| Category: | Capital Needs Assessment |
| Posted: | 05/21/2020 |
| Question: | Will HUD relax its RAD Capital Needs Assessment inspection requirements for RAD conversions during this time impacted by COVID 19? |
| Answer: | The Capital Needs Assessments are a core part of the RAD review process, as they are used to establish a basis on which to project the property’s 20-year capital needs. As such, unless constructed within the past ten years, all properties will require a complete inspection in compliance with the MAP Guide. For properties built within the last ten years, HUD may approve the inspection of only vacant or model units. The Office of Recapitalization will extend milestones and deadlines on a case-by-case basis if the capital needs inspection cannot be completed at this time due to COVID-19. Recap is also considering other approaches to avoid delays caused by inspectors having more limited access to sites at this time. |
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| Posted: | 01/02/2020 |
| Question: | Under RAD Notice Revision 4, when is an Energy Audit required for RAD conversions? |
| Answer: | The energy audit is still required as part of the full CNA. If the Notice says that the narrative is not required or that both components are not required, then the energy audit is also not required. |
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| Posted: | 03/21/2019 |
| 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, |
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| Posted: | 03/18/2019 |
| Question: | How are carbon monoxide detectors handled in the RAD CNA? |
| Answer: | The RAD CNA requires the contractor to confirm that items involving in Life, Health & Safety for building code compliance are being met. Consequently, to the extent smoke detectors and carbon monoxide detectors are required by local code, these items should be confirmed. Furthermore, to the extent combustible appliances are present at the property, carbon monoxide detectors should be recommended. This would include gas ranges, gas hot water heaters, gas furnaces, boilers, etc. |
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| Posted: | 03/01/2019 |
| 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. |
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| Posted: | 01/25/2019 |
| Question: | Is the RPCA required to include units that will not be converted to RAD because of the allowable de minimis reduction? |
| Answer: | No. If the units are being reduced as part of the allowable de minimis reduction, they do not need to be included in the RPCA because they are not converting to RAD. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | If you have a multi-unit community with buildings that have a mix of public housing and non-public housing apartments, should the Capital Needs Section on page 3 of the RAD application include the capital needs for ALL of the units (both public housing and non-public housing) OR just the public housing units and their pro rata share of capital improvement costs for common areas? |
| Answer: | The RAD PCA must cover all units in the project, not just the units being converted under RAD. |
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| Posted: | 01/24/2019 |
| Question: | My firm was engaged by a property owner to complete a RPCA for a mixed income property. Some of the units within the development are market rate and are public housing. |
| Answer: | The 25% sample requirement refers to all units not just the units being converted under RAD. |
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| Posted: | 04/28/2017 |
| Question: | We are pursuing a RAD conversion under the second component. Our current Section 8 SRO Mod Rehab contract covers only a portion of the housing units in our building. Do we need to complete a PCA for the entire building, or just for the units included in our contract? |
| Answer: | The requirement for the assessment of the physical condition of the property proposed for RAD conversion is contacted in Notice, PIH-2012-32 (HA), REV-2, Section 2.4.A., on page 136. The RAD conversion is intended to place the SRO units on a sound financial, physical, and managerial footing for the long-term HAP contract that will replace the Mod Rehab contract. If the ownership of the SRO units also owns the remaining units in the building, then the CNA (HUD’s name for the PCA) must cover the entire building. If the ownership of the SRO units is different than the entity owning the remaining units in the building, then the CNA must only cover the SRO units. |
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| Posted: | 08/27/2015 |
| Question: | If a component does not fall into a category for which the Fannie Mae Physical Needs Assessment Guidance to the Property Evaluator lists an EUL, can it be excluded from the RAD Report? |
| Answer: | No, the component cannot be excluded.
HUD relies on RPCA contractors to be aware of appropriate sources of information for EULs in this situation.
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| Posted: | 10/14/2014 |
| Question: | Is a RAD Property Condition Assessment (RPCA) required on a new construction or substantial renovation transaction? |
| Answer: | A RPCA is required for all RAD transactions, except the following: 1) New Construction; 2) Gut Rehab (essentially, down to the stud); or 3) Recently modernized or constructed buildings (based on the recommendation of the HUD RAD Transaction Manager and approval by the RAD Team Lead). However, the RPCA Excel tool is still required to size the reserve for replacement deposit on all sub-rehab transactions, with the exception of “gut rehabs”. “Gut rehabilitation” is defined as “removal/replacement of all or substantially all interior finished surfaces”.
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| Posted: | 09/08/2014 |
| Question: | If a PHA has accessibility improvements identified in the PCA, can it perform that work post-closing as part of the scope of immediate repairs? |
| Answer: | Critical repairs are repairs that must be done on an accelerated schedule, including health and safety issues (such as an improperly vented gas appliance). Note that identified accessibility modifications that pose imminent health and safety risks, may be considered critical repairs. All critical repairs must be completed prior to the RAD closing. If your property has a critical repair that you believe cannot be completed prior to RAD closing due to time constraints, please discuss this with your RAD Transaction Manager who may permit the repair to be moved into rehab as long as it can be demonstrated that doing so does not present an immediate health or safety hazard to residents. Rehab items also must be done, but the schedule is governed by the rehab provisions of the RAD Conversion Commitment. Year One items typically reflect systems or components that were functioning at the time of the inspection and are anticipated to require replacement in the first year. Whether and when these are done will be up to the property owner. A typical example would be a 20 year roof that is not leaking but that either has reached 20 years of age or will reach 20 years of age within the first year after the closing. The Reserve for Replacement would contain sufficient funds to pay for the roof replacement, and the timing of the roof replacement would be up to the owner. |
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| Posted: | 06/02/2014 |
| Question: | When is the RPCA required? |
| Answer: | The RPCA is required in all instances, except the following: 1) New Construction; 2) Gut Rehab (essentially, down to the stud); 3) Recently modernized or constructed buildings (based on the recommendation of your RAD Transaction Manager and approval by the RAD Team Lead); or 4) Any FHA 221(d)(4) transaction. |
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| Posted: | 02/14/2014 |
| Question: | Is there any restriction on how early the RPCA can be done? We have a project where we would like go ahead and order the RPCA before we submit the application. The project will be funded entirely with Housing Authority funds, so there is no issue with having the RPCA provider approved by a lender.
Is this acceptable? |
| Answer: | Obviously the more current the RPCA, the better it is for the Owner, HUD, and all funding partners to understand the property and what repair and replacement needs have to be addressed. Typically HUD uses an RPCA for 12 months after which time, it will have to be updated if the RAD transaction has not closed. It is also important to document significant replacements that are made and changes made to the property after the RPCA has been completed and while HUD is reviewing the RAD transaction. However, if the transaction is using FHA insurance, the RPCA can be no more than 6 months old at the time of Firm Commitment issuance, otherwise it will need to be updated. Please keep your HUD Transaction Manager apprised of these significant changes. [Updated 2.14.14] |
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| Posted: | 06/18/2013 |
| Question: | Could you further explain the Occupancy adjustment factor and how it’s calculated? |
| Answer: | The utility usage should be adjusted when there are vacancies that impacted utility usage so that the consumption represents 100% occupancy. For example, if your property was 90% occupied during the year, and vacant units consume half as much electricity as occupied units, then the actual consumption represents about 95% of the amount of electricity that the property would have consumed if all units had been occupied for the full year.
HUD does not dictate how the occupancy adjustment is made but does ask that you explain how you made your calculation in the narrative portion of the utility baseline.
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| 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. |
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| Category: | CHAPs and CHAP Amendments |
| Posted: | 03/05/2024 |
| Question: | Can a housing authority process OCAF adjustments during the construction period? If so, does the authority take into account any of the construction loans when adding in debt in the excel RAD OCAF tool HUD provides? |
| Answer: | The OCAF should be applied every year, including during the construction period. There is no deduction of debt service when calculating OCAF adjustments during the period the owner is making interest-only payments on a construction loan. They would only deduct debt service when calculating the OCAF after they’ve converted to permanent financing. |
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| Posted: | 02/14/2024 |
| Question: | Can a RAD converted property receive OCAF adjustments for prior years which have not been taken on an annual basis? For instance, a property converts to RAD in 2017 but has not applied for an OCAF adjustment since the conversion. In 2020, the property requests an OCAF adjustment. Is that property eligible to receive all of the OCAF adjustments since 2017 (meaning 2018, 2019, and 2020)? |
| Answer: | Yes, the OCAF must be applied retroactively if it was missed, since the RAD PBV HAP Contract gives the owner the right to contract rents adjusted by each year’s OCAF. The Contract Administrator must make sure that all OCAFs have been applied correctly since the RAD closing and calculate the current rents accordingly, including making sure that the RAD PBV contract rents do not exceed the PBV program caps. If the Contract Administrator is also the project owner, then the calculations must be performed by an independent entity. As a reminder, there is a PBV OCAF Tool available on www.radresource.net to help ensure the calculation is done correctly. Once the calculations have been made, the Contract Administrator must reach out to the PIH Financial Management Center (FMC), including the Operations Division Director and Team Lead, to request the make a retroactive subsidy payment. Contact information for the FMC can be found here: https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/contact#FMC. Contract Administrators should also include their local Public Housing field office on discussions regarding the OCAF, or if the retroactive adjustment may adversely impact the PHA’s HCV program. |
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| Posted: | 08/23/2023 |
| Question: | How can Small Area Fair Market Rents (SAFMR) be used to increase rents in the project-based voucher (PBV) program? |
| Answer: | HUD published the SAFMR Final Rule allowing for the determination of Housing Choice Voucher (HCV) payment standards using the Small Area Fair Market Rents (SAFMRs), which are calculated at the ZIP code level, rather than at the metropolitan area. SAFMRs allow for payment standards to be established that more accurately reflect the local market. Implementing SAFMRs is an option PHAs can use to increase PBV rents. When converting assistance to PBV under the RAD and RAD/Section 18 blend programs, PHAs may adopt SAFMRs for the following scenarios:
-RAD Rents are higher than 110% of FMR (RAD units)
-Reasonable rents are higher than 110% of FMR (Section 18 units)
PHAs that are not in designated SAFMR areas (where SAFMR adoption is mandatory) have two options to utilize SAFMRs voluntarily:
-Opt-In – A PHA may choose to fully utilize SAFMRs throughout its entire jurisdiction by requesting and receiving approval from their local HUD field office. An Opt-in PHA must decide whether to apply SAFMRs to it’s PBV program or whether to continue using the Metro Area FMRs (MAFMR).
-SAFMR-based Exception Payment Standards – A PHA may choose to establish exception payment standards using the SAFMR in just certain ZIP codes within their jurisdiction. This can be done by simple notification to SAFMRs@hud.gov. Exception payment standards must be applied to all vouchers (tenant-based and PBV) in the exception area (i.e. ZIP code).
Whether the PHA intends to opt-in or establish SAFMR-based exception payment standards, the PHA must carefully follow the instructions in PIH Notice 2018-01. |
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| Posted: | 07/21/2022 |
| Question: | How will the contract rents for the units approved under Section 18 that will be subject to the non-RAD PBV HAP Contract be determined? |
| Answer: | The non-RAD PBV units will be under a separate HAP contract and will have rents determined based on standard PBV requirements, rather than on RAD requirements. The PHA (or the independent entity, if the project qualifies as PHA-owned – see PIH Notice 2017-21 (here: https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2017-21.pdf) Attachments A and B) will establish the “initial rent to owner” (i.e., contract rent) for units approved under Section 18 at the beginning of the Housing Assistance Payment (HAP) contract term, per 24 CFR 983.301(a)(2).
The PHA may need information about proposed contract rents earlier than the beginning of the HAP contract term in order to complete RAD Financing Plan requirements (see RAD Notice Att. 1A). For example, the PHA may have estimated rents determined prior to submission of the RAD Financing Plan to support both HUD’s underwriting and to secure financing commitments from lenders/investors. Particularly where the project is not subject to competitive selection requirements (see PIH Notice 2017-21 Attachment L) the PHA may author a conditional letter to support underwriting that states that if HUD approves the RAD conversion and the Section 18 blend and the site satisfies all requirements for the placement of a PBV HAP contract or AHAP, the PHA commits to placing a PBV contract on an identified number of units and at the appropriate rent level. |
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| Posted: | 10/21/2021 |
| Question: | Would HUD allow PHAs to utilize the RAD Section 18 Blend strategy of disposing of a portion of the units for a Faircloth-to-RAD as a part of the converrsion process to obtain higher rent levels? |
| Answer: | Constructing Faircloth units and then immediately converting them under a RAD/S18 blend would not be feasible under current rules and regulations. Because the Faircloth units must be developed as Mixed-Finance, the construction costs are not part of the RAD transaction and the high cost factor of the the RAD/Section 18 blend would not apply. Faircloth is also incompatible with Section 18 because HUD would not approve construction of Faircloth units where the resulting units would meet the obsolescence test necessary for Section 18. |
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| Posted: | 01/13/2021 |
| Question: | Can a RAD owner include the cost of internet in the RAD project's utility allowance? |
| Answer: | According to 24 CFR 982.517, "A PHA's utility allowance schedule, and the utility allowance for an individual family, must include the utilities and services that are necessary in the locality to provide housing that complies with the housing quality standards (HQS). However, the PHA may not provide any allowance for non-essential utility costs, such as costs of cable or satellite television." Since internet is not necessary to comply with HQS and is therefore also considered "non-essential", its cost cannot be included as part of a utility allowance. Internet cannot be included on PBRA properties either. |
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| Posted: | 11/08/2019 |
| Question: | How can I determine if a project is in a designated Opportunity Zone? |
| Answer: | Each state has designated certain census tracts as Opportunity Zones. HUD has created a national map where users can identify whether a project is situated within a designated Opportunity Zone. See opportunityzones.hud.gov/ |
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| Posted: | 10/31/2019 |
| Question: | For Opportunity Zone rent increases, how is “substantial rehabilitation” defined and what can be included in the RAD Scope of Work to measure against Housing Construction Costs? |
| Answer: | Substantial rehabilitation is defined here as a proposed RAD scope of work where the hard construction costs, including general requirements, overhead and profit, and payment and performance bonds, exceed of 60% of the “Housing Construction Costs.” Housing Construction Costs for a given market area can be found at https://www.hud.gov/sites/dfiles/PIH/documents/TDC.pdf We have also developed a tool available on the RAD Resource Desk that PHAs can use to check to quickly assess whether proposed rehab level meet this threshold.
