Posted:10/01/2013
Question:Are there funds to provide residents/legitimate tenant organizations with technical assistance? If yes, what is the application process?
Answer:There is no RAD-specific funding for technical assistance to residents / tenant organizations. There are extensive resources available on www.hud.gov/rad and www.radresource.net websites. HUD staff is providing RAD webinars regularly (check hud.gov/rad) and residents are encouraged to attend and ask questions. PHAs are reminded that RAD includes various requirements for tenant consultation. In addition, HUD is developing materials to assist tenants in understanding RAD and participate in their local process. [Updated 7.29.13]

Posted:10/01/2013
Question:How are the rents included in Exhibit A of the CHAP determined?
Answer:The contract rents are noted in Exhibit A of the CHAP. The PHA’s lender should proceed with those rents. For all Applications received by or before December 31, 2013, the CHAP rents are based on 2012 appropriations. Note: The general methodology for calculating rents can be found on page 98 of PIH Notice 2012-32. [Updated 7.29.13]

Posted:10/01/2013
Question:I am considering a conversion under RAD. How does a PHA determine the FMR bedroom adjustments contained on page 81 of the notice if the project(s) considered for conversion are not in a metropolitan FMR schedule?
Answer:The RAD Inventory Assessment Tool, as well as the RAD Application, automatically performs this calculation. Essentially, the adjustment is based on the ratio of rents for units of different bedroom sizes for the FMR for that area. Thus, if the 2 brm FMR for a community is 20% higher than the 1 brm FMR, and the PHA is converting all its 1 brm units to 2 brm units, the Tool and Application will adjust the rents upwards 20%. [Updated 7.29.13]

Posted:10/01/2013
Question:I am working with a PHA interested in converting ACC to RAD. The RAD Contract Rent determined by the RAD PHA Application is less than comparable market rent. Is this situation (RAD contract rent being below market) a barrier to the RAD conversion?
Answer:No; in fact, HUD expects that the RAD formula rents will be below market in many cases. After the conversion, the converted units would be subject to a PBRA or PBV contract at the RAD formula rents (below market). Tenants would pay a Section 8 rent (generally, 30% of adjusted income for rent and utilities), and the Section 8 subsidy would cover the rest of the RAD contract rent.

Posted:10/01/2013
Question:I am working with an HA that is interested in a RAD application. The HA will be demolishing 80 units and building back about 100 units, but only wants to convert about 30 to RAD and have those households move back on site, with the other 50 moving offsite permanently. They plan to apply for 9% LIHTCs this year. In their plan, they want to move off 50 families permanently. They want to give them HCVs and then have RAD PBRA for the 30 families who would return to the site. If they did a partial RAD conversion like this, would there be any impact on their ability to secure HCVs for the other non-RAD units?
Answer:The only way for the PHA to secure tenant protection vouchers to replace the 50 units is to apply and receive approval for Section 18 demolition and/or disposition. HUD will not issue tenant protection vouchers for RAD conversions. If the PHA converts 80 units under RAD, it is responsible for replacing 80 units (less a de minimis allowance) of project-based RAD assistance in the community. [Updated 7.29.13]

Posted:10/01/2013
Question:If the RAD contract rents are below what could be achieved in the local market, is there a way under RAD that the PHA could achieve the higher market rents?
Answer:Unfortunately, although HUD requested additional funding for RAD (to supplement the “current funding”), the Congress did not provide this additional funding. Therefore, a project converts at its current funding. A PHA may utilize rent flexibilities in 1.6(B)(5) or 1.7(A)(5) of the RAD Notice to alter the initial contract rents. [Updated 7.29.13]

Posted:10/01/2013
Question:Our RAD transaction is likely to include tenants who are "zero HAP" (30% of income is more than contract rent plus utility allowance). If such a tenant experiences a decrease in income, would the tenant be able to obtain HAP subsidy?
Answer:Yes. Your "zero HAP" tenant would have a right to remain (RAD cannot result in any involuntary permanent displacement of tenants). As long as the tenant chooses to remain, complies with the terms of the lease, and has income too high to quality for HAP assistance, your PBRA (or PBV) contract will have an un-utilized subsidy slot. If the "zero HAP" tenant subsequently has a decrease in income (and is otherwise eligible), the tenant will be entitled to utilize the previously un-utilized subsidy slot. There is no 'grace period' or other timing requirement.[Updated 7.29.13]

Posted:07/25/2013
Question:What is the deadline for a First Component RAD application to preserve the 2012 rent levels: 9/30/13 or 12/31/13?
Answer:As clarified in the revised RAD Notice, the RAD application must be received by 12/31/13 to preserve the 2012 rent levels.

Posted:06/28/2013
Question: If a PHA is interested in applying for RAD but won't be able to close the deal until 2014, what should they assume for calculating RAD rent under the RAD Inventory Assessment Tool?
Answer: For all RAD applications received prior to the end of Calendar Year 2013, HUD will honor the contract rents that appear in the RAD Inventory Assessment Tool.

Posted:06/28/2013
Question: We have a unique situation with one Housing Authority who is considering RAD: We see the RAD PBRA rents in the RAD application that HUD would provide. And I know that those are typically gross, that we would then need to deduct the utility allowances. However, the Authority currently pays for only a portion of the UAs right now, just water and sewer. Residents pay gas, electric and refuse. So, I am trying to understand what is the RAD net rent we should use in our proforma. On an AMP like this, is the RAD PBRA rent shown in the RAD application already net of those UAs the residents currently pay, but gross of the water and sewer? Or are the RAD rents showing the gross rent and we need to deduct out all the UAs we plan for the tenants to pay?
Answer: The RAD rents that appear in the Inventory Assessment Tool, the Application, and the CHAP are contract rents (gross rent minus the utility allowance).

Posted:06/21/2013
Question:Are we correct in understanding that the OCAF applicable to PBV rents following a conversion of public housing under the 1st component of RAD is the OCAF as published annually by HUD in the Federal Register?
Answer:Yes. RAD will use the normal published OCAF.

Posted:04/23/2013
Question:We have senior building with central boiler for heat. Can we establish a utility allowance for tenant paid heat?
Answer:No. HUD does not allow establishment of a utility allowance unless there is individual billing directly from the utility company to each tenant.

