Frequently Asked Questions

Category:	Application
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:	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%.
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:	12/17/2012
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. The application is only used under the 1st component of RAD. 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, use the weighted average. However, if you are planning to apply under the first component of RAD, you may not submit an application until HUD reopens the window for Mod Rehab properties. If you are applying under the second component of RAD, you may also include both projects in your submission
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:	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 best to note the correct unit count? Thanks
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.
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 my application, the rents that it is forcing me to use are 93% of fair market rent. Why can't I use fair market rents?
Answer:	Congress approved RAD without additional funding. So you are limited what funding you currently get – rents, operating fund, capital fund; so that is what you have to use. The question is whether, with current funding for ongoing rents, you can design a viable transaction. Generally, we expect that if you can accomplish enough rehab at the time of conversion, you can design a viable transaction.
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 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. Note that if your mixed finance projects used HOPE VI funds, they must have been placed in service before 2002 to be eligible for conversion. If they did not use HOPE VI funds, they can have been placed in service later, but eligibility for conversion will be subject to the 1,200 unit national cap on RAD conversions of existing mixed finance projects.
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:	Is it correct that the 1200 unit mixed finance cap only applies to Public Housing units that are currently part of mixed-finance developments? That is to say, the mixed finance cap does not place any restriction on conversions of existing 100% Public Housing projects to mixed-finance developments?
Answer:	You are correct; the 1200 unit cap is for existing mixed finance public housing projects. (Notice, p. 52)
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:	10/15/2012
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.
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:	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:	For conversions to PBRA, you do not have to make a reasonable rent determination, but you will need to fill in the 'reasonable rent' section of the Application. Enter your best estimate of market rents in the 'reasonable rent' section of the application (and please include a comment explaining that your agency does not administer vouchers and that this is your best estimate of market rents).
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:	Will HUD provide technical assistance on the application?
Answer:	During the initial application period for RAD, HUD will hold a series of live Q&A sessions to address questions that are sent in to rad@hud.gov during this time. In addition, HUD presenters will address commonly asked technical questions. Each Q&A session will be recorded and posted to the RAD website.
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:	10/22/2012
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 and 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.
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:	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
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:	10/20/2012
Question:	My PHA is considering RAD but we have an existing Capital Fund Financing Program (CFFP) obligation. Can my PHA still apply for RAD?
Answer:	Yes, any PHA with a CFFP obligation may apply for RAD. Some CFFP debt will not require any change in the structure or form of the CFFP obligation. In other instances, HUD will work with the PHA, following CHAP issuance, to attempt to develop a payment strategy to discharge either all or a portion of CFPP debt with eligible sources of pre-payment funds, which could include Capital Funds, Operating Funds, or funds proceeds from the RAD transaction, if structured appropriately. (Upated: 10/19/2012)
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:	01/22/2013
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.
Posted:	01/22/2013
Question:	PIH Notice 2012-32 page 58 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.

Category:	Choice Mobility
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:	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:	05/20/2013
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 18, footnote 5; and Attachment 1A.1 paragraph B.
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:	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:	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:	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:	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:	Can RAD and Choice Neighborhood Funds be used in the same unit for hard construction?
Answer:	Yes. HUD is making efforts to ensure that RAD and Choice Neighborhoods work well together. Choice Neighborhoods grantees are highly encouraged to bring units online under RAD (i.e., project-based Section 8), rather than as public housing.
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:	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:	You can transfer any existing 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 an existing stream of RHF funds due to your agency in future years, you would have three options: 1) Use any existing stream of RHF fund to develop new public housing units. These may be able to be converted to Section 8 in the future if HUD has authority at that time. 2) Reject the RHF funding. 3) Take out a capital fund financing note that would allow you to capitalize the future payments into an upfront amount that can be contributed as a capital source into your converting projects.
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:	We are trying to calculate our funding for the RAD Application and I have a couple questions regarding CFP and RHF 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. At the time of closing the HAP is signed and the project is removed from PIC. HUD will use a pro-rate share of the capital funds attributable to the converting project, in addition to the Operating Funds, to fund the HAP subsidy payments. RHF will not be included in the RAD contract rents. Instead, 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. 2. 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.
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.
Posted:	09/24/2012
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. A PHA may not, however, use public housing program funds on a project following conversion. [See RAD Final Notice Reference: Paragraph 1.5, A.]