For purposes of calculating aggregate construction costs vis-à-vis the 60% threshold, HUD will consider the combined construction costs of the overall development. The development may include a mixture of new construction and rehabilitation and may include other units besides the converting units (e.g., through the development of new units).
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| Posted: | 10/31/2019 |
| Question: | For the Opportunity Zone Rent Increase, how will HUD determine whether the rent increase is necessary for the viability for the transaction? |
| Answer: | PHAs may request an increase to the rents in their CHAPs by up to $100 per unit per month. Generally, HUD will take the following approach to determining whether the rent increase is necessary for the viability of the transaction:
1) HUD will consider the total revenue for the property, including any other adjustments to the CHAP rents and other revenue producing units at the site.
2) The transaction must utilize “hard,” must-pay financing.
3) Using a trending rate of 2% for revenue and 3% for expenses, the transaction must maintain a debt coverage ratio that is no greater than 1.35 over a 20-year pro forma.
4) The transaction cannot include any cash-out financing or net acquisition proceeds to the PHA.
5) For transactions with more than 50 units, the transaction must defer or exclude at least 25% of the maximum allowable developer fee that would be allowable under the state Qualified Allocation Plan.
As a result of these tests, HUD may deny the rent increase or reduce the amount from what was requested. HUD reserves the right to consider other unique factors in the analysis of individual transactions.
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| Posted: | 10/31/2019 |
| Question: | What converting projects are eligible for the Opportunity Zone Rent Increase provision? |
| Answer: | A project, as defined in the RAD Notice and which equates to a single transaction or phase, must meet all of the following criteria. The project must:
• Be converting to a Project Based Rental Assistance (PBRA) HAP contract
• Be located in a designated Opportunity Zone
• Propose in its Financing Plan to be newly constructed or substantially rehabilitated
• Require the rent increase in order to achieve viability of the transaction |
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| Posted: | 03/25/2019 |
| Question: | If the RAD contract rents are below what could be achieved in the local market, is there a way under RAD that the PHA could achieve the higher market rents? |
| Answer: | Unfortunately, although HUD requested additional funding for RAD (to supplement the “current funding”), the Congress did not provide this additional funding. Therefore, a project converts at its current funding. A PHA may utilize rent flexibilities in 1.6(B)(5) or 1.7(A)(5) of the RAD Notice to alter the initial contract rents. [Updated 7.29.13] |
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| Posted: | 03/25/2019 |
| 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. |
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| Posted: | 01/25/2019 |
| Question: | Am I correct in thinking rent reasonableness does not factor into calculating PBRA Contract Rents? |
| Answer: | Yes. However, because the PBRA-PBV decision can be changed after the Application is submitted, HUD is requiring a reasonable rent estimate for each RAD application, even if PBRA is preliminarily selected. If your agency administers a Housing Choice Voucher program, you will make the reasonable rent determination yourself, in accordance with voucher program requirements. If you do not have a voucher program, you may enter your best estimate of comparable market rents (the rents that the property would command in the local market, without subsidy), but please note somewhere in the Application that you do not have a voucher program and that your reasonable rent estimate did not follow voucher program requirements. |
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| Posted: | 01/25/2019 |
| Question: | How does a change in classification of bedroom size impact my RAD rents? |
| Answer: | If a PHA can demonstrate that the current units are not competitive because of size or other factors, and therefore the PHA requests to re-classify the units to a smaller bedroom size, HUD will retain the current funding, subject to the applicable RAD rent caps. For example, assume that a PHA currently has 10 5-brm units with a RAD contract rent of $500. However, these units are extremely small by market standards and, as a result, the PHA has difficulty leasing these units to families otherwise eligible for a 5-brm unit. With supporting documentation, the PHA shows that these units would more appropriately be treated as 4-brm units. HUD will convert the units to 4-brm, but retain the funding at $500, subject only to the 4-brm rent cap. |
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| Posted: | 01/25/2019 |
| Question: | HUD will assign to a mixed-finance project, as with all RAD conversions, a RAD Contract Rent. Can the PHA negotiate with the owner of that project for such things as land lease payments, participation in cash flow, etc.? |
| Answer: | Yes. HUD will underwrite each project to determine that all costs are reasonable and related to the project, and that the financing plan is feasible. Otherwise, the PHA and the mixed-finance owner are free to negotiate such matters. |
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| Posted: | 01/25/2019 |
| Question: | If my RAD conversion involves a change in bedroom distributions (due to a transfer of assistance, demolition/new construction, or rehab), how will this affect the RAD contract rents? |
| Answer: | Whether or not the actual number of units changes, the RAD team will assign to the project the contract rents associated with the bedroom sizes prior to the change in bedroom distribution. Thus, if the property had 40 2-brms with a RAD rent of $500 and 60 3-brms with a RAD rent of $600, but the PHA plans to change the distribution to 100 3-brm units, all those units will be funded at $600. Similarly, if the new project included all 2-brms, the rents for the 2-brms would be $500. |
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| Posted: | 01/25/2019 |
| Question: | If you submit a joint CNI/RAD application, will the RAD award date be based on the CNI award schedule? |
| Answer: | When applying for RAD via a joint RAD/CNI application in which you indicate that the CNI application is also your RAD application, you will only receive a RAD CHAP award (Commitment to enter into a Housing Assistance Payment Contract or "CHAP") upon receipt of the CNI award. In other words, your RAD application will only be accepted if and when your CNI application is accepted so the date of your RAD award will be the date of your CNI award. If you not receive a CNI award, your RAD application is also considered rejected. If you believe the project is viable for RAD regardless of the CNI funding you should submit a separate RAD application independent of the CNI application (without any CNI grant money as a source of funds). In the latter scenario, you would receive a RAD Award (CHAP) regardless of the outcome of your CNI application. |
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| Posted: | 01/25/2019 |
| Question: | In either PBV or PBRA, can an owner charge for excess utilities? |
| Answer: | No. Although the public housing program has a provision for “check-metering” and surcharges for excess resident utility usage (24 CFR 965.506), there is no such provision in PBV or PBRA. If a converting project currently has surcharges for excess consumption of PHA-supplied utilities, the PHA may ask HUD to adjust the rent by the amount in Row 19 of the HUD-52722 (Calculation of Utility Expense Level) used in the Fiscal Year in which the RAD contract rents were calculated. |
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| Posted: | 01/25/2019 |
| Question: | My agency is scheduled to receive Replacement Housing Factor (RHF) or Demolition/Disposition Transition Funds (DDTF) as a result of other public housing properties that were removed from our inventory through demolition or disposition. We would like to augment our RAD contract rent instead. How do we request the rent increase and how do we determine the amount that the RAD rents can be increased? |
| Answer: | To request a RAD contract rent augmentation, PHAs should email their RAD Transaction Manager who will obtain the amount of future RHF/DDTF funds for which PHAs are eligible. Once PHAs have received confirmation of the available amount, the PHAs complete the RHF/DDTF Rent Boost/Cancellation Certification form found in the Document Library on the RAD Resource Desk and email it to the RAD Transaction Manager. The PHAs should note in their email whether they wish to apply the amount to a specific CHAP or across multiple CHAPs. The Office of Recap will then issue an amended RAD CHAP award reflecting the revised contract rents. Note that the augmented contract rents are still subject to existing PBV and PBRA rent caps. |
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| Posted: | 01/25/2019 |
| Question: | My current public housing project consists of scattered sites on multiple parcels and I am considering a conversion to PBV under RAD. Under what conditions will I be allowed to combine these units under one CHAP (and one HAP)? |
| Answer: | In the PBV program, multiple single-family buildings may be on the same HAP Contract (i.e. scattered-site single family buildings). However, if the scattered sites are not single-family buildings, each project must have its own HAP contract. A project can be defined as a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. HUD interprets project to apply to all these structures (i.e., single building, multiple contiguous buildings, etc.), and a PHA must consider the entire definition and apply this definition to proposed PBV units.
For purposes of RAD application, the PHA will need to submit an application for each AMP (or each portion of an AMP). If the scattered-sites are eligible to be under one HAP, as described above, and are already under one AMP, one CHAP will be issued. If the scattered-sites are eligible to be under one HAP as described above, but are not currently under one AMP, separate applications should still be submitted using the “Many-to-One” application instructions found here: http://portal.hud.gov/huddoc/manyto1_appinstr.docx. |
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| Posted: | 01/25/2019 |
| Question: | My project currently has a mix of project-paid and tenant paid utilities. We are attempting to determine whether to switch to all tenant-paid or all project-paid utilities. How will those changes affect my RAD rents? |
| Answer: | If you are prepared to make the change in utility combination at the time of conversion, we will adjust the RAD rents at that time, based on the following: 1) If you are converting from tenant-paid utilities to project-paid utilities, we will add to your contract rent the amount of the associated utility allowance. For example, if your contract rent is $400, and your utility allowance is $100, then your new contract rent will be $500 if you convert all tenant-paid utilities to project-paid. 2) If you are converting from project-paid to tenant paid utilities, we will reduce your contract rent by the utility allowance that will now be assigned to those units. For example, if your current contract rent is $500, but there is no utility allowance, and if you plan to convert to tenant-paid utilities and the utility allowance will be $100, we will then reduce your contract rent from $500 to $400.
If conversion of utilities occurs after the RAD conversion date say, after completion of repairs), the utility conversion must be effective at the property’s contract anniversary date. Chapter 12, Section 5 of HUD Handbook 4350.1 describes the procedural requirements for these conversion requests. |
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| Posted: | 01/25/2019 |
| Question: | My project has a family that is currently paying a “flat rent.” Per PIH Notice 2014-12, PHAs are now required to update these flat rents, where applicable, and offer residents a phase-in of 35% a year. How will this phase-in of flat rents impact the resident when we convert to RAD? |
| Answer: | Let’s assume the tenant is now paying $200 in rent but the new amount, under public housing flat rent, is $400. The family’s recertification is July 1. So, the PHA raises the rent in July to $270. Let’s further assume that the project converts in August. The flat rent phase-in "schedule" that a tenant was going to undergo in public housing is now irrelevant. If, at the time of conversion this tenant was paying $270, but the tenant's TTP under section 8 is $500, then the rent will phase in from $270 to $500 over 3 or 5 years (note: the public housing flat rent target of $400 doesn't matter anymore).
Since the next recertification would be the following July, the 3-5 year phase in for RAD wouldn't start until July 2015. As a result, the PHA will not run into the problem of a tenant's rent increasing twice in one year. |
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| Posted: | 01/25/2019 |
| Question: | My RAD project received a CHAP in December 2012 and had a REAC inspection in April 2013. Because the project was exempt for PHAS purposes at the time of the REAC inspection, can the record of the inspection be removed from the REAC system? |
| Answer: | No. REAC inspections will continue after issuance of a CHAP, and scores will continue to be issued. The exemption is an exemption from the PHAS scoring system. The April 2013 inspection score for your project stands, but it will not affect your PHA's score under the PHAS system. |
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| Posted: | 01/25/2019 |
| Question: | The energy savings provision of the new HUD RAD notice (Attachment 1C, pages 116-118 of the Notice REV-2) allows PHAs to apply 75% of the energy savings back to the contract rent. (1) When can a PHA apply the energy savings?; 2) How does it get documented?; 3) Can the PHA take the energy savings in the first year of the new HAP? |
| Answer: | (1) The Notice provides that, for rehab projects, the energy savings will result in an increase to the post-rehab rents (at the RAD closing the PBRA HAP contract will specify both pre-rehab and post-rehab rents). Thus, you must complete the rehab before the energy savings can be applied. For new construction, the energy savings can be applied once construction is completed.
(2) The Notice discusses documentation requirements at the bottom of page 116 and top of page 117. "PHAs can submit UA projections performed by a professional engineer, based on the project’s plans and specifications that, at a minimum, take into account specific factors including, but not limited to, unit size, building orientation, design. and materials, mechanical systems, appliances, and characteristics of the building location. The projections must be submitted in the RAD UA Projections Template." Note that approval is at HUD's discretion.
(3) See item (1) regarding timing of the increase in RAD Contract Rent. |
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| Posted: | 01/25/2019 |
| Question: | The property I wish to convert to RAD currently contains efficiencies which are hard to market. I'd like to convert them into 1 bedrooms. How will this impact my RAD contract rents? |
| Answer: | Where a PHA wants to eliminate efficiencies (or otherwise reconfigure units) because the units are hard-to-market, and does so by combining two units into one, HUD will fund the reconfigured units according to the appropriate bedroom size. In addition, for the “lost” units, HUD will treat these as “special purpose”, meaning that the subsidy for the lost units will be distributed across the remaining units, subject to the RAD rent caps and in no event more than what the PHA would have received in subsidy prior to conversion.