Posted:04/22/2013
Question:We were unclear in the RAD application operating expenses (Section 8 of the Application) how to reflect our PHA’s intent to have the tenants pay their own electricity. As a result, we showed the projected utility expense as being a project expense. Going forward, how do we accurately reflect the tenant-paid utilities?
Answer:Prepare the RAD Application assuming that all utilities continue to be owner-paid. If you assume that utility expenses will be reduced (because of utility-saving investments during rehab), please explain in the Application how you estimated the amount of the reduction. Once you complete the RAD conversion, you can then request a change in the utility configuration of the project, with an appropriate adjustment in the Contract Rent and tenant utility allowance. The normal procedures for converting to tenant-paid utilities for PBRA are included in HUD Handbook 4350.1 Chapter 12. For PBVs the PHA's normal voucher utility allowance schedule is used.

Posted:03/05/2013
Question:For a RAD project, is the utility consumption frozen at the RAD conversion?
Answer:Utility consumption, as a factor in determining utility subsidy, is only important in the public housing program. When the PHA converts, the RAD contract rents will be based on “current funding.” So, if a PHA has a high Utility Expense Level (UEL) under the public housing program, and the PHA can reduce that consumption following conversion (say, by making energy improvements),the PHA will benefit from those energy savings, i.e., HUD is locking in the funding to the PHA based on these higher consumption levels.

Posted:03/05/2013
Question:If, post-RAD, a RAD project made utility-saving investments, what would happen to Section 8 contract rents and tenant utility allowances?
Answer:Any savings in owner-paid utilities would flow to the project owner, and there would be no adjustment to the Section 8 contract rents. Any savings in tenant-paid utilities would flow to the tenants.

Posted:03/04/2013
Question:How do you find out what HUD will allow for rent caps on public housing conversions. Is there an exact number or is there a formula for different locations? The formula's say 93% of near by market rate rents seems to be a little vague.
Answer:The RAD PHA Application calculates the correct rents based on FY12 'current funding' levels. As projects approach closing, HUD will provide the correct rent levels based on updated 'current funding' levels. The details of the rent calculation are on the Validation worksheet of the Application. The rent calculation methodology also is explained in Attachment 1C of the Notice. Generally, if the project converts to PBRA, there is no cap up to 120% of the FMR. After that, the PHA may keep current funding, up to 150% of the FMR, but only if the current funding does not exceed the market rent for the unit. For PBV conversions, the RAD rent is the lower of current funding, the market rent for the unit, or 110% of the FMR.

Posted:01/22/2013
Question:The RAD rent for our project is less than the FMR. If we convert a project to RAD will the RAD rents be included in the calculation of average rent for Section 8 and thus drop our agency's allocation and fee income?
Answer:RAD rents do not affect the baseline Section 8 rent calculation for the Agency and thus will not impact allocation or fees. The new voucher subsidy that will be issued to fund conversions to PBV will get renewed in the same manner as other Section 8 HAP. Further, a PHA will receive an admin fee for each new RAD unit.

Category:Residents
Posted:07/17/2014
Question:My PHA is the recipient of a ROSS Service Coordinator Grant and plans to submit a RAD Application. Will we be permitted to continue assisting families (who, because of the RAD conversion) will be residing in non-public housing units) after the conversion?
Answer:Yes. Section 1.5H of the Notice provides that residents who are currently participating in ROSS may continue to participate after the RAD conversion for the term of ROSS grant. Also, with the PBRA HAP, the converted properties will be eligible to apply for the Multifamily Housing Service Coordinator Grants which are available to subsidized properties. These competitive grants are offered through a Notification of Funding Availability to serve properties designated as elderly and/or disabled. [Revised 7.17.14]

Posted:07/15/2014
Question:For a RAD PBV conversion, I understand that the public housing lease is terminated and a new lease must be effective as of the effective date of the HAP contract. I also understand that there is a RAD Unit Lease Rider that needs to be attached to the lease for all PBV conversions. However, once the public housing lease is terminated, is there a specific form of lease required to be used? An existing FAQ states that "the normal voucher lease requirements are applicable." What does that mean and where can I find the requirements?
Answer:24 CFR part 983.256 describes the lease requirements under the PBV program. This regulation (24 CFR part 983.256) outlines the form of lease, the required information within the lease, and the required tenancy addendum. There is not a specific form that owners must use as the PBV lease, however, in all cases the lease must include the additional tenant rights specified in PIH Notice 2012-32 REV 1 (the RAD notice) as well as the HUD-required tenancy addendum (as discussed in the regulation).

Posted:06/03/2014
Question:Does HUD require that new leases be executed prior to closing?
Answer:No. The new leases only need to be executed prior to the effective date of the HAP.

Posted:06/03/2014
Question:Must a PHA give tenants 30-day notice of the effective date of the new lease?
Answer: PHAs must give tenants at least 30-day notice of their public housing lease termination (recognizing that the exact date of closing, and thus the exact effective date of the HAP, is not known). HUD recommends that PHAs provide this notification to residents along with a notification of the effective date of the new lease. However, PHAs should consult with legal counsel, especially with respect to the requirements of state and local tenant laws.

Posted:06/02/2014
Question:Some of the families are currently over-housed. How will these units be treated for subsidy purposes at conversion?
Answer:If there is not an appropriately-sized bedroom for the family to transfer into, the family can remain in the unit and unit will continue to be funded based on the actual bedroom size and the contract rent. But if an appropriately-sized unit becomes available, the family will be required to move at that time.

Posted:05/19/2014
Question:We want to be sure we understand the RAD rule for grandfathering tenant income eligibility. Our reading of the Final Notice is that if, post conversion, a tenant’s income increases to where the tenant would no longer have been eligible for the Public Housing unit the tenant occupied prior to the RAD conversion, and the tenant does not meet eligibility requirements for the converted unit, then the tenant is no longer eligible to remain at the project. Is this correct? It’s not entirely clear, but our interpretation is that if a tenant is over-income for Public Housing at the time of conversion (because the tenant’s income has increased since the last review), the tenant would be allowed to remain at the converted project as long as there was no further increase in income. Is this correct?
Answer:The following are applicable whether the tenant has PBRA assistance or PBV assistance: (1) The only consequence of the increase in income is that the PBRA (or PBV) subsidy will decrease or be eliminated. (2) The tenant may not be evicted (or denied renewal of an expiring lease) solely because of income. (3) When the above-income tenant moves out, the unit must be leased to an eligible family.

Posted:05/12/2014
Question:If an over-housed household remains in their unit and continues to receive PBV assistance under the RAD program, will the assistance received be based on the unit size, and not on the household size?
Answer:The contract rent, and HAP assistance, will be based on the unit size, for both PBVs and for PBRA. If there is no appropriately sized unit available to move the family into and the over-housed household is therefore permitted to remain in the unit, it will not impact the rent due from the tenant or the subsidy provided under the contract.