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:	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:	03/05/2013
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, which is consistent with how public housing treats units under modernization, but is otherwise not existing practice in either Section 8 world. We anticipate issuing instructions for these Rehab Assistance Payments very shortly. 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.
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:	01/16/2013
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 nearly final version of all contractual documents is available on the RAD website, specifically at this link: http://portal.hud.gov/hudportal/HUD?src=/RAD/contracts. The final drafts of the HAP documents to be submitted for OMB approval should be posted to the same website soon. Nearly final versions of the drafts are available on the site now.
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:	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.
Posted:	02/15/2013
Question:	I am attempting to fulfill my 60-Day Milestone under the Notice. What elements of my proposed conversion must be included in my Significant Amendment?
Answer:	As per PIH Notice 2012-32, the following items must be covered in your Significant Amendment request: 1. A description of the units to be converted, including the number of units, the bedroom distribution of units, and the type of units (e.g., family, elderly/disabled, or elderly-only); 2. Any change in the number of units that is proposed as part of the conversion, including de minimis unit reductions and unit reductions that are exempt from the de minimis cap; 3. Any change in the bedroom distribution of units that is proposed as part of the conversion; 4. Any changes in the policies that govern eligibility, admission, selection, and occupancy of units at the project after it has been converted. This includes any waiting list preferences that will be adopted for the converted project as well as the Resident Rights and Participation, Waiting List and Grievance Procedures for residents stated in 1.6, 1.7 and Attachment 1B of PIH Notice 2012-032 (see Table 1 below for more specific guidance). 5. If there will be a transfer of assistance at the time of conversion, the significant amendment must include the location (including census tract) of any converted units that will be transferred off-site, as well as the information described above for the units that will be transferred. In addition, if some, but not all of the assisted units will be transferred to another site at the time of the conversion, the significant amendment must also include a description of how the waiting list will be transferred and how households will be selected for the transfer (please see Table 2 below for more specific guidance). Additionally, in accordance with 24 CFR Part 903, a PHA must perform the following actions in regards to their Capital Fund Plan: 6. During the significant amendment stage, a PHA shall notify the public that the current and future Capital Fund Budget grants will be reduced as a result of any projects converting to RAD, requiring revised Annual and Five-Year Plans. a. The PHA should provide an estimate of the amount of the current Capital Fund grant that is associated with the proposed project(s) and the impact on the PHA’s current Five-Year PHA Plan and Five-Year Capital Fund Action Plan. b. If the RAD conversion will impact an existing CFFP or utilize RHF funds to facilitate conversion, the PHA should also indicate the estimate impact of those activities. Finally, HUD recommends that, to avoid the need for a possible subsequent significant amendment, you examine your definition of “Substantial Deviation”. You may want to redefine your definition of Substantial Deviation in Section 10 of the PHA Plan to exclude the following items: a. Changes to the Capital Fund Budget produced as a result of each approved RAD Conversion, regardless of whether your proposed conversion will include use of additional Capital Funds; b. Changes to the construction and rehabilitation plan for each approved RAD conversion; and c. Changes to the financing structure for each approved RAD conversion. Please Note: Approval of a PHA’s Financing Plan may be delayed if a PHA has made a substantial change to its plans, as defined locally, and the PHA has not completed a Significant Amendment.