For example, a project has 100 efficiencies with RAD contract of $400 PUM, which was calculated based on combined Operating and Capital Fund subsidy of $200 and tenant rents of $200. The PHA wants to convert the 100 efficiencies into 50 one-bedroom units. As such, all 50 1-BR units could convert at a $600 PUM contract rent (subject to applicable 1-BR rent caps). [Updated 9/18/14] |
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| Posted: | 01/25/2019 |
| Question: | Under public housing, some of our ACC units are offline for Resident Council/Social Service activities however we still receive subsidy for them. After the RAD conversion, will we still receive subsidy for these units and, if so, at what amount? |
| Answer: | For conversions where the PHA is proposing a de minimis reduction in dwelling units, but certain units will be designated for special purpose uses or units are being reconfigured through rehab to improve marketability (e.g. combining efficiencies), these units will not be included in the HAP contract and will not receive subsidy. However, HUD will increase the contract rents for the dwelling units by a share of the foregone subsidy (i.e., the Operating Fund and Capital Fund portion of the weighted Contract Rent) attributable to the deminimis units that meet this criteria. |
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| Posted: | 01/25/2019 |
| Question: | We are a PHA converting to PBRA which currently has Flat Rent tenants. Is there some provision in the 50059 to allow us to phase in their rent according to our policy that it not increase by more than $25 per month as a result of conversion? We will need to phase these individuals in for five years. |
| Answer: | The 50059 form does not currently have such a provision, but TRACS will allow the phase-in.
The RAD team has been advised that "TRACS accepts the 50059 and sends an error message to the owner indicating the rent paid by the tenant does NOT meet 30% of adjusted income. However, it’s not a fatal message error. TRACS 202d will implement a rent override indicator for audit purposes." |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | How are the rents included in Exhibit A of the CHAP determined? |
| Answer: | The contract rents are noted in Exhibit A of the CHAP. The PHA’s lender should proceed with those rents. For all Applications received by or before December 31, 2013, the CHAP rents are based on 2012 appropriations. Note: The general methodology for calculating rents can be found on page 98 of PIH Notice 2012-32. [Updated 7.29.13] |
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| Posted: | 01/24/2019 |
| Question: | If an over-housed household remains in their unit and continues to receive PBV assistance under the RAD program, will the assistance received be based on the unit size, and not on the household size? |
| Answer: | The contract rent, and HAP assistance, will be based on the unit size, for both PBVs and for PBRA. If there is no appropriately sized unit available to move the family into and the over-housed household is therefore permitted to remain in the unit, it will not impact the rent due from the tenant or the subsidy provided under the contract. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | PIH Notice 2012-32 REV-1 page 76 indicates that a PHA must notify HUD within 15 days of the CHAP award (or issuance) if it decides to refuse the CHAP. Is the PHA required to confirm its intent to accept the CHAP under that same deadline? |
| Answer: | The PHA is not required to notify HUD that it will accept the CHAP. Unless HUD hears otherwise, it is assumed that the CHAP has been accepted by the PHA.[Updated 7.29.13] |
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| Posted: | 01/24/2019 |
| Question: | Prior to closing, how are my CHAP rents increased by OCAF? |
| Answer: | HUD will increase the RAD contract rents included in the CHAP each year by the published OCAF. For properties awarded under the original 60,000 unit cap with initial contract rents based on FY 2012 funding levels (“FY 12 RAD rent base year”), the first OCAF adjustment occurred in 2014 and will occur each year thereafter until closing. Thus, for a project in this category that closes with a HAP effective date of January 1, 2017, the initial contract rents are based on 2012 funding, increased by the 2014, 2015, 2016, and 2017 OCAFs. For properties awarded above HUD’s original 60,000 unit cap but subject to the increased 185,000 cap with initial contract rents based on FY 2014 funding levels (“FY 14 RAD rent base year”), the first OCAF adjustment occurred in 2015 and will occur each year thereafter until closing. Thus, for a project in this category that closes with a HAP effective date of January 1, 2017, the initial contract rents will be based on 2014 funding, increased by the 2015, 2016, and 2017 OCAF.
Note: Because the OCAF adjustments are generally published in October for the following calendar year, beginning in CY 2017 HUD plans to update all CHAP rents by the applicable OCAF adjustments before the start of the calendar year. |
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| Posted: | 04/28/2017 |
| Question: | For a RAD PBV Transaction that has had a CHAP and RCC issued and is in the Closing process, what are the steps to request a utility allowance change? |
| Answer: | The utility allowances shown in the RAD CHAP award reflect the utility allowances input by the PHA at the time of the original RAD application submission. The RAD conversion must close with the Public Housing utility allowances currently in place at the site. The existing utility allowances should be reviewed and confirmed at the Financing Plan stage. If there is a change to the utility allowances since the original CHAP was issued, the Executive Director of the PHA must submit a signed certification to their Transaction Manager stating the requested utility allowances per bedroom type and certifying that those are the utility allowances currently in effect at the site. The Transaction Manager will then request an amended RAD CHAP Exhibit A which will reflect the updated utility allowances. If an RCC has already been issued, the RCC will also need to be amended to reflect the revision. Please see the RAD CHAP Amendment Overview available in the RAD Resource Desk Document Library for additional information on utility allowances. |
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| Posted: | 03/04/2016 |
| Question: | Can a PHA ask for a waiver of certain regulations in order to establish a site-specific utility allowance schedule for a property converted to a Project-Based Voucher contract under RAD? |
| Answer: | Yes. A PHA can ask for a waiver of 24 CFR 983.301(f)(2)(ii) and 982.517 in order to establish a site-specific utility allowance schedule for a property converted to a Project-based Voucher contract under RAD. In considering such waiver requests, HUD will take into consideration whether the project had a site-specific utility allowance prior to conversion, the extent to which the voucher-wide utility allowance schedule can be appropriately applied to the site without causing undue burden to the residents or over-subsidizing the residents, and other factors HUD may request in order to assess good cause. Such waiver requests must be submitted through the Office of Public and Indian Housing (PIH) in accordance with PIH Notice 2013-20 |
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| Posted: | 06/02/2014 |
| Question: | At conversion, what utility allowance shall I use – the utility allowance that was in my application (2012) or the utility allowance in effect at the time of conversion? |
| Answer: | The PHA should use the most recent utility allowance at the time of conversion. |
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| Category: | Environmental Review |
| Posted: | 05/27/2020 |
| Question: | My environmental consultant is attempting to complete the Environmental Review Record in HEROS. The system requires the contact information for who will be reviewing the Environmental Review Record. I need the name of the HUD Certifying Officer and Title before submitting my ER. Can you assist me with determining who this person will be? |
| Answer: | If you have a RAD Transaction Manager assigned already, you would use that person's name and title. For RAD for public housing (RAD1) conversions without one assigned, you would use Kara Williams-Kief, Branch Chief. For RAD for Multifamily (RAD2) conversions without one assigned, you would use John Ardovini, Branch Chief. |
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| Posted: | 05/22/2020 |
| Question: | What guidance or relief has HUD made available for Responsible Entities (RE) completing an Environmental Review under Part 58 during this period of COVID-19? |
| Answer: | HUD is temporarily allowing for flexibilities in the signature and certification process for the 7015.15 Request Release of Funds (RROF) and 7015.16 Authority to Use Grant Funds (AUGF) forms. Instructions for REs and HUD Field Offices can be found here: https://files.hudexchange.info/resources/documents/RROF-AUGF-Signature-Certification-Process-COVID-19.pdf
Additionally, HUD is expanding the options for public review of the Environmental Review Record (ERR). Instructions and guidance can be found here: https://files.hudexchange.info/resources/documents/Consultation-Review-Comment-on-Environmental-Review-Record-COVID-19.pdf |
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| Posted: | 05/22/2020 |
| Question: | For RAD conversions subject to an Environmental Review under 24 CFR Part 50 that require a Phase I Environmental Site Assessment (ESA), will HUD accept a report without a physical site inspection? |
| Answer: | If the environmental provider can access the site, but not the interior of buildings or units, HUD will accept an ESA with an exterior inspection only, if the ESA is in accordance with the ASTME-1527-13 standard and the ESA preparer has another adequate means of viewing the interior. Acceptable alternative means include: Conducting phone interviews with facility staff in order to complete their typical inspection questionnaires. In this example, the physical inspection would be replaced by interior and exterior photos taken by management staff. A list of photo requirements can be found here. After the engineering firms receive and review the photos sent by the facility, a phone interview should be scheduled with facility staff to answer any questions that the engineer has about items in the photos and to complete their typical inspection questionnaires; Publicly available sources, including satellite photos, and drone video can be utilized as an additional resource to verify site specifics.
If traveling to the site is not feasible (e.g. due to governmental restrictions on travel or shelter in place/quarantine orders), HUD will accept the ESA without a physical site visit for projects already in HUD’s portfolio, (i.e., not applicable to transfers of assistance) as long as the site is considered low risk based on current and historical uses. Sites with past, current or adjacent uses that include but are not limited to underground storage tanks, contaminated soil or groundwater, dumps, solid or hazardous waste landfills, brownfields or superfund sites are considered high-risk and will continue to require a physical site visit by the ESA preparer.
ESA reports without a physical site visit must: Explain the reason why a site visit did not take place; Meet the ASTM E1527-13 standard (or most recent version); Include adequate means of viewing the interior and exterior (e.g. an onsite rep could live stream a walk-through of the facility and grounds, or send photos and video of the site and grounds).
For projects that are new to HUD’s portfolio through a transfer of assistance or that do not meet the low risk criteria, the ESA preparer must conduct a physical site visit. However, HUD will accept a draft ESA report with the Financing Plan or Conversion Plan that includes all information except the physical site visit as long as the preparer views the interior and exterior by other means. The final ESA with the site visit must be submitted before HUD will issue the RAD Conversion Commitment (RCC) (for public housing conversions), RAD Conversion Agreement (for Project Rental Assistance Contract (PRAC) conversions)), or RAD Approval Letter (for Section 8 Moderate Rehabilitation/Single Room Occupancy (Mod Rehab/SRO) conversions). |
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| Posted: | 05/22/2020 |
| Question: | For RAD conversions subject to an Environmental Review under Part 50, how should the PHA or owner conduct lead based paint (LBP), asbestos (ACM), and radon testing and reporting for the ESA if an environmental professional is unable to access dwelling units due to COVID-19? |
| Answer: | The PHA or owner must take the following steps to conduct LBP, ACM and radon testing if unable to access dwelling units. For any property built before 1978, an Operations & Maintenance (O&M) Plan will automatically be put into place for LBP and ACMs. The O&M Plan can be terminated if subsequent inspections with access to dwelling units determine it is not necessary. For properties requiring a lead based paint survey, asbestos survey, or radon testing, completion of the surveys/testing can be deferred until such time as the property can be inspected, but must occur before HUD will issue the RCC (for public housing conversions), RAD Conversion Agreement (for PRAC conversions), or RAD Approval Letter (for Mod Rehab/SRO conversions). Recap will continue to hold Concept Calls for RAD public housing conversions and Kickoff Calls (After Conversion Plan Submission) for RAD multifamily conversions (PRAC/Mod Rehab/SRO) without testing being completed. If dwelling unit inspections have not occurred by the time of the Financing Plan, HUD will still accept and begin review of the Financing Plan, even with an incomplete ESA, as long as the Sources and Uses includes an “Environmental Contingency Fund” to cover potential abatement and/or mitigation measures. Lead Based Paint and Asbestos Contingency Fund: The Environmental Contingency Fund must include amounts to cover potential abatement and/or mitigation measures based on costs of such measures on comparable projects. The PHA must describe the approach it used to develop the Environmental Contingency Fund amount, including a description of how the comparable projects are an appropriate predictor of the potential abatement or mitigation costs for the converting project. Radon Contingency Fund: For a single-family residence, the PHA may use an estimate for testing of between $100-$275 per unit and between $1,500-$3,000 per unit for mitigations, or other amounts based on a professional recommendation and as approved by HUD. For a multifamily building, the PHA may use an estimate for testing of between $50-$80 per unit and between $2,500-$4,000 per unit for mitigation, or other amounts based on a professional recommendation and as approved by HUD. Testing must be completed before HUD can issue the RCC (for public housing conversions), RAD Conversion Agreement (for PRAC conversions), or RAD Approval Letter (for Mod Rehab/SRO conversions) by at which point HUD and the PHA or owner can determine if the contingency will still be needed. |
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| Posted: | 05/22/2020 |
| Question: | How will Multifamily FHA deals and RAD conversions subject to an Environmental Review under Part 50, manage consultation under Section 106 for jurisdictions where these offices have temporarily closed? |
| Answer: | Certain State Historic Preservation Offices (SHPOs), Tribal Historic Preservation Offices (THPOs) and federally recognized tribes have indicated that they are unable to participate in the standard 30-day consultation period during an office closure. The National Conference of State Historic Preservation Offices maintains a database https://www.achp.gov/coronavirus with the operating status of each SHPO office and whether or not it can accept electronic submissions. There is no equivalent database for THPOs or for federally recognized tribes; therefore, federal agencies must reach out directly to assess their status.
According to the ACHP, the Section 106 deadlines for a SHPO and/or THPO response will be considered paused while an office is closed or work conditions are such that the SHPOs and/or THPOs are unable to carry out their Section 106 duties due to the COVID-19 outbreak. This pause would also apply to consultation with federally recognized tribes for projects that involve ground disturbance.
HUD will not issue a Firm Commitment (for FHA-insured loans), the RAD Conversion Commitment (RCC) (for public housing conversions), RAD Conversion Agreement (for Project Rental Assistance Contract (PRAC) conversions)), or RAD Approval Letter (for Section 8 Moderate Rehabilitation/Single Room Occupancy (Mod Rehab/SRO) conversions until it has met its obligations under Section 106.