Posted:05/12/2014
Question:If we elected to covert our ACC assistance to PBV or PBRA, will we be certifying tenants and receiving funding through the PIH office or Multi-Family? Will we use 50058 or 50059? Will we be using the TRACS system?
Answer:RAD conversions to PBVs will use the 50058 which will be submitted into PIC, just like certifications for any other family assisted under the Housing Choice Voucher program. Subsidy will be administered by the housing authority with whom the PBV HAP contract is signed, rather than through PIH. RAD conversions to PBRA will use the 50059 which will be submitted into TRACS. Subsidy will be administered by the Office of Multifamly Housing at HUD.

Posted:04/15/2014
Question:We understand that the RAD rules indicate that all residents residing in the property have the right to retain their tenancy and will be grandfathered in the project even if they do not meet new program rules. In that vein, if we have a household that is inappropriately housed because they are a one person household in a two bedroom unit, will the RAD voucher issued for that unit be a 2 bedroom voucher or a one bedroom voucher?
Answer:In all cases subsidy due to the owner is based on the HAP contract. The fact that in some cases a family may be over-housed does not impact the contract rents, the tenant’s contribution, or the subsidy due to the owner.

Posted:04/10/2014
Question:Do residents of properties need to be receritified at conversion?
Answer:No. All residents will maintain the same annual recertification date they would have had as public housing residents. Current residents are not subject to the rescreening, income eligibility, or income targeting provisions of either the PBV or PBRA programs. Following conversion: 1)For PBRA conversions, for the purposes of recording the resident in TRACS, owners should complete an initial HUD-50059 certification for each household that includes the same information previously found on the 50058, including the next annual reexamination date found on Line 2i; 2) For PBV conversions, the PHA would continue to use HUD Form 50058 for each household, but would consider the family a new admission and complete Section 11 (instead of Section 10). The Form should include the same information previously found on the 50058, including the next annual reexamination date found on Line 2i.

Posted:04/10/2014
Question:We expect to have vacancies at the property that we are converting between now and closing. When a Public Housing tenant signs a lease, they are required by HUD to sign for a year for the initial lease term. We don’t want to have vacancies because that negatively impacts the budget, but we wouldn’t be able to keep a PH tenant on a PH lease once we convert. How should this be handled? Can we modify the PH lease to make it shorter?
Answer:PHAs should enter into normal lease terms with any resident moving in prior to conversion. All public housing residents, regardless of when they moved in, will need to be given at least 30-day prior notification that their public housing lease will be terminated at the effective date of the new HAP contract.

Posted:02/28/2014
Question:To help deter crime, we have police officers who live in the public housing units even though they do not qualify for assistance. Are police officers allowed to continue to live at the property following conversion?
Answer:If converting to PBRA 245 CFR 5.661 provides for police and other security personnel to reside in an assisted project. MFH Handbook 4350.3, Section 3-8.D provides guidance on the admission of over-income tenants, and further in the Handbook, how to calculate rents. These will need to be approved by the contract administrator (HUD field office) to ensure the needs are there and the rents are appropriate. Under PBV, there is no provision for police officers to live in assisted units. However, if the police officer family was living in public housing at the time of the conversion, they can remain in the unit even though they may be over-income because RAD prohibits the re-screening of current public housing residents. However, once that family moves out, only income eligible applicants can be admitted into the PBV program and the participant must be receiving some amount of HAP to move into the unit. A PHA that wishes to continue to have police officers reside in units in the project may consider not including those units on the HAP contract.

Posted:02/03/2014
Question:Can a PHA continue to recognize and fund an existing resident council organization formed under Part 964, even though it is not required to do so?
Answer:Yes.

Posted:02/03/2014
Question:How will Family Self-Sufficiency participates be handled in a RAD project?
Answer:Family Self-Sufficiency is specifically discussed in Notice PIH-2012-32 REV-1. See pages 40-41 for PBV conversions and page 54 for PBRA conversions.

Posted:02/03/2014
Question:On October 3, 2011, we submitted our entire Public Housing Inventory (496 units) for Disposition under Section 18. Our Dispo application was only partially approved for our senior units (180 units) in April of this year. We are now planning to submit the remaining 316 PH units for repositioning under RAD. Since we went through the resident consultation process under the Sec. 18 Dispo application process, do we really need to have more rounds of resident consultation for the 316 units?
Answer:The Section 18 meetings would not count for RAD purposes. As required in the RAD Notice, and prior to submitting an application for RAD, the PHA is required to do the following: 1) Notify residents of projects proposed for conversion and legitimate resident organizations of the PHA’s intent to pursue a conversion; 2) Conduct at least two meetings with residents of projects proposed for conversion to discuss conversion plans and provide opportunity for comment; and 3) Prepare comprehensive written responses to comments received in connection with the required resident meetings on the proposed conversion to be submitted with the RAD Application. Once a PHA is selected to participate in the Demonstration, it must have at least one more meeting with residents before HUD will execute a HAP contract. Further information can be found in Section 1.8 of the Notice (Resident Notification).

Posted:02/03/2014
Question:These questions relate to the waiting list, and pertain to occupying RAD units after original residents return to the site. Because the RAD units are Project-based Housing Choice Vouchers, and HCVs do not allow for families to earn above 50% of AMI, we wanted to confirm that we can skip over households earning more than 50% of AMI on the current public housing development’s waiting list (the development in which the RAD units are located). Will there be an FHEO problem? If RAD households decide to move after one year and they move with a standard Housing Choice Voucher, when the housing authority selects the next resident to occupy the RAD unit, will there be an FHEO problem because we skipped over the general HCV waiting list since we are drawing from the development’s waiting list fin which the RAD units are located?
Answer:Note that RAD does not permit any permanent involuntary displacement of existing households. It is acceptable for the RAD property (post-conversion) to maintain a property-specific waiting list for the HCVs. It is also acceptable for the RAD property's tenant selection plan to limit new residents to households with gross income at or below 50% AMI. Please note that, under the voucher program (and, consequently, the PBV program), a PHA must limit admissions to applicants with incomes below 50% of median, unless the PHA amends its Administrative Plan in accordance with 24 CFR 982.201

Posted:02/03/2014
Question:We hope to convert 72 PH units (two 36-unit projects) to PBV under RAD. In the PBV program families who are underhoused or overhoused must move but we understand that all tenants in place at the time of RAD conversion cannot be required to move. Can we let the under and overhoused families remain after conversion? We have no available units in the project to which we can move them.
Answer:If there are not appropriately-sized units for the families to move to, they may remain after conversion; RAD does not permit permanent involuntary displacement of any existing tenant.