Category:	Milestone - 90 Days
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:	01/24/2013
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).
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:	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:	10/15/2012
Question:	Is it correct that the 1200 unit mixed finance cap only applies to Public Housing units that are currently part of mixed-finance developments? That is to say, the mixed finance cap does not place any restriction on conversions of existing 100% Public Housing projects to mixed-finance developments?
Answer:	You are correct; the 1200 unit cap is for existing mixed finance public housing projects. (Notice, p. 52)
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:	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:	04/04/2013
Question:	Has the 1,250 unit cap for Mod Rehab conversions under the 1st component of RAD been reached?
Answer:	Mod Rehab applications under the 1st component of RAD, that were received during the Initial Application Period, did not exhaust the 1,250 unit cap. HUD is currently (April 2013) working on a revised Notice to extend the time period during which Mod Rehab owners can apply under the 1st component of RAD.
Posted:	12/17/2012
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. The application is only used under the 1st component of RAD. 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, use the weighted average. However, if you are planning to apply under the first component of RAD, you may not submit an application until HUD reopens the window for Mod Rehab properties. If you are applying under the second component of RAD, you may also include both projects in your submission
Posted:	10/23/2012
Question:	What should we do if the Mod Rehab contract is expected to expire after the RAD conversion is anticipated to be completed.
Answer:	If the Mod Rehab contract is expected to expire after the RAD conversion is anticipated to be completed, HUD will provide a letter of intent stating that upon expiration of the contract (which may occur after the new financing closes) it is our intent for the PHA to enter into the PBV contract.
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:	05/20/2013
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 18, footnote 5; and Attachment 1A.1 paragraph B.
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:	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:	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:	03/04/2013
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:	Yes, normal public housing inspections continue until the RAD closing. A public housing property remains a public housing property until the RAD closing. Please note, however, that the Department plans to issue soon a notice indicating that, upon CHAP award, affected units will be exempt from PHAS.
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 housing authority will not be the owner of the RAD project (the owner will be an LLC or limited partnership, formed for tax credit purposes). Would it be considered acceptable 'control' if the housing authority is the administrator of the project based vouchers and has a right of first refusal after the tax credit compliance period?
Answer:	Yes. In the case of tax credits, all of the forms of control identified in the Notice serve as an acceptable form of control. If a PHA were proposing some alternative form of control, prior HUD approval would be required.
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:	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.
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:	04/19/2013
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.
Posted:	02/19/2013
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.
Posted:	02/13/2013
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 assistance 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.
Posted:	10/12/2012
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).
Posted:	09/24/2012
Question:	What procurement rules apply to RAD during the application phase?
Answer:	HUD has authorized $100,000 in public housing funds that PHAs can spend on pre-development expenses without HUD approval. Because these are public housing funds and the project has not yet converted assistance under RAD, PHAs must comply with public housing procurement rules. Generally, this means small purchase procedures, which are outlined in Chapter 5 of the Procurement Handbook for Public and Indian Housing Authorities, 7460.8 Rev-2. (Note that HUD is not capping the total amount that can be spent on pre-development expenses; rather, the $100,000 is the amount that can be spent prior to approval of the Financing Plan. It is likely that some projects will incur more than $100,000 on pre-development costs.) [See RAD Final Notice Reference: Paragraph 1.5, A.]