HUD can generally accommodate a consultation process that requires more than 30 days. However, HUD will be monitoring this situation closely to minimize or avoid any adverse effect that office closures may have on applications. Please alert HUD if a project has an urgent time frame. |
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| Posted: | 01/27/2020 |
| Question: | Many PHAs have what they consider “Senior” properties, however, these properties often may not have the official designation in the Housing Authorities 5 year or Annual Plan. Are these properties exempt from lead-based paint testing as part of the environmental review of a RAD conversion? |
| Answer: | Lead-based paint requirements are applicable to RAD conversions that were constructed prior to 1978 in accordance with 24 CFR Part 35. The only exceptions allowed include: (1) the project is proposed for demolition provided the property will remain unoccupied until demolition, (2) the housing is designated exclusively for the elderly or persons with disabilities, unless a child of less than 6 years of age resides or is expected to reside there, and (3) zero-bedroom dwelling units, unless a child of less than six years of age resides or is expected to reside in the unit. The Section 8 program does not allow for an owner to discriminate against an elderly head of household who has custody of a child as long as there is an appropriately sized unit for the household. As such, many properties that are thought of as “Senior” may not qualify under the exception since they might not be exclusively used for the elderly; as such, they will be required to follow the LBP requirements for the RAD program. |
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| Posted: | 01/15/2020 |
| Question: | What is the shelf life of a Phase 1 Report for an environmental review? |
| Answer: | Please see the MAP Guide chapter 9, section 3.A.1.c: "The Phase I ESA must be conducted (meaning the earliest of the date of the site visit, records review documents, or interviews) within one-year of the submission to HUD. HUD may require updates or additional analysis in specific circumstances." For non-FHA PBRA transactions, if the Phase 1 ESA was conducted over 1 year but less than 5 years prior to submission, then it can be updated by a Transaction Screen (in accordance with ASTM E 1528-14) that is up to 1 year old upon submission. |
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| Posted: | 03/25/2019 |
| Question: | Is SHPO or Section 106 review required on a RAD conversion project that is more than 40 years old? ?Does it matter whether it's minor rehab, gut rehab or demolition? |
| Answer: | RAD requires Environmental Review approval (see Notice PIH-2012-32 REV-1 pages 84-85).? The required Environmental Review includes consultation with SHPO. |
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| Posted: | 03/21/2019 |
| Question: | We are a PHA and have been unable to get the Responsible Entity to complete the Environmental Review to ensure the property meets requirements for 24 CFR Part 50 or Part 58, as applicable. Is the Environmental Review still required in this instance? |
| Answer: | In cases where the Responsible Entity chooses not to complete the assessment, HUD will complete the assessment under Part 50. Please contact your Transaction Manager for further instruction. |
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| Posted: | 01/25/2019 |
| Question: | Does an environmental review need to be done on dispositions in transfer of assistance? |
| Answer: | Yes. If HUD is taking a federal action, an environmental review is required unless there is a categorical exclusion in the applicable regulation (Part 50 or Part 58) that specifically excludes that action from all or part of environmental review requirements. For example, some dispositions may be partially excluded from environmental review (categorically excluded subject to the Federal laws and authorities cited in 24 CFR 50.4 or 24 CFR 58.5) if the structure or land disposed of will be retained for the same use. The review will be conducted based on the reasonably forseeable use of the land or structure that will be disposed of. |
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| Posted: | 01/24/2019 |
| Question: | What is the required format of a Phase I Site Assessment to meet RAD Environmental requirements? |
| Answer: | If you are using FHA financing, the Phase I will be ordered by your FHA lender, and the format will be in accordance with Chapter 9 of the MAP Guide. Otherwise, check with the agency that will be issuing the Environmental Review approval; the Phase I will need to be acceptable to the approving agency. It is a good idea to procure the Phase I from a firm that has experience preparing reports that have been found acceptable by the specific agency that will be issuing the Environmental Review approval. If you are not using FHA insurance, you should check with the entity performing the assessment to determine if a full Phase I will be required. |
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| Posted: | 04/04/2018 |
| Question: | How should RAD conversions mitigate the presence of asbestos containing material (ACM)? |
| Answer: | RAD conversions must follow the ACM guidance found in Chapter 9 of the MAP Guide. However, as of 3/27/18, HUD is in the process of updating this section of the MAP guide and has issued a MAP Guide Waiver with the below interim guidance which is applicable to all RAD conversions: If Asbestos Containing Material (ACM) or suspect ACM is identified at a facility, HUD requires a response action to address the risk. Response actions may include complete removal, limited removal/repair, encapsulation, enclosure or management of the ACM under an Operation and Maintenance (O&M) Program, or a combination of these, as recommended by an accredited professional. If ACM or suspect ACM remains after the initial identification and, if applicable, response action, an asbestos O&M program shall be implemented. The following are examples for when certain response actions may be appropriate.
A. Removal
1. Damaged friable materials
2. Friable materials in good condition with high potential for disturbance (e.g., accessible pipe or tank insulation, ceiling tiles where air exchanges occur in plenum above, ceiling tiles that are required to be moved to access mechanical equipment or piping on a routine basis, etc.)
B. Limited removal/repair, encapsulation or enclosure.
1. Damaged non-friable materials (limited removal/repair)
2. Limited damage to ceiling texture (limited removal/repair)
3. More extensive wall and/or ceiling texture damage or highly friable texture
4. Pipe insulation with limited damage but with limited potential for disturbance/impact (enclosure or removal)
C. Operation & Maintenance (“O&M”) Plan
1. Non-friable materials in good condition
2. Joint compound or wall and ceiling textures in good condition
3. Adhesive ceiling tiles with no real potential for disturbance
4. Friable pipe insulation materials in mechanical areas in good condition with limited potential for disturbance/impact by routine maintenance activities
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| Posted: | 12/31/2015 |
| Question: | Do RAD conversions trigger an Environmental Justice review? |
| Answer: | An Environmental Justice (EJ) review may be triggered if the conversion involves new construction, either on a new site or an existing site. The goal of EJ is to avoid, minimize, or mitigate any disproportionately high and adverse impacts to minority or low-income populations. The process is to first determine if there are any adverse impacts. If there are, the PHA should work to change the project so that they are avoided or at least minimized. If adverse impacts remain, a determination of whether there is a minority of low-income population disproportionately affected must be made. Any mitigation decisions must be based on meaningful public outreach to the affected community. Additional information regarding completing an EJ and how to document the findings as part of the environmental review can be found here: https://www.hudexchange.info/programs/environmental-review/environmental-justice/ |
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| Posted: | 07/10/2015 |
| Question: | Can you convert units located in a flood zone to RAD? |
| Answer: | RAD is subject to the floodplain management regulations at 24 CFR Part 55. Those regulations do not prohibit assisance in floodplains, but do require a process to consider and mitigate impacts. Please keep in mind that in most cases, activities in a floodway will be prohibited. |
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| Posted: | 07/10/2015 |
| Question: | If we are doing PBRA, very minimal rehab (mostly cosmetic) with no FHA, I'm understanding that we need to do either a Transaction screen or a Phase I. How do we know if a transaction screen would suffice? |
| Answer: | The Notice and the RAD Environmental Review Guidance both discuss the transaction screen option. To qualify, you must be converting to PBRA (non-FHA), and cannot be engaging in sub rehab or new construction. The transaction screen must be in accordance with ASTM E1528-14. The only deviation from that standard is the required preparer qualifications that are set forth in the Notice and the Guidance. If any potential environmental concerns are identified, a Phase I ESA in accordance with ASTM E1527-13 would be required. If the site owner has an idea that there could be concerns with the site, they may want to simply order a Phase I ESA. |
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| Posted: | 07/10/2015 |
| Question: | Under what circumstances would an environmental review for a PBV conversion be conducted under Part 50? |
| Answer: | HUD can determine to perform a Part 50 review instead of having an RE perform a Part 58 review under 24 CFR 58.11. When a RAD application includes FHA insurance (or other Part 50 program), and funding sources that are authorized for Part 58, such as HOME, are also being contemplated for that site, HUD can use 24 CFR 58.11 to prepare one environmental review under Part 50. It is important that the applicant notify HUD of this situation early on in the process. |
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| Category: | Financing Plan Milestones and Requirements |
| Posted: | 05/20/2021 |
| Question: | We would like to request an additional extension of the Financing Plan. We were previously extended until 06-01-21, but we would like to request an extension until 10-01-21. |
| Answer: | You need to request a Financing Plan extension by clicking into your property and selecting "Request Financing Plan Ext." from the "Action Items" drop down menu. |
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| Posted: | 10/31/2019 |
| Question: | When may a PHA make the request for an Opportunity Zone Rent Increase and how will HUD document approval? |
| Answer: | PHAs may make an initial request for the rent increase up to six months prior to submission of the Financing Plan and will make the final request when the Financing Plan is submitted.
The PHA’s initial request should affirm that the project:
Is converting to a Project Based Rental Assistance (PBRA) HAP contract
Is located in a designated Opportunity Zone
Will be newly constructed or substantially rehabilitated
Requires the rent increase in order to achieve viability of the transaction
Unless the project is not converting to PBRA or if it is located outside of an Opportunity Zone, HUD will issue a CHAP addendum that will provide a modified rent schedule conditioned on 1) submission of a complete and acceptable Financing Plan within six months of the date of the addendum and 2) HUD’s verification at the time of Financing Plan that the transaction meets the criteria for the rent increase as described above. The PHA can use the CHAP addendum to support lender and investor underwriting.
Please note that while HUD anticipates being able to fund most requests, HUD may need to delay issuance of a CHAP addendum if there is inadequate funding available to support the request.
If a complete and acceptable Financing Plan is not submitted within six months of the date of the CHAP addendum is issued, the CHAP addendum will expire. HUD will not provide extensions. The PHA may submit a subsequent request for the rent increase, which HUD will consider subject to the availability of funding.
In reviewing the submitted Financing Plan, HUD will confirm that the project meets all criteria to be eligible for the increase and confirm that the amount of the rent increase is necessary for the viability of the transaction. Once confirmed, HUD will amend the CHAP to fully incorporate the increased rents. |
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| Posted: | 03/25/2019 |
| Question: | Is it appropriate for a PHA to provide the accessibility and relocation plan checklist prior to submission of an application for firm commitment for FHA financing or submission of a financing plan? |
| Answer: | Yes. PHAs must provide the accessibility and relocation checklist prior to submission of an application for firm commitment for FHA financing or submission of a financing plan. However, since approval of the checklist is required prior to closing, in order to avoid delays HUD strongly recommends that PHAs submit the checklist as soon as details of the transaction are known (i.e. before all of the other components of the Financing Plan or application for firm commitment is ready). Submission of the checklist in an earlier stage will help speed up transaction processing and allow HUD more time to work with a PHA to resolve any issues that may arise during review. |
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| Posted: | 03/21/2019 |
| 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. |
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| Posted: | 03/01/2019 |
| Question: | Does RAD have any Appraisal requirements? |
| Answer: | RAD does not have any appraisal requirements. For non-FHA financing, your lender will decide on any appraisal requirements. |
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| Posted: | 03/01/2019 |
| 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. |
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| Posted: | 03/01/2019 |
| Question: | Is there a requirement for who holds the Replacement Reserves? |
| Answer: | Yes. If there is FHA-insured financing, the insured lender will hold the Replacement Reserve. Otherwise, typically a non-FHA-insured lender or a LIHTC investor holds the Replacement Reserve. In RAD transactions without debt and without LIHTCs, HUD can agree to allow the PHA to hold the Replacement Reserve as a separate account with a banking institution with the account covered by a General Depository Agreement (form HUD-51999). Please note that a GDA may also be required in other circumstances, such as when public housing funds are being used to fund the reserve. Please contact your RAD Closing Coordinator for additional information. |
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| Posted: | 01/25/2019 |
| Question: | Attachment 1A of the RAD Notice Rev-2 states, "For leveraged transactions, the debt-coverage ratio should not be less than 1.11 over a ten year period using 2% growth in revenue and 3% growth in expenses." Will HUD be only reviewing the DCR for the first 10 years of a property? In effect, do we only need to submit a proforma with cash flow projections for 10 years? If so, is that also true for non-leveraged transactions? |
| Answer: | HUD requires an operating pro forma that projects out for the length of the initial HAP contract (either 15 or 20 years) for both leveraged and non-leveraged projects. Although we require that you submit a pro-forma for the 15 or 20 year period of the HAP, for purposes of analyzing the project’s feasibility, if it’s a self-financed deal (no debt), then we only test the first 10 years for DSCR and net cash flow. Please note that in the revised Notice, HUD has instructions that say that the Financing Plan will be reviewed and evaluated as a whole. |
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| Posted: | 01/25/2019 |
| 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: | 01/25/2019 |
| Question: | Does RAD have a standard for the reasonableness of Architectural and Engineering (A/E) fees? |
| Answer: | For projects subject to Subsidy Layering Reviews, the RAD SLR has a threshold of 5% of hard construction costs for architectural fees. Engineering fees, however, should be reported separately, as should construction management, permitting, and commissioning services. For any amount above 5%, the PHA would need to provide documentation that such amounts are consistent with local practices, including allowable amounts under the applicable State Qualified Allocation Plan (QAP). |
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| Posted: | 01/25/2019 |
| Question: | Is construction period interest an eligible cost in the Subsidy Layering Review? |
| Answer: | Construction period interest is an eligible cost only if is paid in cash. If it is not to be paid in cash (for example, if it is to be paid from future cash flow of the property) then it is not eligible because no cash is needed during the development period. |
|
| Posted: | 01/25/2019 |
| Question: | Is there a HUD 2530 submission required as part of RAD? |
| Answer: | If a PHA converts to PBVs, the 2530 process does not apply. If a PHA converts to PBRA, the PHA itself is exempt from the 2530 process, but any development partner with greater than a 25% stake in the project, or any management agent (other than the PHA) will be subject to the 2530 process. Please note that transactions utilizing FHA financing are subject to the existing 2530 procedures for FHA. Please discuss with your respective Transaction Manager. |
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| Posted: | 01/25/2019 |
| Question: | Is there any limit on how much of the developer fee can be deferred to finance a RAD conversion, assuming all project financing will be from Housing Authority sources? |
| Answer: | While in tax credit deals only a certain amount of deferred developer fee can be counted towards basis, there’s no such rule outside of that context. As a general principle, the RAD team generally wants a material amount of non-deferred developer fee because it acts as an additional contingency (if there are cost overruns, the developer can defer more fee without having to invest more cash in the deal). Additionally, funding requirements may change based on the findings from the completed RAD Physical Condition Assessment (RPCA). |
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| Posted: | 01/25/2019 |
| Question: | My PHA is converting a project using no debt. What standard should be used in reviewing the financing plan with respect to cash flow coverage? |
| Answer: | Generally, the same standards as used in FHA, e.g., 1.11 if New Construction/Sub Rehab and 1.15 if there are modest or no repairs. Similarly, like FHA, there is no need to make assumptions about income and expense trending when examining long-term cash flow coverage. |
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| Posted: | 01/25/2019 |
| Question: | What are the insurance requirements for a RAD project? Is an AM Best rating required for the insurance company? |
| Answer: | The RAD requirements for insurance can be found in the RAD Notice (1.6.D.5 for PBVs, 1.7.C.4 for PBRA): "Mandatory Insurance Coverage. The Covered Project shall maintain at all times commercially available property and liability insurance to protect the project from financial loss and, to the extent insurance proceeds permit, promptly restore, reconstruct, and/or repair any damaged or destroyed project property." If your RAD project has a first mortgage loan or other non-RAD funding, your other funding provider(s) probably have their own insurance requirements, so be sure to check with your non-RAD funders as well. |
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| Posted: | 01/25/2019 |
| Question: | What are the specifics of HUD’s decision to issue a new Financing Plan due date if the project is not awarded credits in current round and needs more than 30 days to established a financing strategy that does not include 9% credits? Notice states that the decision is based on score and rank. What does "score and rank" refer to? |
| Answer: | If the PHA’s applications for 9% tax credits is unsuccessful in the first tax credit round that begins 90 days after CHAP issuance, the CHAP will be terminated unless, within 30 days of notification, the PHA demonstrates that it diligently pursued 9% tax credits, as evidenced by the score and ranking in the unsuccessful 9% application OR proposes a financing strategy that does not rely on 9% tax credits and that is feasible. “Score and ranking” refers to the QAP score and rank within the LIHTC application round. Typically projects are rated and ranked based upon how well the project met the priorities and criteria set forth in the state’s QAP and the top scoring applicants are awarded LIHTCs. The PHA would need to submit evidence showing that their project received a high QAP score and ranking but still did not receive the credits due to the competiveness of the round. |
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| Posted: | 01/24/2019 |
| Question: | Are there any federal bidding or procurement requirements for the selection of developer or development partners (investors, lenders, contractors, architects/engineers, legal, consultants, etc.) associated with a public housing conversion and the completion of initial repairs? |
| Answer: | PHAs must comply with conflict of interest requirements in the respective Project-Based Rental Assistance (PBRA) and Project-Based Voucher (PBV) programs. Additionally, PHAs must comply with any state and local requirements as well as any requirements established by the lenders or funders. Otherwise, the RAD program does not impose any federal bidding or procurement requirements in the selection of developer or development partners. Aside from the issue of selection of developer or development partners, public housing conversions may be subject to subsidy layering review (see Section 1.5.A of the Notice) as well as Davis-Bacon and Section 3 (see Sections 1.6.D.3 and 1.7.C.2). Additionally, with respect to pre-development costs, Section 1.5.A of the Notice reads: Prior to the approval of a project’s Financing Plan, a PHA may expend up to $100,000 in public housing program funds in related pre-development conversion costs per project. Predevelopment funds may be used to pay for materials and services related to proposed development and may also be used for preliminary development work. Public housing program funds spent prior to the effective date of the HAP are subject to public housing procurement rules. These rules continue to apply. [Updated 7.29.13] |
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| Posted: | 01/24/2019 |
| Question: | I'm working on a LIHTC transaction. The HFA has agreed to do the subsidy layering review. Is there a form that HUD would prefer the HFA use? |
| Answer: | No. HUD does not have a subsidy layering form for external parties to use. The HFA should perform the subsidy layering review in accordance with their existing internal process. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | Suppose that the PHA's operating expenses increase following conversion and the project doesn't have the cash to make the deposit into the R4R as required under RAD- what would be the likely consequences of a failure to make required replacement reserve deposits?