Posted:12/04/2013
Question:Can a family voluntarily waive its right to return?
Answer:Yes. A family may voluntarily waive its right to return. If a PHA is going to obtain a voluntary waiver of the right to return, HUD recommends the PHA first offer the family a public housing unit or Housing Choice Voucher in lieu of a right to return. If this is not possible, the PHA is still required to provide permanent relocation assistance as defined in the URA, and must ensure that all fair housing and civil rights conditions are met.

Posted:12/04/2013
Question:The language in the RAD Legislation states that tenants retain the rights “provided under sections 6 and 9 of the Act.” Do these rights apply anew even though they may have been modified by the PHA’s approved MTW Plan?
Answer:Yes. A PHA participating in the MTW program will be required to comply with all resident rights and procedures outlined within PIH Notice 2012-32, REV-1 for the converting property (ies). HUD considers compliance with the resident rights and procedures to satisfy Sections 6 and 9 of the US Housing Act of 1937, as amended, and will not require that converting PHAs be responsible for additional protections. Please Note: PIH Notice 2012-32, REV-1 requires MTWs to explicitly include the resident rights and procedures in their MTW Plan. These policies are defined in Section 1.6 or Section 1.7 of the Notice, as applicable,. Where a PHA participating in the MTW program utilizes flexibilities that do not directly conflict with PIH Notice 2012-32, REV-1, they may retain those flexibilities.

Posted:10/17/2013
Question:Tenants in place at the time of conversion will be housed in accordance to existing PH occupancy standards; is it permissible to have subsequent tenants housed in accordance with our S8 occupancy standards of number of bedrooms?
Answer:After conversion, occupancy requirements will be in accordance with the new HAP contract (either PBVs or PBRA). If your project converts to PBRA, the occupancy standards in HUD Handbook 4350.3 would be applicable. If your project converts to PBV, the occupancy standard are determine by your HCV occupancy standard.

Posted:10/17/2013
Question:We have an inventory of Scattered Site Public Housing units (i.e. houses and duplexes). 95% of the units are three or four bedrooms units. We plan to convert some of these units to PBVs under RAD. There is a concern that RAD converted units may be difficult to rent because our current Section 8 occupancy standard is for two persons per bedroom. Under that scheme, a family with two adults and a boy and girl, would only qualify for a two-bedroom unit. Is it possible for us to modify our occupancy standards specifically to give Section 8 Project Based Voucher RAD units less stringent standard?
Answer:Currently, a PHA must have a single occupancy standard across its entire HCV program.

Posted:10/01/2013
Question:Are there funds to provide residents/legitimate tenant organizations with technical assistance? If yes, what is the application process?
Answer:There is no RAD-specific funding for technical assistance to residents / tenant organizations. There are extensive resources available on www.hud.gov/rad and www.radresource.net websites. HUD staff is providing RAD webinars regularly (check hud.gov/rad) and residents are encouraged to attend and ask questions. PHAs are reminded that RAD includes various requirements for tenant consultation. In addition, HUD is developing materials to assist tenants in understanding RAD and participate in their local process. [Updated 7.29.13]

Posted:10/01/2013
Question:I am working with an HA that is interested in a RAD application. The HA will be demolishing 80 units and building back about 100 units, but only wants to convert about 30 to RAD and have those households move back on site, with the other 50 moving offsite permanently. They plan to apply for 9% LIHTCs this year. In their plan, they want to move off 50 families permanently. They want to give them HCVs and then have RAD PBRA for the 30 families who would return to the site. If they did a partial RAD conversion like this, would there be any impact on their ability to secure HCVs for the other non-RAD units?
Answer:The only way for the PHA to secure tenant protection vouchers to replace the 50 units is to apply and receive approval for Section 18 demolition and/or disposition. HUD will not issue tenant protection vouchers for RAD conversions. If the PHA converts 80 units under RAD, it is responsible for replacing 80 units (less a de minimis allowance) of project-based RAD assistance in the community. [Updated 7.29.13]

Posted:10/01/2013
Question:What is the obligation of a project owner in the unlikely event that, due to an approved de minimis reduction in the number of units in a project, there are insufficient units available to accommodate all tenants who want to return to the converted project?
Answer:At the time of closing, all residents currently in converting units have a right to return to the project following rehabilitation. If a de minimis number of units are being removed from the site such that some families may be unable to move back in, the PHA must obtain consent from a household waive their right to return if the PHA is providing them with alternative accommodations. [Updated 7.29.13]

Posted:05/22/2013
Question:Are PBV units under RAD required to have a Request for Tenancy Approval (RFTA) filled out by the owner and tenant?
Answer:Yes. RAD includes a few adjustments to the basic PBV program (see Section 1.6 of Notice PIH-2012-32), but none of those adjustments affects the requirement for an RFTA.

Posted:05/22/2013
Question:Do housing complexes receiving RAD funds need to provide smoke free apartment blocks?
Answer:RAD does not include any smoke free building requirement. You would, however, want to check whether your project has any non-RAD funding sources that include such a requirement.

Posted:05/22/2013
Question:For RAD PBV conversions, is there a special choice-mobility requirement, or is the choice-mobility requirement the same as under the normal PBV program?
Answer:The choice-mobility requirement for RAD PBVs is the same as for the normal PBV program (under Section 8(o)(13)(E) of the Housing Act of 1937).

Posted:04/23/2013
Question:We understand that for the TBRA conversion there is no rescreening or eligibility required- current residents are grandfathered in. However, we are layering 4% tax credits that will have a 50-60% income limit, and we understand that current residents will have to meet that income requirement in order to be eligible for the tax credits. Is that correct? Will permanent relocation be required for our current residents who are over the 50 or 60% income limit? Also for tax credit eligibility we believe we can use existing income verifications if they are 120 days current to the date of the initial TIC. But if older than that do we have to interview those clients? Are we doing initial 50059s regardless of when their last interview was? TBRA requires that we give them the right to return after rehab is completed. However, what about those who are over the tax credit income limit? Are we looking at permanent relocation for them, or can they really come back?
Answer:Regarding a tax credit conversion, you have two options. One is to apply for tax credits only for units that are occupied by income-eligible households (or that are vacant). The other option is to apply for tax credits for a larger number of units but to work with over-income tenants for their voluntary agreement to relocate (RAD cannot result in the permanent involuntary relocation of any tenant). Talk to your State tax credit allocating agency and/or your tax credit investor / syndicator regarding tax credit requirements for initial income certifications.