Category:	Public Housing Program
Posted:	02/15/2013
Question:	I am attempting to fulfill my 60-Day Milestone under the Notice. What elements of my proposed conversion must be included in my Significant Amendment?
Answer:	As per PIH Notice 2012-32, the following items must be covered in your Significant Amendment request: 1. A description of the units to be converted, including the number of units, the bedroom distribution of units, and the type of units (e.g., family, elderly/disabled, or elderly-only); 2. Any change in the number of units that is proposed as part of the conversion, including de minimis unit reductions and unit reductions that are exempt from the de minimis cap; 3. Any change in the bedroom distribution of units that is proposed as part of the conversion; 4. Any changes in the policies that govern eligibility, admission, selection, and occupancy of units at the project after it has been converted. This includes any waiting list preferences that will be adopted for the converted project as well as the Resident Rights and Participation, Waiting List and Grievance Procedures for residents stated in 1.6, 1.7 and Attachment 1B of PIH Notice 2012-032 (see Table 1 below for more specific guidance). 5. If there will be a transfer of assistance at the time of conversion, the significant amendment must include the location (including census tract) of any converted units that will be transferred off-site, as well as the information described above for the units that will be transferred. In addition, if some, but not all of the assisted units will be transferred to another site at the time of the conversion, the significant amendment must also include a description of how the waiting list will be transferred and how households will be selected for the transfer (please see Table 2 below for more specific guidance). Additionally, in accordance with 24 CFR Part 903, a PHA must perform the following actions in regards to their Capital Fund Plan: 6. During the significant amendment stage, a PHA shall notify the public that the current and future Capital Fund Budget grants will be reduced as a result of any projects converting to RAD, requiring revised Annual and Five-Year Plans. a. The PHA should provide an estimate of the amount of the current Capital Fund grant that is associated with the proposed project(s) and the impact on the PHA’s current Five-Year PHA Plan and Five-Year Capital Fund Action Plan. b. If the RAD conversion will impact an existing CFFP or utilize RHF funds to facilitate conversion, the PHA should also indicate the estimate impact of those activities. Finally, HUD recommends that, to avoid the need for a possible subsequent significant amendment, you examine your definition of “Substantial Deviation”. You may want to redefine your definition of Substantial Deviation in Section 10 of the PHA Plan to exclude the following items: a. Changes to the Capital Fund Budget produced as a result of each approved RAD Conversion, regardless of whether your proposed conversion will include use of additional Capital Funds; b. Changes to the construction and rehabilitation plan for each approved RAD conversion; and c. Changes to the financing structure for each approved RAD conversion. Please Note: Approval of a PHA’s Financing Plan may be delayed if a PHA has made a substantial change to its plans, as defined locally, and the PHA has not completed a Significant Amendment.

Category:	RAD Physical Condition Assessment (RPCA)
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:	01/24/2013
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).
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:	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:	03/05/2013
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, which is consistent with how public housing treats units under modernization, but is otherwise not existing practice in either Section 8 world. We anticipate issuing instructions for these Rehab Assistance Payments very shortly. 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.
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:	05/22/2013
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.
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:	04/04/2013
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.
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 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. There is no ability under RAD to increase the RAD rents to market.
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:	03/04/2013
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%.
Posted:	01/22/2013
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 varous requirements for tenant consultation; each PHA needs to decide the best way to comply with these requirements. In addition, HUD is developing materials to assist tenants in understanding RAD and participate in their local process.
Posted:	01/22/2013
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:	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:	01/09/2013
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. The CHAP rents are based on 2012 appropriations, and while they are subject to change based on 2013 appropriations, the 2013 bill currently is similar, and only minor changes, if any, are expected to occur to the rents at conversion. Note: The general methodology for calculating rents can be found on page 79 of PIH Notice 2012-32.

Category:	Residents
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:	04/04/2013
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.
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:	01/22/2013
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 varous requirements for tenant consultation; each PHA needs to decide the best way to comply with these requirements. In addition, HUD is developing materials to assist tenants in understanding RAD and participate in their local process.
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:	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 minimus number of units are being removed from the site and, following repairs, some of the original housheolds cannot move back in, those households must be placed at the top of the waiting list for that site. Alternatively, a household may consent to waive their right to return if the PHA is providing them with alternative accomodations.
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:	10/15/2012
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.
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:	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:	01/22/2013
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:	10/18/2012
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:	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:	01/22/2013
Question:	The housing authority will not be the owner of the RAD project (the owner will be an LLC or limited partnership, formed for tax credit purposes). Would it be considered acceptable 'control' if the housing authority is the administrator of the project based vouchers and has a right of first refusal after the tax credit compliance period?
Answer:	Yes. In the case of tax credits, all of the forms of control identified in the Notice serve as an acceptable form of control. If a PHA were proposing some alternative form of control, prior HUD approval would be required.
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.