Does it make a difference whether it's PBV or PBRA? |
| Answer: | Failure to make required deposits to the replacement reserve is a violation of both the RAD Conversion Commitment (which survives the closing) and the PBRA or PBV HAP Contract and HUD may take enforcement action in such an event. If a property experiences an unexpected and substantial increase in operating expenses, the owner should contact HUD to determine options that will not result in HUD initiating an enforcement action. |
|
| Posted: | 01/24/2019 |
| 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: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 02/03/2014 |
| Question: | Once awarded, what is the time frame to complete capital improvements? |
| Answer: | The Financing Plan and RCC must include a reasonable timeline for completion of all rehabilitation items acceptable to HUD, generally 12 to 18 months from the date of closing the conversion and any financing, depending on the scope of rehabilitation funded. (Notice PIH-2012-32 REV-1 page 79). |
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| Category: | Notifying Residents |
| Posted: | 04/17/2024 |
| Question: | In a property converting under RAD, what are the notice and meeting requirements for non-public housing residents? |
| Answer: | Notice of the RAD conversion should be provided to all residents of the property, with scheduled meetings open to any residents that would like to receive more information about the RAD process. However, for residents of units whose subsidy is not converting from public housing assistance, the language in the sample RAD Information Notice (RIN) should be modified to make sure the notice provided to residents is accurate and relevant. For example, the RIN can include a general description of the conversion, as well as conceptual plans, but for residents that are not in the public housing program, it should not inform the resident that the household has a right to remain in the unit or, if any relocation is required, a right to return to an assisted unit in the Covered Project. All public housing residents whose unit is converting should receive a RIN that includes all of the required items within Section 6.6.A of Notice H/PIH 2016-17 (the RAD Fair Housing and Relocation Notice). |
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| Posted: | 03/17/2023 |
| Question: | In planning the required resident meetings that must occur before Concept Call, I’m wondering if there is a minimum notice period for alerting residents about the meeting. We typically hand deliver meeting notices to each unit but I’m not sure if there is a requirement or preference for how far in advance of the meetings the notice must or should be delivered. |
| Answer: | You should give residents a reasonable amount of time to plan to attend the meetings. If the PHA has a standard notice period for meetings, they should adhere to that standard. |
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| Posted: | 11/15/2022 |
| Question: | The RAD Application asks the PHA to enter in the date the RIN was issued to residents. Is there guidance regarding an acceptable amount of time that can elapse between issuance of the required RIN and submission of a RAD application? |
| Answer: | Per the RAD Notice, all residents must be issued a RIN prior to submission of a RAD application. Given the likely turnover that will occur at projects and the need to keep residents updated throughout the conversion process, if the RIN has been issued more than 12 months before the submission of an application, HUD will require that the PHA provide an additional written notification meeting the requirements of a RIN (see Section 6.6.a of the RAD Relocation Notice and see Sample RIN at http://www.radresource.net/rad_resident_info_notice.docx) to all current residents to ensure that all residents have received notice of the impending conversion. A PHA may also provide evidence that residents have been kept informed of ongoing RAD implementation in the form of written notices, resident meetings, or other forms of communication. HUD reserves the right to review such evidence to ensure compliance with program goals related to resident notification and engagement. |
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| Posted: | 01/26/2021 |
| Question: | The RAD Notice requires that prior to submitting an application the PHA must conduct at least two meetings with residents of projects proposed for conversion. Is there guidance regarding the amount of time that can elapse between issuance of the required resident meetings and the RAD application? |
| Answer: | The purpose of the resident meetings is to ensure that residents are informed of the RAD conversion process and have an opportunity to provide comments and feedback. The standards described in the RAD Notice (see Section 1.8) are designed to make sure that PHAs maintain regular communications with residents throughout the RAD conversion process, including when there are substantial changes. HUD considers significant delays between the conduct of resident meetings and the submission of an application to be a substantial change and therefore will require another resident meeting if the PHA held two meetings but neither occurred within a year of the RAD Application submission date. Any resident comments received in connections with the additional meeting and the PHA’s responses must be included with the Application. |
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| Posted: | 05/21/2020 |
| Question: | How should PHAs communicate with residents about the RAD conversion process, respond to resident questions, and solicit feedback when in-person resident meetings are not possible due to the recent COVID-19 outbreak? |
| Answer: | The health and safety of residents, PHA and Owner staff, and other program partners is paramount. PHAs that continue with public meetings should follow the latest CDC, state, or local health department guidance relative to holding public meetings. However, it is still critical for PHAs and owners to keep residents informed about any changes to their housing, their rights, and the timing of key events related to the conversion and for residents to have the opportunity to provide comments as required at different stages of a RAD conversion.
The RAD Notice requires PHAs and owners to hold resident meetings and to receive and provide response to comments during those meetings. In lieu of community meetings held in common areas, PHAs and owners may hold meetings remotely using videoconferencing or teleconferencing technology provided that they can: Accept and respond to answers to questions submitted during the meeting; Maintain an attendance log in order to track if residents are able to participate successfully; Accommodate the needs of persons with disabilities or with limited English proficiency (LEP) through the meeting format. In selecting the host technology, PHAs must ensure they can comply with Section 504 of the Americans with Disability Act; and Provide residents with a follow-up notice after the meeting with a summary or reproduction of presented information and a means to ask additional questions related to the conversion.
In selecting among alternative meeting methodologies, PHAs and owners should be attentive to the nature of technology which residents are likely to have in their homes. When submitting their Financing Plan or Conversion Plan and (for public housing conversions) their RAD application, PHAs and owners must provide the date(s) of any remote resident meetings and a record of the responses (written or oral, or in subsequent actions) to resident comments on the proposed conversion and scope of work that were received in connection with such meetings. HUD may request follow-up measures on a case-by-case basis.
Effectively communicating during this period may take more time than previously and PHAs and owners may determine that additional meetings are necessary in order to ensure that you are reaching all residents. Please keep your RAD point of contact updated in the event that an extension to existing deadlines is needed.
Beyond the required resident meeting and comment period, HUD recommends that PHAs and owners develop an alternative communication plan that is sustainable for at least 8 weeks or more and that achieves the goals of providing residents relevant information about the RAD conversion, particularly more complex transactions with significant construction and/or relocation. PHAs may develop a process that includes various forms of alternative communication methods so that all residents can receive information and participate in the process regardless of their individual circumstances. Below are some suggested methods by which to share information with residents: Set up teleconference calls in the place of in-person meetings, ensuring that residents have enough prior notice and receive clear directions (particularly those with limited technological access/abilities); Provide flyers/notices to residents at each unit with updates about how information can be obtained regarding the RAD process; Post notices in common areas of the property; Provide letter updates in resident mailboxes; Provide text and/or email updates to residents; Share a sign-up sheet with residents to meet 1-on-1 with office staff or by phone; Create online materials (video or other) available to all residents; Create and distribute a survey for residents to gather information about their questions, experience, and preferences; Ensure that all residents have contact information (phone and email) for PHA staff should they have questions. |
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| Posted: | 12/09/2019 |
| Question: | We received two CHAPS for two projects but intended to have these projects be phased. So the CHAP on project 2 was returned, we are now "phased" and will submit an application for that second project within 365 days of receipt of the first CHAP. The question - we had issued a GIN to the residents of that second phase. Is that GIN "rescinded" also and will be re-issued when we submit that second CHAP application? More specifically, do we need to do the resident tracking required for that second project during this interim period? |
| Answer: | While there is no formal requirement in the RAD Relocation Notice, we would encourage the PHA to notify residents that plans have changed and that the PHA is no longer pursuing RAD for their project at this time. As long as the GIN was issued in a timely manner (within 30 days of CHAP issuance), the PHA is only responsible for keeping a tenant log for the time between CHAP issuance and CHAP withdrawal. Once the CHAP is withdrawn, the project is no longer a part of RAD and is not subject to RAD Relocation requirements. |
|
| Posted: | 10/15/2019 |
| Question: | If we had already submitted a Financing Plan or received an RCC when RAD Notice Rev 4 was published, do we need to have another resident meeting to satisfy the requirements of having meetings before concept call and between concept call and Financing Plan submission?