Posted:04/04/2013
Question:Can you explain the consequences of switching to RAD on the tenant protection and Tenant Council funds that are currently built into our Operating Budget? I know RAD intends that those funds continue to be provided to the Tenant Councils etc, but what is the source of those funds (i.e. do they reduce the RAD contract rent payments) or are the PHA expected to provide those funds from other sources (ACC grant) etc?
Answer:The $25 per unit per year, of which at least $15 must be conveyed to resident organizations, is built into the RAD rent. It would be a project expense.

Posted:03/05/2013
Question:What is the tenant certification reporting process for RAD PBV conversions? Will they be reported to HUD through the 50058 or 50059 process? Or, does it depend of the type of Project Based Voucher the development is converted to?
Answer:If the PHA converts a project to Section 8 PBVs, the PHA will continue to use HUD-50058s for the tenant certifications. (The PHA will actually terminate the 50058 for the family under the public housing program and create a new 50058 for the voucher program.) If, however, the PHA converts to PBRA, the PHA will then complete a 50059 for each family.

Posted:03/04/2013
Question:Per the 2nd sentence in 24 CFR 983.260(c) addressing process for PBV program “If voucher or other comparable tenant-based rental assistance is not immediately available upon termination of the family’s lease of a PBV unit, the PHA must give the family priority to receive the next available opportunity for continued tenant-based rental assistance.” Would families wishing to move from PBV (exercising their tenant based rental assistance option) have a higher preference that a family wishing to port their voucher to a higher cost area; special purpose vouchers such as FUP, NED, VASH, etc; or families whose tenant-based rental assistance was terminated due to lack of funding? Or can the PHA determine the order of preference between these specific groups?
Answer:PBV families wishing to exercise their statutory right to move with tenant based rental assistance have an absolute priority over all others.

Posted:02/28/2013
Question:Is there an example of the proper type of tenant notice that owners can post to inform tenants for the different cases of either accepting or rejecting RAD?
Answer:Sample tenant notification letters can be found in the appendix of Section III (assuming this is a question for a Rent Supp or RAP owner) of the notice (PIH Notice 2012-32). The Notice is on the RAD website (www.hud.gov/rad).

Posted:02/19/2013
Question:If a Mod Rehab property converts to PBRA under RAD, will the future Tenant Certifications be under HUD Handbook 4350.3 guidelines?
Answer:Yes if the property is converting to PBRA; no if the property is converting to PBV

Posted:02/19/2013
Question:We are planning to submit an application in the competitive round for the RAD program for public housing. With the new funding, we will propose to rehabilitate one of our existing senior projects. We anticipate very non-intrusive relocation, if any relocation at all. We estimate that the work will start and finish within one 24-hour period. If residents need to spend the night at a local hotel, we will provide the funds for that? Does this trigger the URA? Do we need to send them General Information Notices when we apply?
Answer:Generally speaking, all RAD projects are covered by the URA, which means that the PHA has to provide temporary relocation services. In terms of how those relocation costs are funded, the PHA has several options. First, during the period of construction, as long as the units were receiving subsidy at the time of conversion, HUD will be making rehab assistance (subsidy) payments for the units. The PHA could use these subsidies to pay for relocation. Or, the PHA could build the relocation costs into the development budget.

Posted:01/16/2013
Question:Attachment 1.B.2 section A of the Final Notice suggests that the PHA is to provide and administer these funds. Who is responsible for providing and administering these funds, the PHA or the single asset entity mortgagor (i.e. owner entity)?
Answer:Early in the Notice “PHA” is defined as current PHA or any future owner of the project. All provisions therefore refer to the owner entity. Additional guidance can be found in the FHA RAD Mortgagee Letter 12-20. See ML 12-20, Section IV, I, 6(a). The mortgagor’s project expenses must include $25 PUPA for resident association funding and resident services funding.

Posted:10/23/2012
Question:In the standard PBV program, if a family is overhoused they are required to move to a right-sized unit. Will this be the same policy for RAD?
Answer:Owners may request a waiver to allow over-housed residents to remain in their units and receive PBV assistance if no right-sized unit is available.

Posted:10/22/2012
Question: Do the no-rescreening and right to return provisions of the 1st component of RAD place any limitation on screening residents and denying admission for criminal backgrounds pursuant to USC TITLE 42, CHAPTER 135, SUBCHAPTER V—SAFETY AND SECURITY IN PUBLIC AND ASSISTED HOUSING § 13661. Screening of applicants for federally assisted housing - (c) Authority to deny admission to criminal offenders? This is potentially an issue for LIHTC projects where LPAs typically establish resident admission criteria.
Answer: Yes; The no-rescreening and right of return provisions are statutory and therefore are not subject to modification or waiver. A household that occupies an assisted unit at the time of conversion is permitted to remain post-conversion. If you had started an eviction action , you have to follow through with eviction action, you cannot summarily evict the family because of conversion. (See pages 32 (PBVs) and 40-41 (PBRA) of the Notice.)

Posted:10/22/2012
Question: Our RAD transaction will have a Choice-Mobility requirement. This question concerns residents who do not meet current screening requirements for Housing Choice Vouchers but who (because of the waiver of rescreening) will occupy PBV or PBRA units post-RAD. If one of these residents later requested a Choice-Mobility voucher, would the resident have to satisfy all current screnning requirements for the Housing Choice Voucher program, or would the waiver of re-screening continue to apply?
Answer: The waiver of re-screening applies (a) to issues that pre-date the RAD conversion (for example, a prior conviction record that would be unacceptable under one-strike) and (b) to continued occupancy at the RAD project. The waiver of re-screening would not apply to the possible future application for a Housing Choice Voucher that you describe (the resident would have to meet all HCV screening requirements in effect at the time). The waiver also does not apply to any issue that arises post-conversion (for example, a conviction that occurs after the RAD conversion).

Posted:10/22/2012
Question: Will the security deposit amount following the rehab be at a higher level than public housing?
Answer: The tenant’s existing security deposit will transfer at the RAD closing. Future tenants will pay security deposits according to PBRA / PBV rules.

Posted:10/19/2012
Question: Under RAD, will the relocation costs be subject to URA for former tenants returning to the property?
Answer: Yes.