|
| Answer: | For active CHAP awardees, the resident meeting requirements in Rev 4 of the RAD Notice should be implemented based on where in the RAD conversion process your transaction was when Rev 4 was published. If you had already submitted a Financing Plan at that time with evidence of prior resident meetings held (as required under Rev 3 of the RAD Notice), then you do not need to have an additional meeting or meetings to satisfy the “before Concept Call” and “before Financing Plan” resident meeting requirements that were introduced in Rev 4 of the Notice. Conversely, if you did not submit a Financing Plan prior to the Rev 4 publication date, you are required to have a least one resident meeting before the Concept Call and another before Financing Plan submission. |
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| Posted: | 05/07/2019 |
| Question: | Are PBV units under RAD required to have a Request for Tenancy Approval (RFTA) filled out by the owner and tenant? |
| Answer: | No, this provision of the housing choice voucher regulations (24 CFR 982 subpart G, section 302) does not apply to the PBV program (see 24 CFR 983.2.c). |
|
| Posted: | 01/25/2019 |
| Question: | Must a PHA give tenants 30-day notice of the effective date of the new lease? |
| Answer: | PHAs must give tenants at least 30-day notice of their public housing lease termination (recognizing that the exact date of closing, and thus the exact effective date of the HAP, is not known). HUD recommends that PHAs provide this notification to residents along with a notification of the effective date of the new lease. However, PHAs should consult with legal counsel, especially with respect to the requirements of state and local tenant laws. |
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| Posted: | 01/24/2019 |
| 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: | 10/27/2017 |
| Question: | In a PBRA conversion, can the owner/PHA of a Public Housing project designated for the elderly continue to serve only elderly households? |
| Answer: | The owner/PHA cannot designate buildings as is done in Public Housing. While owners may not restrict occupancy to certain household types, however, Owners may adopt certain waiting list preferences on their waiting list, some of which require prior HUD approval while others do not. HUD regulation (see 24 CFR 5.655) permits Owners of PBRA projects to adopt waiting list preferences for single persons who are elderly without prior HUD approval. To adopt a waiting list preference for elderly families (i.e. non single-persons), the Owner must obtain prior HUD approval. See Paragraph 4-6 of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs and HUD Housing Notice 2013-21 for the applicable requirements for implementing a preference for elderly families. Note that all owner adopted preferences must be included in the Tenant Selection Plan (TSP) and the Affirmative Fair Housing Marketing Plan for the property. |
|
| Posted: | 10/11/2017 |
| Question: | When does a resident first get the Right to Return? With the issuance of the RIN? The CHAP? Some other milestone? |
| Answer: | Under Section 6 of the RAD Relocation Notice (H 2016-17), eligibility for protections under said Notice apply to any person residing at the Converting Project and who is legally on the public housing lease, has submitted an application to be added to an existing lease, or is otherwise in lawful occupancy at the time of CHAP issuance. Consequently the Right to Return would apply to anyone meeting these conditions at the time of CHAP issuance. |
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| Posted: | 10/14/2014 |
| Question: | When do resident relocation requirements begin, at CHAP Award or at Closing? Our PHA wants to make sure they are providing required notices and assistance on time. |
| Answer: | PHAs should begin to engage residents on relocation matters as soon as they begin to develop any RAD development or rehabilitation plans that may involve relocation. PHAs should refer to Section 4: Relocation Planning of Notice H 2014-09/PIH 2014-17. The chart provided in this section presents a general sequencing of relocation planning activities within the RAD milestones. |
|
| Posted: | 08/21/2014 |
| Question: | Are housing authorities expected to walk residents through the process of moving utilities and forwarding mail, or just to pay the out-of-pocket expenses of those kinds of activities? |
| Answer: | Part of URA requirements are to provide relocation advisory services for any permanent relocations. Under RAD, advisory services are required for relocations lasting longer than a year and strongly recommended for relocations that are for shorter periods. |
|
| Posted: | 08/21/2014 |
| Question: | If a resident decides to accept a Housing Choice Voucher, how is the right of return affected? |
| Answer: | When a resident chooses to accept permanent relocation payments and assistance in accordance with URA or at URA levels for a RAD conversion (for example accepting a HCV as their permanent relocation housing), the resident is also choosing to decline their right to return to the completed RAD property.
If a resident accepts an HCV as a temporary relocation housing option, this acceptance does not mean that the resident is declining their right to return. A resident can choose to accept temporary relocation assistance and payments without declining their RAD right to return.
PHAs are reminded that residents must give informed consent to decline their right to return, meaning they are making a decision based on an informed understanding of their housing options, and that PHAs must keep auditable records of this decision.
|
|
| Posted: | 08/21/2014 |
| Question: | When converting to PBRA or PBV under RAD, does the URA apply to persons temporarily relocating – for less than twelve months – or only for those residents who relocate either permanently or for more than one year? |
| Answer: | URA applies to RAD projects that involve acquisition, demolition, or rehabilitation. So if your deal involves acquisition, demolition, or rehabilitation, then URA applies. Both URA and RAD have requirements for relocations that last less than a year. For example, URA requires that a resident who will be temporarily relocated receive reimbursement for reasonable out of pocket expenses connected to the move, such as moving expenses and increased housing costs. Additionally, RAD would require residents that move temporarily receive a RAD Notice of Relocation, which is a specific RAD requirement, and not one that comes from the URA. |
|
| 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: | 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. |
|
| Category: | PHAs: Post-Closing |
| Posted: | 05/31/2023 |
| Question: | In a RAD Section 18 blend transaction, when does the contract administrator begin receiving voucher adminitration fees? |
| Answer: | In a RAD Section 18 Blend, the RAD PBV HAP contract is funded by Public Housing funds for the remainder of the calendar year of conversion. In the first full calendar year after the RAD conversion, the project will receive Section 8 funds. HUD will disburse Administrative fees to PHAs each month based on actual leasing reported in VMS in prior months. For the Section 18 units, the execution of the PBV HAP contract will initiate the Section 8 funding process. The PHA will receive Administrative Fees monthly as it is obligated in advance and a reconciliation is performed at the end of the year. |
|
| Posted: | 12/14/2021 |
| Question: | In RAD for PHAs (RAD 1), are Davis Bacon requirements applicable for a post-closing refinance? |
| Answer: | Davis Bacon requirements are applicable for all construction or repair work on projects that are initiated within eighteen (18) months after the effective date of the RAD PBV or PBRA HAP contract. This applies even if the owner is utilizing another funding source (e.g., a FHA-insured HUD 223(f) loan) that does not require the use of Davis-Bacon wages. |
|
| Posted: | 03/25/2019 |
| 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: | 03/01/2019 |
| Question: | In considering a RAD conversion from public housing to PBRA, would the Form HUD-90105a Model Lease for Subsidized Programs be required under PBRA? |
| Answer: | Yes. The current form of model lease, and instructions for implementing the model lease, are contained in Handbook 4350.3 Occupancy Requirements of Subsidized Multifamily Housing Programs (see Appendices 4-A and 4-E). Additionally, PIH Notice 2012-32 REV 1 requires additional resident rights be included in the lease. |
|
| Posted: | 03/01/2019 |
| Question: | Is there a requirement for who holds the Replacement Reserves? |
| Answer: | Yes. If there is FHA-insured financing, the insured lender will hold the Replacement Reserve. Otherwise, typically a non-FHA-insured lender or a LIHTC investor holds the Replacement Reserve. In RAD transactions without debt and without LIHTCs, HUD can agree to allow the PHA to hold the Replacement Reserve as a separate account with a banking institution with the account covered by a General Depository Agreement (form HUD-51999). Please note that a GDA may also be required in other circumstances, such as when public housing funds are being used to fund the reserve. Please contact your RAD Closing Coordinator for additional information. |
|
| Posted: | 03/01/2019 |
| Question: | The residents of a project converting to RAD want to form a resident council after conversion. What are the requirements to form a council after RAD conversion? |
| Answer: | There is no requirement to form a resident council under RAD, but residents may form a resident organization and receive tenant participation funds. There are different resident participation and funding requirements under PBRA and PBV. For PBRA conversions, residents have the right to establish and operate a resident organization in accordance with 24 CFR Part 245 (Tenant Participation in Multifamily Housing Projects). In addition, in accordance with Attachment 1B (more specifically, Attachment 1B.2 at page 110 of REV-2), residents will be eligible for resident participation funding. For PBV conversions, residents of Covered Projects with converted PBV assistance will have the right to establish and operate a resident organization for the purpose of addressing issues related to their living environment and be eligible for resident participation funding In accordance with Attachment 1B.2. |
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| Posted: | 03/01/2019 |
| Question: | When is the first REAC inspection from the time a redeveloped unit is occupied? We understand that the resident has a move in inspection done by the HA and that they are not re-screened for one year after moving in to the permanent unit. |
| Answer: | Under PBRA conversions, a physical inspection will take place as soon as possible after closing. If rehabilitation is occurring at the project and the project has FHA insurance, the first inspection will not occur until the rehabilitation is complete. If rehabilitation is being done and the project does not have FHA financing, the owner can submit a formal written request to the local multifamily field office to postpone the initial inspection until rehabilitation is complete. After the initial inspection, the schedule of subsequent physical inspections will be determined by 24 CFR Part 200 Subpart P. |
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| Posted: | 01/25/2019 |
| Question: | Can an owner administer the PBV waitlist? |
| Answer: | The obligation that the waiting list be maintained by the administering PHA is statutory. A PHA may choose to use a broad HCV waiting list, a PBV waiting list, or a project-specific PBV waiting list, but it is still the responsibility of the PHA to maintain that waiting list. |
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| Posted: | 01/25/2019 |
| Question: | Eligibility is grandfathered for public housing residents that occupy units converted to PBV via
RAD. Would this grandfathering also apply to residents that were working through their Earned Income Disregard periods? In public housing, the EID eligibility is not limited to persons with disabilities as it is in Section 8. I am assuming that their EID eligibility would continue through to completion and during their tenancy in the PBV unit. However, wanted to confirm that here. |
| Answer: | See pages 42 and 43 of Notice PIH-2012-32 REV-1 that discuss the continuation of Earned Income Disregard. Also see pages 39 and 40 that discuss the process for phasing in the rent increase that would occur at the end of the EID period. |
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| Posted: | 01/25/2019 |
| Question: | Once conversion is completed, are there restrictions regarding the form of lease used or can a PHA use a lease of their choosing? |
| Answer: | For RAD PBV conversions, the normal voucher program lease requirements are applicable. For RAD PBRA conversions, the normal PBRA lease requirements are applicable. See HUD Handbook 4350.3 Chapter 6.
In both cases, the lease must include the tenant rights as required in PIH Notice 2012-32 REV 1 |
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| Posted: | 01/25/2019 |
| Question: | The RAD Notice refers to the “calculated” TTP. Is this capped at the RAD gross rent? |
| Answer: | No. The calculated TTP is determined only by the household’s adjusted income. |
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| Posted: | 01/25/2019 |
| Question: | Under RAD, if an applicant or resident needs a reasonable accommodation, who is to pay for the accommodation? |
| Answer: | Section 504 (of the Rehabilitation Act of 1973) requires property owners to provide and pay for physical and procedural accommodations, as needed by applicants and residents with disabilities, for properties with "federal financial assistance". Public housing is "federal financial assistance", and so are PBRA and PBVs. Accordingly, under RAD you have the same responsibilities regarding reasonable accommodations as you did under the public housing program.
The HUD website contains a one-stop Section 504 resource at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/disabilities/sect504. |
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| Posted: | 01/25/2019 |
| Question: | What accounting/book-keeping measures must be instituted if only a portion of our properties participate in RAD (some remain traditional PHA properties receiving funds from HUD while others convert)? As a part of that financial question, can staff be allocated to each program or will separate staff need to be used? |
| Answer: | Be sure to talk to each of your funders. First mortgage lenders, in particular, are likely to have accounting / bookkeeping requirements. RAD itself has very few such requirements: a) All RAD conversions are subject to a requirement to provide access to records (including project financial statements and operating data), if HUD so requests. b) RAD PBRA conversions must submit annual financial statements electronically to HUD; see the REAC-FASS website at http://www.hud.gov/offices/reac/products/prodmf.cfm. c) RAD projects that utilize FHA-insured first mortgage financing will be subject to FHA's accounting and bookkeeping requirements; contact your FHA multifamily lender.
Your question concerning whether it is acceptable to allocate staff costs to the RAD project should be posed to your first mortgage lender. If you will be using FHA-insured financing, HUD recommends that before adopting any allocations, you consult with accountants, property managers, or other experts who are very familiar with applicable FHA requirements. |
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| Posted: | 01/25/2019 |
| Question: | What are the insurance requirements for a RAD project? Is an AM Best rating required for the insurance company? |
| Answer: | The RAD requirements for insurance can be found in the RAD Notice (1.6.D.5 for PBVs, 1.7.C.4 for PBRA): "Mandatory Insurance Coverage. The Covered Project shall maintain at all times commercially available property and liability insurance to protect the project from financial loss and, to the extent insurance proceeds permit, promptly restore, reconstruct, and/or repair any damaged or destroyed project property." If your RAD project has a first mortgage loan or other non-RAD funding, your other funding provider(s) probably have their own insurance requirements, so be sure to check with your non-RAD funders as well. |
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| Posted: | 01/25/2019 |
| Question: | Who is responsible for monitoring the provision of supportive services, the PHA or the owner? Any guidance that you can provide would be greatly appreciated |
| Answer: | The responsibility for monitoring, per 24 cfr 983.56(b)(2)(ii)(C), is on the PHA. “The PHA must monitor the excepted family’s continued receipt of supportive services and take appropriate action regarding those families that fail without good cause to complet either supportive services requirement. The PHA administrative plan must sate the form and frequency of such monitoring.” |
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| Posted: | 01/24/2019 |
| Question: | Does a PHA receive the admin fee for administering PBV as part of a RAD conversion? In other words, the money paid to PBRA is limited to RAD contract rents. Is the money paid to a PHA for PBV include the RAD Contract rents PLUS an admin fee? |
| Answer: | Yes, the PHA that administers the PBV contract will receive monthly administrative fees under the Voucher program, beginning in the first full calendar year following conversion. This amount is not funded through the RAD contract rents but is funded from the larger Tenant Based Rental Assistance (TBRA) account. |
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| Posted: | 01/24/2019 |
| Question: | Our PHA is pursuing a RAD conversion, and we will be transferring the property to a new single asset entity. Does the new entity have to have a separate board of directors? |
| Answer: | There is no RAD requirement that a new single asset entity have a separate board of directors. Check with your financing partners (and your local legal counsel) to see if they have any requirements. Outside the public housing community, it is common for nonprofit housing owner-developers to have a single board of directors governing the nonprofit itself and all of its 100% owned single asset entities. |
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| Posted: | 01/24/2019 |
| Question: | Our PHA is pursuing a RAD conversion. In what situations must we create a new entity to own the converted project? |
| Answer: | If the conversion will use PBVs, and the PHA itself will administer the PBVs, HUD rules that prohibit the PHA from signing a HAP with itself. Consequently, the PHA will either need to create a single-purpose entity to own the PBV units (typically, through a related non-profit) or the PHA may want to form a separate company to serve as the leasing agent or management agent for the PBV program. But other than this requirement in the PBV program that the PBV administrator and the PBV owner cannot be the same entity, which is actually a PBV program requirement and not a unique RAD requirement, there is no RAD requirement for creating of new ownership entities. That said, in almost all situations where the PHA is seeking private financing, the lender or investor will the property be owned by a “single asset entity” (usually a limited liability company or a limited partnership but sometimes a corporation, that owns nothing other than the property). FHA requires a single asset entity if FHA multifamily mortgage insurance is being utilized. Another common example is Low Income Housing Tax Credits, which necessarily entail sale of the property, and the tax credit investor is almost certain to require a single asset entity. |
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| Posted: | 01/24/2019 |
| Question: | Our PHA is pursuing a RAD conversion. We are converting to PBRA, we are not using tax credits, and we do not plan on taking out a first mortgage loan. Accordingly, there is no requirement that we transfer the property to a single asset entity. However, the RAD Notice strongly encourages a single asset entity. Why is that? |
| Answer: | The short answer is that single asset entities are the industry standard form of ownership for apartment properties, single asset entities facilitate accurate accounting and management reporting, and single asset entities make it easier for management and the board to understand trends in the portfolio. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | We are converting almost all of our public housing through RAD. What happens to the community centers during this conversion, maintenance buildings, central office, etc.? All are non-Residential units but are there to support the residential units. |
| Answer: | These are decisions that you will need to make.
First, any non-dwelling structures that are on the same footprint of a converting project will become defederalized with the RAD conversion (assuming they do not receive any special federal funding).
HUD expects that, in your situation, you will be operating a central office cost center after the RAD conversions. If you will be providing property management, the central office cost center would receive property management fees. The central office cost center would also receive cash flow distributions. From those revenues, the central office cost center would bear the expenses of providing property management services and of being the owner. If you follow this approach, most likely your central office would be retained by the PHA (not transferred to any RAD project) and used to house the central office cost center.
Most likely, community centers and maintenance buildings that fall within the 'footprint' of a RAD project would be transferred to the RAD project along with the residential buildings. You would want to talk with your legal and financial advisors regarding a central community center (serving multiple properties) and regarding a central maintenance facility (serving multiple properties); the best option for these types of central facilities will vary depending on your specific circumstances. |
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| Posted: | 01/24/2019 |
| Question: | When an authority has a CHAP Agreement, but has not yet closed, are those units still to be inspected by REAC if that is scheduled prior to the closing? |
| Answer: | Upon CHAP award, affected units will be exempt from PHAS scoring. However, normal public housing inspections continue until the RAD closing. [Updated 7.29.13] |
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| Posted: | 03/05/2018 |
| Question: | What are the Catalog of Federal Domestic Assistance (CFDA) numbers for properties that have converted to RAD? |
| Answer: | PBV RAD conversions are reported under CFDA 14.871. PBRA RAD conversions are reported under CFDA 14.195, Section 8 Housing Assistance Payments Program. |
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| Posted: | 11/28/2017 |
| Question: | If a tenant is in the RAD PBV phase-in period and transfers to a different size unit in the same PBV project, does the phase-in still apply or will rent be based on TTP at that point? |
| Answer: | If the rent increase is occurring because of new income, the rent phase-in does not apply. If the tenant's monthly rent increases because the tenant moved to a new unit as a result of the RAD conversion, then the phase-in does apply. |
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| Posted: | 11/06/2017 |
| Question: | We are a Property Management company that was previously processing the annual recertifications for the Public Housing units. The units have now converted to PBV under RAD. Do we continue to do the annual/interim recertifications until Jan. 1 of the following year, and do we issue the utility reimbursement checks? Or, does the Housing Authority take over the recertifications/interims and issue the utility reimbursement checks as the of RAD closing date? |
| Answer: | It is up to the PHA how they wish to handle processing of recertifications and utility allowances for its voucher program. HUD does not prevent PHAs from contracting with a management company to perform these tasks. |
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| Posted: | 10/27/2017 |
| Question: | In a PBRA conversion, can the owner/PHA of a Public Housing project designated for the elderly continue to serve only elderly households? |
| Answer: | The owner/PHA cannot designate buildings as is done in Public Housing. While owners may not restrict occupancy to certain household types, however, Owners may adopt certain waiting list preferences on their waiting list, some of which require prior HUD approval while others do not. HUD regulation (see 24 CFR 5.655) permits Owners of PBRA projects to adopt waiting list preferences for single persons who are elderly without prior HUD approval. To adopt a waiting list preference for elderly families (i.e. non single-persons), the Owner must obtain prior HUD approval. See Paragraph 4-6 of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs and HUD Housing Notice 2013-21 for the applicable requirements for implementing a preference for elderly families. Note that all owner adopted preferences must be included in the Tenant Selection Plan (TSP) and the Affirmative Fair Housing Marketing Plan for the property. |
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| Posted: | 06/23/2017 |
| Question: | If an MTW Agency sets a rent for the HAP contract at the time of conversion, can the Agency go back at a future date (say, year 5) and increase the rent for the HAP contract beyond the standard OCAF adjustments? |
| Answer: | No. The RAD Notice (Section 1.6.B.6) and the HAP contracts require that contract rents may only be adjusted by the OCAF. The RAD notice further specifies that MTW agencies may not alter this requirement. |
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| Posted: | 03/04/2016 |
| Question: | Can a PHA ask for a waiver of certain regulations in order to establish a site-specific utility allowance schedule for a property converted to a Project-Based Voucher contract under RAD? |
| Answer: | Yes. A PHA can ask for a waiver of 24 CFR 983.301(f)(2)(ii) and 982.517 in order to establish a site-specific utility allowance schedule for a property converted to a Project-based Voucher contract under RAD. In considering such waiver requests, HUD will take into consideration whether the project had a site-specific utility allowance prior to conversion, the extent to which the voucher-wide utility allowance schedule can be appropriately applied to the site without causing undue burden to the residents or over-subsidizing the residents, and other factors HUD may request in order to assess good cause. Such waiver requests must be submitted through the Office of Public and Indian Housing (PIH) in accordance with PIH Notice 2013-20 |
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| Posted: | 01/15/2016 |
| Question: | Is choice mobility only available to residents who were in place at conversion, or can new residents eventually qualify for it too?
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| Answer: | For covered projects, the Choice-Mobility option is available to all existing and future residents. Note, however, that there may be limits on the number of residents in a covered project who might receive a Choice-Mobility option in any given year. See Notice PIH-2032 REV-2 for additional information on the Choice-Mobility requirement (see in particular section 1.6.D.9 for PBV conversions and section 1.7.C.5 for PBRA conversions). Some RAD PBRA conversions received an exemption from the Choice-Mobility requirement at the time of the initial RAD application and approval, as discussed on Section 2.3.6.C.3 of the Notice. |
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| Posted: | 10/09/2015 |
| Question: | Do residents of a PBV RAD conversion have to wait 12 months or 24 months after the execution of the HAP to exercise their right to move into tenant-based assistance? |
| Answer: | See the RAD Notice REV-2, page 61, item 9 Choice Mobility, which makes it clear that, with PBVs, a resident's ability to access the choice-mobility option is available "at any time after the first year of occupancy." Note that the choice-mobility requirements for PBV conversions differ in some respects from the choice-mobility requirements for PBRA conversions.
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| Posted: | 10/06/2014 |
| Question: | We are preparing to occupy our RAD site, however we do not know the process for 50058 submission. Is there a RAD program code for the 50058? Further should we submit a code "10" when the voucher is issued and a code "1" 50058 when the resident moves in? Also, will be 50058 be submitted as a public housing or housing choice voucher, both have different and distinct reporting information? Without a RAD program code HUD will not be able to actively track the success of the RAD program through the 50058 submission process. |
| Answer: | The 50058 should be filled out as it normally is for the Project-Based Voucher program, including completing Section 11 of the Form. In addition, the PHA should enter in line 2N “RADPH.” Action Code 10, Issuance of a Voucher, does not apply under the PBV program |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Category: | Rehab, New Construction, and Demolition |
| Posted: | 07/31/2023 |
| Question: | Certain repositioning tools (i.e., Streamlined Voluntary Conversion, Small PHA RAD Blends, Section 18 “under 50”) that are only available to small PHAs require the PHA to close out its public housing program. Can a PHA utilize one of these tools and still be able to develop their remaining available Faircloth authority through Faircloth-to-RAD prior to closing out their public housing program? |
| Answer: | Yes. PHAs that have repositioned all of their public housing units under one of the above-mentioned mandatory closeout tools may develop Faircloth to RAD units prior to closing out their public housing program. As an example, a 122-unit PHA with 44 units of additional Faircloth authority decides to pursue a Small PHA RAD & Section 18 Blend. The PHA may complete their RAD & Section 18 Blend transaction and unit removal and then delay their mandatory close out in order to first develop up to 44 units of Faircloth to RAD units. The PHA may not develop traditional PH units, and the PHA must complete close out activities following the closing of their Faircloth to RAD project.
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| Posted: | 05/31/2023 |
| Question: | In a RAD Section 18 blend transaction, when does the contract administrator begin receiving voucher adminitration fees? |
| Answer: | In a RAD Section 18 Blend, the RAD PBV HAP contract is funded by Public Housing funds for the remainder of the calendar year of conversion. In the first full calendar year after the RAD conversion, the project will receive Section 8 funds. HUD will disburse Administrative fees to PHAs each month based on actual leasing reported in VMS in prior months. For the Section 18 units, the execution of the PBV HAP contract will initiate the Section 8 funding process. The PHA will receive Administrative Fees monthly as it is obligated in advance and a reconciliation is performed at the end of the year. |
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| Posted: | 07/21/2022 |
| Question: | How will the contract rents for the units approved under Section 18 that will be subject to the non-RAD PBV HAP Contract be determined? |
| Answer: | The non-RAD PBV units will be under a separate HAP contract and will have rents determined based on standard PBV requirements, rather than on RAD requirements. The PHA (or the independent entity, if the project qualifies as PHA-owned – see PIH Notice 2017-21 (here: https://www.hud.gov/sites/dfiles/PIH/documents/PIH-2017-21.pdf) Attachments A and B) will establish the “initial rent to owner” (i.e., contract rent) for units approved under Section 18 at the beginning of the Housing Assistance Payment (HAP) contract term, per 24 CFR 983.301(a)(2).
The PHA may need information about proposed contract rents earlier than the beginning of the HAP contract term in order to complete RAD Financing Plan requirements (see RAD Notice Att. 1A). For example, the PHA may have estimated rents determined prior to submission of the RAD Financing Plan to support both HUD’s underwriting and to secure financing commitments from lenders/investors. Particularly where the project is not subject to competitive selection requirements (see PIH Notice 2017-21 Attachment L) the PHA may author a conditional letter to support underwriting that states that if HUD approves the RAD conversion and the Section 18 blend and the site satisfies all requirements for the placement of a PBV HAP contract or AHAP, the PHA commits to placing a PBV contract on an identified number of units and at the appropriate rent level. |
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| Posted: | 06/03/2022 |
| Question: | How does a PHA sequence its RAD and Section 18 applications in order to use this provision? How will HUD process the application materials to ensure that the release of the Declaration of Trust, RAD conversion, and execution of the non-RAD PBV AHAP or HAP contract occur jointly? |
| Answer: | Initial processing instructions are as follows:
Step 1: The PHA submits a RAD application at www.radresource.net for the entire “Converting project” that will encompass the transaction.
Step 2: The PHA satisfies PHA Plan requirements for both RAD and Section 18.
Step 3:The PHA identifies that it intends to utilize a RAD/Section 18 Blend in the Concept Call held with HUD prior to submitting the Financing Plan. If the PHA is using the Small PHA Blend, the PHA submits its repositioning plan prior to submission of the Financing Plan in order to confirm eligibility.
Step 4: The PHA determines its plan for how it will attach PBV assistance to the Section 18 units (i.e., through the Existing Housing PBV requirements or through AHAP). The plan must comply with all applicable PBV requirements (see program regulations at 24 CFR Part 983 and applicable guidance including, but not limited to: the HOTMA Federal Register Implementation Notice at 82 Fed. Reg. 5458 (January 18, 2017) and PIH Notice 2017-21) and be feasible based on the timing of the RAD closing. PHAs are encouraged to begin required steps to project-base Section 18 units as early as possible. See questions 8, 9, and 21.
Step 5: The PHA submits a Financing Plan and other supporting information for the Section 18 units that complies with the following.
The PHA’s Financing Plan will cover the entire transaction/converting project covered under the Blend. The Financing Plan includes documentation that HUD can use for both RAD and Section 18 processing as well as supplementary documentation needed to complete the Section 18 approval. The PHA is not required to submit a separate Section 18 application through IMS/PIC. Instead, HUD’s Special Applications Center (SAC) reviews the additional material noted below and uploads it into IMS/PIC in the form of a DDA Section 18 application.
In addition to standard Financing Plan requirements, the PHA submits a Financing Plan that includes:
a. A detailed transaction summary in the Conversion Overview, which must describe the use of this provision and confirm that the units that will be removed through Section 18 will be sold or otherwise transferred (i.e., ground lease) to a third-party entity that is recognized as a separate independent entity under State law (which may include a non-profit affiliate controlled by the PHA).
b. A cash flow pro forma that reflects the income and expenses of the total project, i.e., for the RAD and non-RAD units.
a. Capital Funds sources that, on a pro-rata basis, do not exceed the development budget, e.g., in a transaction seeking a 60/40 RAD/Section 18 construction blend, any Capital Fund contributions cannot exceed 60% of the development budget in a transaction with 60% of the units in RAD and 40% of the units as Section 18. This does not apply in the case of a PHA that will no longer have ACC units as a result of the RAD/Section 18 Blend or that will have less than 50 units remaining and have initiated procedures to dispose of their final ACC units.3
b. A Capital Needs Assessment covering the whole property. The hard construction costs in the Uses will be used to determine whether the project qualifies for the Construction Blend.
c. A Sources and Uses covering the whole property.
d. Any applicable front-end civil rights reviews completed for the entire property.
e. An Environmental Review for the whole project.
f. A RAD Initial Year Funding Tool that is correctly sized to include only the RAD units.
g. Utility allowance schedule reflecting the projected utility allowances following the completion of rehab or construction, which will be used to prepare the CHAP amendment.