Posted:10/19/2012
Question:We made a decision to relocate tenants prior to RAD and have used funds designated for public housing to move the tenants out. If we convert the units through RAD, we will not have access to these funds to move the tenants back into the project after the renovation. How will we cover the relocation costs to move the tenants back to the project?
Answer:You are correct that, once the RAD closing has occurred, public housing funds can no longer be used to pay for continued relocation costs. However, RAD permits you to transfer public housing funds to the RAD project at the RAD closing, so you might consider that approach. Of course, you may also include relocation costs in your RAD development budget.

Posted:10/18/2012
Question: At the RAD conversion, when do we re-certify the families?
Answer: You should re-certify families on their next annual re-certification date.

Posted:10/18/2012
Question:Does no re-screening of tenants include sex offenders, is that also waived?
Answer:Yes, there is no rescreening of sex offenders based solely on the RAD conversion. However, if through the routine annual/interim recertification it is discovered the individual was erroneously admitted into public housing in violation of QHWRA, then that individual must be terminated.

Posted:10/18/2012
Question:Is the income limit waived for former public housing residents coming back to the property?
Answer:Yes, there is no re-screening of tenants.

Posted:10/17/2012
Question: We are preparing an application for a RAD conversion from Public Housing to PBRA pursuant to a 9% tax credit rehab. What options other than Choice-Mobility must be provided under RAD (and/or URA) if a tenant chooses not to return to the renovated project? Is a household which elects not to exercise its right to return considered a displaced household? Is there a requirement to offer comparables? Is there a requirement to provide a TPV or other form of subsidy? Is there a requirement to pay relocation expenses? Is the household entitled to Public Housing wait-list priority?
Answer: If you have to move the tenant temporarily during rehab, you will be required to comply with URA in terms of finding the family comparable subsidized housing during renovation, which could include, say, other public housing. Once the renovation is done, and the tenant is made an offer to return, but refuses, the PHA has no on-going obligation.

Posted:10/15/2012
Question: If a housing authority is planning to submit an application for conversion of their entire portfolio (less than 1,000 units), will the resident notification / meeting be required prior to the submission of an application? There is no plan for significant rehabilitation and no plans for displacement of tenants. If meetings are required, can the meetings be portfolio-wide resident meetings in lieu of a separate resident meetings for each site?
Answer: Yes, regardless of the level of rehab or whether relocation is needed, two resident meetings must take place prior to application submission and you must include resulting comments and your responses as an attachment to the application. It is fine to hold one portfolio wide meeting as long as all tenants are notified.

Posted:10/15/2012
Question: If we are using RAD to redevelop our final public housing site, can the residents of the public housing site being demolished get priority on the HCV voucher wait list so that they can receive a voucher for relocation since we can not get temporary relocation vouchers?
Answer: If you want to use your current vouchers to help with the required relocation at the site being demolished, your PHA should amend its Section 8 Administrative Plan, if applicable, to provide a preference for the families who are affected by the demolition. (You should also be aware that you can use the HAP payments that would otherwise flow to the project during the construction period as a source of relocation funds.)

Posted:10/12/2012
Question: Must all families resident at the property pre-conversion live there after conversion? May pre-conversion residents be permanently relocated?
Answer: No permanent involuntary displacement may occur as a result of a RAD transaction. If a resident is temporarily relocated to accommodate construction and makes a voluntary decision not to return, that does not violate RAD rules.

Posted:10/12/2012
Question: Our property that we are proposing for RAD conversion is completely vacant and approved through SAC for demolition. All of the former residents were relocated off of the property in 2009, and were given the choice to either receive a Housing Choice Voucher or move to a different property in our public housing portfolio. Please confirm that we are not required to notify former residents and hold resident meetings for this RAD application.
Answer: There is no tenant notification process/requirement if there are no occupied units at the site.

Posted:10/08/2012
Question:Is it correct that there is nothing in the "no-rescreening" provisions that would prevent collection and analysis of tenant income data for purposes of determining LIHTC eligibility and for determining tenant rent payments under PBRA or PBV? Is the answer the same for both PBRA and PBV?
Answer:The prohibition against "re-screening" protects tenants against displacement. PHAs may not, for example, re-evaluate any existing tenant under the one-strike rules. The prohibition against "re-screening" does not, however, prohibit any re-determination of income that is otherwise required. If LIHTCs will be utilized in the RAD transaction, the PHA may encourage an existing tenant who is over LIHTC income limits to move from the project by offering an HCV from the PHA's own allocation. However, the PHA may not require the existing tenant to move. If the tenant wishes to remain, he or she has that right. In that case, the over-income tenant's unit would not be eligible for the LIHTC program. The preceding applies to both PBVs and PBRA.

Category:Subsidy
Posted:06/02/2014
Question:In the case of projects receiving tax credits, who will perform the SLR?
Answer:If an SLR will be completed by the tax-credit issuing agency prior to conversion, we will accept it in place of a HUD-performed SLR. In all other cases where an SLR is triggered, the RAD Transaction Manager will perform the SLR. Note: An FHA loan, in and of itself, does not trigger an SLR. It is only if the project receives other Federal assistance (e.g., HOME, Capital Fund, etc.) in addition to the PBV or PBRA subsidy. Also note that while HUD has the authority to accept a tax credit agency’s SLR, but HUD has no ability to compel such an agency to perform the SLR.

Posted:05/12/2014
Question:In the "Rental Assistance Demonstration Conversion Guide" bottom of page 13 under Cap on Number of Assisted Units, it states: "Under RAD, only 50% of the units in a PBV project can be assisted, with exceptions...." Question - What does that mean?
Answer:Under RAD conversions to PBV, no more than 50% of the units in a property may be assisted by the PBV contract unless at least 50 percent of the units at the project qualify for the exceptions for elderly, disabled, or families receiving supportive services, or are within single-family properties. See PIH Notice 2012-32 Rev 1 Section 1.6.A(2)

Posted:12/04/2013
Question:Where a PHA has applied to convert more than one project, may it choose to convert one project to PBV and the other to PBRA?
Answer:Yes. It is solely within the PHA’s power to determine whether it wishes to convert individual projects to PBV or PBRA. HUD requires notification of that choice during the 60 Day Milestone but does not require that it be the same type as other RAD conversions.

Posted:10/17/2013
Question:What is the document HUD will use to flow the Section 8 rent from closing of the conversion? We understand the Section 8 rents begin immediately and can be used for temporary housing and relocation, please confirm.
Answer:The HAP contracts include the provision for Rehab Assistance Payments.

Posted:10/01/2013
Question:I am working with a PHA interested in converting ACC to RAD. The RAD Contract Rent determined by the RAD PHA Application is less than comparable market rent. Is this situation (RAD contract rent being below market) a barrier to the RAD conversion?
Answer:No; in fact, HUD expects that the RAD formula rents will be below market in many cases. After the conversion, the converted units would be subject to a PBRA or PBV contract at the RAD formula rents (below market). Tenants would pay a Section 8 rent (generally, 30% of adjusted income for rent and utilities), and the Section 8 subsidy would cover the rest of the RAD contract rent.

Posted:06/21/2013
Question:Are we correct in understanding that the OCAF applicable to PBV rents following a conversion of public housing under the 1st component of RAD is the OCAF as published annually by HUD in the Federal Register?
Answer:Yes. RAD will use the normal published OCAF.

Posted:06/18/2013
Question:Are Housing Authorities eligible to receive subsidy phase-down payments for units converted under RAD?
Answer:No. Housing Authorities are not eligible to receive subsidy phase-down payments for units converted under RAD, or what, under the public housing program, is referred to as "Asset Repositioning Fee." Nor will PHAs, under RAD, be eligible for Replacement Housing Factor (RHF) funds for units that convert. Essentially, the act of conversion makes the PHA "whole" in terms of assisted units.

Posted:05/20/2013
Question:Will ACC and capital fund subsidy continue during the RAD conversion? If so, can those funds be used for temporary relocation costs and/or other development costs?
Answer:ACC subsidy will continue until the RAD closing. Following the RAD closing, the property will be under a Section 8 HAP contract. Under RAD, properties are eligible under their HAP contract for Rehab Assistance Payments, which provides subsidy payments during the period of rehab, approximately equal to the Operating and Capital subsidy amounts the project had received under public housing. Many PHAs plan to use this subsidy to support relocation costs.

Posted:03/05/2013
Question:Who will be conducting the subsidy layering reviews when required?
Answer:The RAD Subsidy Layering process is currently being finalized. Subsidy Layering Reviews will be done either by the RAD Transaction Manager or (for transactions involving certain non-RAD sources of funds) by another funder. For example, some state HFAs do the subsidy layering review for tax credit project.

Posted:03/04/2013
Question:As we are modeling the pro forma for the HA's RAD application, what will the yearly subsidy increases be based on? For example, the Section 8 subsidy increases are based on a calculation that starts with COLA. Other funding sources require showing 2% increase in rental income. Is this assumption accurate in the future funding for this subsidies?
Answer:The RAD Notice provides that contract rents (whether under PBRA or PBVs) will increase in accordance with HUD's Operating Cost Adjustment Factor (OCAF) methodology. HUD designs OCAFs to reflect changes in average operating costs for apartment properties by state. For more information, see the Federal Register notice announcing the FY 2013 OCAFs (October 16, 2012 Federal Register starting at page 63324). HUD does not provide estimates of future OCAFs. Project owners, lenders and other funding sources should make their own estimates of how contract rents will change in the future. Because OCAFs represeent increases in local costs, and because these increases in local costs will be used to adjust rents (revenues), some lenders have not required that, for purposes of development of pro-formas, the revenues trend at a lower rate than expenses.

Posted:10/18/2012
Question:Is RAD PBV eligible for vacancy loss and damages claim?
Answer:For the PBV program, vacancy loss is governed by 24 CFR 983.352; we did not change the rules for vacancy payments.

Posted:10/15/2012
Question: How is a PHA's budget authority for the PBV program affected by the RAD program?
Answer: The funding for the RAD PBVs will increase the PHA's existing funding for its voucher program. There will be an offsetting decrease in funding under the PHA's public housing ACC. Please also note that the RAD conversion to PBVs is in addition to the PHA's existing ability to project-base up to 20% of its vouchers; that is, the PHA can still project-base up to 20% of its pre-RAD vouchers in addition to the new RAD PBVs.

Category:Tax Credits
Posted:06/02/2014
Question:In our state, the tax credit allocating agency allows a fee up to 20% of the development budget as long as the amount exceeding 15% is deferred/contributed to the project. Can the RAD project charge this higher fee?
Answer:Yes. RAD will allow (whether FHA or non-FHA financing) the higher fee, provided the amount over 15% is re-contributed to the project (and not expected to be repaid).

Posted:05/12/2014
Question:We understand that for the TBRA conversion there is no rescreening or eligibility required- current residents are grandfathered in. However, we are layering 4% tax credits that will have a 50-60% income limit that residents will need to meet for tax credit compliance. Would we therefore need to permanently relocate current residents that are over the 50 or 60% income limit?
Answer:The RAD transaction may not result in permanent involuntary displacement of any existing resident. If an existing resident does not meet the LIHTC income requirement, and if you are unsuccessful in persuading the over-income resident to relocate voluntarily, you will not be able to claim tax credits for that unit. As a result, you may not be able to claim tax credits for 100% of the units. When planning your tax credit transaction, you need to estimate carefully how many units will be able to qualify for tax credits. You should discuss acceptable methods for verifying tax credit eligibility with your State tax credit allocating agency and with your tax credit investor.

Posted:04/07/2014
Question:Once I receive a CHAP, I will be applying for 4% tax credits to an agency that accepts rolling applications. The RAD notice is very specific on the timing of 9% LIHTC applications, but does not provide requirements on when I should submit my 4% application. When am I required to submit my tax credit application?
Answer:Generally, PHAs should submit their 4% tax credit application within 90 days of receiving a CHAP. However, some PHAs have indicated that they would like to have a completed PCA in-hand before they submit their tax credit application. Consequently, where a PHA wants to have a completed PCA prior to submission of its 4% credit, or where the tax credit agency requires market studies or other third-party reports that require substantial lead time submitted with their tax credit application, HUD will extend the submission milestone to 150 days. Any requests for an extension must include the proposed application submission and award notification dates. Reasonable requests will be approved with the requirement that the 30, 60, and 90-day milestone are met prior to award notification. This allows a PHA to move towards financing plan approval as soon as the tax credits are awarded, preventing any unnecessary delays.

Posted:06/21/2013
Question:Can you clarify who needs to provide HUD 2530s in regards to a low income housing tax credit investor?
Answer:The RAD applicant is responsible for providing all 2530/APPS submissions. Note that LIHTC investors may qualify for 'passive investor' status in APPS. See http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/apps/appsmfhm. Passive investors can make a limited submission in APPS.

Posted:06/18/2013
Question:Many PHAs incorporate multiple sites into a single AMP. Our understanding of IRS LIHTC regulations is that projects encompassing multiple sites must have 100% tax credit units. It is also our understanding that no one may occupy a tax credit unit who has an income above 60% AMI. There will typically be tenant households with incomes greater than 60% AMI grandfathered in under RAD’s “right to return” and “no requalification” tenant protection provisions. On the face of it, this would seem to preclude conversion of an entire multi-site amp under RAD if LIHTCs are used – it would have to be treated as multiple RAD conversions (and separate LIHTC projects) because of the IRS LIHTC requirements. This can be especially problematic for 30% present-value bond deals which typically need to involve many units to support bond underwriting costs. Is there a way to convert a multi-site AMP under RAD using LIHTCs?
Answer:First, there is no requirement in RAD that a PHA convert an entire amp to RAD. The units within the amp can be re-grouped in ways that are logical from a real estate and management perspective and that facilitate financing. The PHA should apply for groups of units within the amps or across amps that make sense to finance as a project. Second, you are correct that tenant households have an absolute right to remain / right to return. If the household wants to remain at / return to the site, they must be accommodated at the site.

Posted:04/23/2013
Question:We understand that for the TBRA conversion there is no rescreening or eligibility required- current residents are grandfathered in. However, we are layering 4% tax credits that will have a 50-60% income limit, and we understand that current residents will have to meet that income requirement in order to be eligible for the tax credits. Is that correct? Will permanent relocation be required for our current residents who are over the 50 or 60% income limit? Also for tax credit eligibility we believe we can use existing income verifications if they are 120 days current to the date of the initial TIC. But if older than that do we have to interview those clients? Are we doing initial 50059s regardless of when their last interview was? TBRA requires that we give them the right to return after rehab is completed. However, what about those who are over the tax credit income limit? Are we looking at permanent relocation for them, or can they really come back?
Answer:Regarding a tax credit conversion, you have two options. One is to apply for tax credits only for units that are occupied by income-eligible households (or that are vacant). The other option is to apply for tax credits for a larger number of units but to work with over-income tenants for their voluntary agreement to relocate (RAD cannot result in the permanent involuntary relocation of any tenant). Talk to your State tax credit allocating agency and/or your tax credit investor / syndicator regarding tax credit requirements for initial income certifications.

Posted:10/22/2012
Question: Can we submit a RAD application without tax credits if we know that we eventually might apply for them?
Answer: Your Application must be feasible as submitted (that is, it must include enough rehab to result in a physically and financially viable project). If your Application is feasible, you certainly can add more sources of funds later, in order to do additional rehab (over and above the level required for long term viability). If, on the other hand, you need the tax credit equity in order to have a viable project, you need to include the tax credit equity in the Application.

Posted:10/22/2012
Question: How flexible will HUD be with closing milestones and LIHTC deals? Does it make a difference whether they are 4% or 9%?
Answer: Applicants with 9% LIHTC deals and applicants with 4% deals in states with fixed application deadlines will be expected to apply at the first feasible application deadline following the award of the CHAP. In 9% LIHTC deals, in some cases, exceptions to the milestones described in the Notice will be necessary. In states with a rolling 4% allocation application, PHAs should apply for the 4% allocation within 90 days of issuance of the CHAP and these PHAs should be prepared to meet the remaining milestones as set forth in the Notice. In 4% LIHTC deals, HUD believes there will generally be sufficient time to with the milestones established in the Notice, but will work with applicants if exceptions are needed.

Posted:10/15/2012
Question: The Notice requires all due diligence received by lender or investor by 90 days from the issuance of the CHAP. Assuming the CHAP is issued 11/23/2012 (30 days after the application window closes). These items would be due by 2/21/13. Our proposed transaction includes an allocation of 9% LIHTC. The application date for those credits is 1/10/2013 with awards in April 2013. Initial scoring (which is an indicator of the final award would be available at the end of January) We would typically not complete items such as the survey, appraisal, etc. until AFTER that award is secured or at a minimum until the intital scoring is availabe late January, which would not allow enough time for the third party reports to be completed. The HA does not want to expend funds until is is reasonably assured that the transaction will move forward as all of these reports are time sensitive. Is there any flexibility within the CHAP timeline of milestones to fit the specific needs of the transaction? I do not foresee any problem in meeting the overall deadline of closing on the RAD conversion and equity within 360 days of issuance of the CHAP.
Answer: HUD agrees that due diligence materials should not be ordered until the 9% LIHTC reservation letter is in hand. For this reason, the Notice provides that Milestone dates for 9% LIHTC transactions will be customized to each individual transaction. 9% LIHTC transactions will have the standard dates for the 30 day Milestone (lender engagement letter, development team) and 60 day Milestone (significant amendment, PBV-PBRA decision). However, for 9% LIHTC transactions, the remaining Milestone dates will be transaction-specific and will be based on the QAP allocation cycle. Each 9% LIHTC transaction will have a special Milestone by which you must submit the LIHTC reservation letter. The timing of this MIlestone will be based on your responses in Section 13 of the Application. The remaining Milestones (starting with the "90 day" Milestone) would be established based on when you actually provide the LIHTC reservation letter. For purposes of illustration, based on your example, say that you provide the LIHTC reservation letter on April 25, 2013. One approach would be as follows: the 90 day and future milestones (that would ordinarily run from CHAP issuance) will run instead from April 25, 2013 (that is, the 90 day due diligence Milestone would fall on July 24, 2013, and the 150 day MIlestone for firm commitment applications would fall on September 22, 2013). HUD expects that this approach will be workable for most 9% LIHTC transactions, but if there is something unusual about your transaction that would call for a different approach, HUD is open to alternative approaches.

Posted:10/10/2012
Question: I’m writing with a question regarding a proposed tax credit development. The housing authority in question plans to apply for RAD and 9% LIHTCs to be able to substantially rehabilitate one of its properties. The RAD Notice on page 66 (Attachment 1-A, Section 1.A.1.C.5) states that applicants must “Include a contingency of 10% (HUD may require a higher contingency on a case-by-case basis).” However, the Qualified Allocation Plan imposes a lower limit on the construction contingency amount. Please provide guidance as to how the housing authority should appropriately budget for hard cost contingency that both makes it competitive in the 9% tax credit pool and meets HUD’s requirements as well?
Answer: HUD does not impose any requirements regarding your application for LIHTCs. However, for purposes of the RAD Application and for purposes of the Financing Plan, your construction contingency amount must comply with the Notice. Note that this requirement may result in your needing to fund part of the required contingency with LIHTC equity and additional contingency with other sources of funds.