Supplemental Section 18 materials. The PHA also submits certain materials needed for a complete Section 18 application that are not already required by RAD. Specifically, the PHA submits the following material to the RAD Resource Desk no later than its submission of the Financing Plan :
a. List of units (by address, unit type, and PIC number) that designate which units will be removed through Section 18 and which units will be removed by RAD. Spreadsheet format preferred.
b. Evidence that the PHA described the Section 18 disposition in its PHA Annual Plan and the Field Office approved that PHA Annual Plan. For Qualified PHAs, a certification that they have discussed the Section 18 disposition at a public hearing. See question 24.
c. A local government support letter. The PHA must consult local government on its proposal to apply for Section 18 for some units under a RAD/Section 18 Blend and secure a letter of support from the chief executive officer (i.e., mayor) of the local government.
d. Evidence of consultation with any resident organization for the residents living in the Converting Projects and the Resident Advisory Board (RAB)4; and any written comments received from impacted residents, resident organizations, or the RAB, along with the PHA’s responses to those comments.
e. A Board resolution that approves the PHA’s proposal to apply for Section 18 for some units under a RAD/Section 18 Blend. The resolution must be signed and dated after all resident and local government consultation has been completed.
PHAs are not required to submit the following items described in 24 CFR 970.7(b) since they will have been addressed through the RAD requirements:
(i) evidence of environmental review – the environmental review for the entire project will be completed through the RAD processing requirements;
(ii) (timetable for the disposition – the disposition will occur simultaneously with the RAD closing;
(iii) a statement justifying the disposition – the disposition is justified based on the project qualifying for the RAD/Section 18 Blend;
(iv) a description of the method of disposition (i.e., ground lease, sale);
(v) estimates of the gross and net proceeds – the property’s sale will be occur under RAD requirements and any proceeds from sale will be subject to requirements imposed through RAD; and
(vi) evidence the PHA offered the property to sale to the eligible resident organizations (See also 24 CFR 970.9(b)(3)(ii)— (the PHA would be eligible to an exception to the offer of sale because it has a firm plan, as proposed in the Financing Plan, to replace the public housing units with low-income housing units (PBV units)).
PHAs can satisfy the Section 18 requirements for consulting with the impacted residents as part of the RAD consultation requirements. PHAs can also satisfy the Section 18 relocation plan requirements as part of the RAD Relocation Plan requirements, since the relocation benefits to all families must be the same. Please note that the PHA may not provide different relocation rights and benefits to residents of the project on the basis of whether they reside in a RAD unit or a Section 18 unit.
Step 6: Upon receipt of the Financing Plan requesting the use of the RAD/Section 18 Blend, HUD revises the CHAP, amends the RAD PIC removal application, and creates the Section 18 removal application. HUD uses the materials already submitted by the PHA to the RAD Resource Desk to populate the Section 18 application. The SAC alerts the PHA if there are any missing items necessary for the Section 18 application. HUD will not approve the Financing Plan until the PHA has satisfied all Section 18 submission requirements.
The Office of Recapitalization subsequently issues the RAD Conversion Commitment (RCC), which will reference the transaction’s use of the RAD/Section 18 blend and include a special condition that the non-RAD PBV HAP contract or AHAP will be executed concurrent with the conversion. The SAC then also issues the Section 18 approval letter, which will identify the maximum number of units eligible for Tenant Protection Voucher (TPV) funding based on PIH’s Annual HCV Funding notice, which currently allows the PHA to request TPVs for units that were occupied by assis |
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| Posted: | 05/31/2022 |
| Question: | Does a PHA receive new HAP funding to cover the cost of the non-RAD PBV HAP contract? Is the funding process the same for the RAD PBV HAP contract? |
| Answer: | Units converting through RAD are subject to the RAD processes for funding of the HAP contract described in Section 1.13 of the RAD Notice. For the balance of the year the RAD HAP contract becomes effective, the contract is funded from public housing funds. And in the first full year following conversion, the contract is funded through new Section 8 funds. Please see the RAD PBV Quick Reference Guide (here: http://www.radresource.net/sources/public/RAD%20PBV%20Conversion%20Guide%20-%201.9.15%20update.pdf) for details on how the new Section 8 funding is calculated.
Units being approved under Section 18 that will be covered under a non-RAD PBV HAP contract are funded differently. Following the Section 18 approval, which occurs after the issuance of the RCC, in order for the PHA to receive new voucher funding with which to make payments under the non-RAD PBV HAP contract, the PHA must apply to HUD for new “Tenant Protection Voucher (TPV)” funding through their Field Office. PIH Notice 2021-07 § 5. This separate application is a necessary step in order to receive TPVs. The PHA may request a new increment of TPVs for occupied units and vacant units that were occupied by an assisted family within the 24 months prior to Section 18 approval. HUD generally issues TPVs on the average per unit cost (PUC) in the PHA’s HCV Program. However, if the PHA has concerns regarding the sufficiency of funding based on average PUC, the PHA can request higher TPV funding as part of its TPV application (HUD-52515) submission (or can make a subsequent request during the time of their initial funding increment). (See PIH Notice 2021-10 (here: https://www.hud.gov/sites/dfiles/PIH/documents/pih2021-10.pdf), or any successor notice, and the TPV FAQs (here: https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/tenant_protection_vouchers) for additional information about requesting TPVs). The PHA will generally use this funding to cover the HAP costs for the Section 18 units that are replaced under a PBV HAP contract, though may initially use the funding to relocate residents off-site with tenant-based assistance (and then back-fill the Section 18 units with its existing HCV resources after they have been redeveloped and when it is ready to put them under a HAP contract).
Where the project has units that are vacant and have not been occupied within the last 24 months, the PHA would not be eligible for TPV funding for those units following a Section 18 approval per PIH Notice 2021-10 § 6(d) (here: https://www.hud.gov/sites/dfiles/PIH/documents/pih2021-10.pdf); the PHA should select those units for RAD since all public housing units converted through RAD are eligible for new funding as part of the conversion. If there are a significant number of long term vacancies that exceed the number of units converting through RAD, the PHA would still be required to replace the public housing units with project-based assistance consistent with RAD’s “substantial conversion of assistance” requirement. The PHA may consider using Section 18 for a smaller portion of the property than allowed under the blend. |
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| Posted: | 05/31/2022 |
| Question: | RAD and Section 18 have different PHA Plan requirements. How do I satisfy the PHA Plan requirements for a RAD/Section 18 blend? |
| Answer: | The PHA Plan informs HUD, residents, and the public of the PHA’s plans and mission for serving the needs of participant families and the strategies for addressing those needs. HUD considers both RAD and Section 18 significant actions that PHAs must address in their PHA Plans.
For RAD/Section 18 Blends, PHAs must meet the PHA Plan requirements for both RAD and Section 18. A PHA can indicate in its PHA Plan that it is considering submitting applications for RAD, Section 18, and a RAD/Section 18 Blend and can indicate the exact unit mix is not yet determined. A PHA can also specify whether or not any changes to the mix of units would be a significant amendment to the PHA Plan, which would require adoption and approval per 24 CFR § 903.21 if it were to change. The PHA may, for example, conclude that if the specific of mix of units between RAD and Section 18 is not yet known (because, for example, the PHA does not know which Construction Blend it will qualify for), but the outcome for the project will be the same (preservation through rehab) and all residents will have the same rights, such a change can be considered not to meet the criteria for significant amendment. The PHA should be as specific as possible in its PHA plan but should also be clear in its written materials and public hearing about the different options under consideration. RAD and Section 18 have different requirements for PHA Plans:
1. The RAD notice (Attachment 1D) details what must be included in the PHA Plan. PHA must include Attachment 1D in an Annual Plan, 5-year Plan, or significant amendment. Major items include: unit descriptions to be converted, changes in the number of units post conversion, changes in policies that govern eligibility or admission post conversion, any transfers of assistance, and a statement on the impact of conversion on a PHA’s Capital Fund budget.
2. See 24 CFR 970.3(b)(h) for the PHA Plan requirements for Section 18. PHAs describe proposed dispositions in their PHA Annual Plan or significant amendment. The PHA Annual Plan should indicate that the PHA has applied or will apply for disposition for a portion of the Converting Project. To satisfy the Section 18 requirements, the description of the project in the PHA Annual Plan (at a minimum the IMS/PIC project names and numbers) must be the same as the IMS/PIC project names and numbers that will be proposed for Section 18 as part of the RAD/Section 18 Blend. Qualified PHAs that are not required to submit PHA Annual Plans must certify they discussed the disposition at a public hearing.
The PHA should also be aware of PBV requirements for the PHA Plan and Administrative Plan and may find it useful to address those requirements at the same time as the RAD and Section 18 requirements. For instance, if a PHA intends to use the PBV program, it must provide in the PHA Plan the projected number of PBV units, their general locations, the work it plans to do on the property or site, how many units of PBV it is planning on adding to the site, and how project- basing is consistent with its PHA Plan. Guidance on PBV requirements for the PHA Plan and Administrative Plan is in Appendix II of PIH Notice 2017-21. |
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| Posted: | 05/26/2022 |
| Question: | For a PHA pursuing a Small PHA Blend, what needs to be included in the Repositioning Plan? Is a PHA required to close out its public housing program through a Small PHA Blend? |
| Answer: | A PHA that chooses to use the Small PHA Blend is making a commitment to close-out its public housing program and must submit a Repositioning Plan per PIH Notice 2021-07, 3.A.2.e(2). However, a PHA may remove all of its remaining public housing units in the single transaction that uses the Small PHA Blend or may reposition all of its remaining public housing through separate transactions.
If the transaction would remove all remaining units, the PHA must submit a HUD-5837 indicating it will closeout its public housing program and there is no need for a separate “Repositioning Plan.”
If the transaction does not remove all remaining units, the PHA must demonstrate that it intends to pursue a reasonable and practical strategy to reposition all of its remaining public housing units Specifically, the PHA must develop a feasible repositioning plan that has been approved by its board of commissioners and reflects the specific repositioning tools (i.e. Section 18, RAD, a RAD/S18 blend), that the PHA plans to use to remove all remaining units; that it will not develop any additional public housing units under otherwise available Faircloth Authority; and that it will closeout its public housing program in accordance with PIH Notice 2019-13. The repositioning plan must be acceptable to HUD and must be submitted through the RAD Resource Desk prior to the submission of the RAD Financing Plan so that HUD can confirm the PHA’s eligibility for the Small PHA Blend. |
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| Posted: | 05/24/2022 |
| Question: | Can a PHA contribute Public Housing funds (i.e., Capital Funds, Operating Funds, Program Income) into the RAD budget, even though the property will include non-RAD units? |
| Answer: | Yes. The RAD Notice (Section 1.5.A) permits public housing funds to be used as a source of capital in the development budget to support conversion. Consistent with HUD’s approach to subsidy layering reviews, in the case of a PHA that will no longer have ACC units as a result of the pending or simultaneous closing, or have less than 50 units remaining and have initiated procedures to dispose of their final ACC units, when the PHA is contributing public housing funds in a conversion, there is no restriction on the amount of public housing funds that may be contributed to the Covered Project(s) through the conversion. In all other cases, HUD will apply a proportionality test to make sure that the funds contributed relative to the total project budget are proportional to the RAD units relative to the total units. In addition, the PHA must estimate and plan for costs for operating and maintaining its remaining public housing units (if any) until such units are also removed from public housing, as well as the closeout costs (e.g., audits, legal fees) described in PIH Notice 2019-13 and 2014-24 (as applicable). |
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| Posted: | 05/24/2022 |
| Question: | Can a PHA with more than 250 units utilize the RAD/Section 18 Small PHA Blend if it first repositions other public housing assets resulting in having 250 or fewer public housing ACC units? |
| Answer: | Yes. A PHA may utilize any of HUD’s repositioning strategies to decrease the number of public housing units under ACC to 250 (or fewer) units. As soon as the PHA has 250 or fewer units under ACC, and otherwise meets the Small PHA Blend eligibility criteria, it would be eligible for the Small PHA Blend option. |
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| Posted: | 05/24/2022 |
| Question: | How is “project” defined for the purposes of determining how many units are eligible for disposition under a blend? |
| Answer: | See PIH Notice 2021-07, 3.A.2.e. For purposes of calculating the number of eligible units that may be approved under Section 18, HUD considers the “Converting Project,” prior to consideration of the RAD/Section 18 blend, reflecting the public housing ACC units that would be removed from PIC through RAD and as defined in the RAD Notice (the Converting Project may be an AMP, multiple AMPs, or a portion of an AMP). For example, assume that a PHA has 100 ACC units in a garden-style apartment complex and a CHAP for 99 units with one unit in the converting project being a manager’s unit that will be excluded from the Housing Assistance Payment (HAP) Contract through RAD’s de minimis allowance. The proposed conversion includes hard costs in excess of 60% of HCC, qualifying the project for a RAD/Section 18 Construction blend with a mix of 60% RAD and 40% Section 18. The denominator would then be 100 units, allowing 40 units to qualify for Section 18 (40% of 100). Please note that since the blends provide for a maximum percent of units that can be approved under Section 18, when the percentage results in a non-whole number, HUD rounds down to the nearest whole number.
However, if on an identical 100-unit property only 60 units are in the Converting Project because the PHA had separately secured Section 18 approval for 40 units (e.g., they met the obsolescence test) or if 40 of the units were not public housing ACC units (e.g., they are unassisted units in an existing public housing mixed-finance development), only 24 units would be eligible for Section 18 under the RAD/Section 18 blend (i.e., 40% of 60).
Because of the many possible variations in project characteristics, HUD reserves the right to determine eligibility. Please check with the RAD Resource Desk.
Within the project, the RAD and Section 18 units do not need to be in separate buildings. It will be up to the PHA to determine which units within the blend are removed through Section 18 and which units are converted through RAD. Please note that the selection of units to be removed through Section 18 may impact the PHA’s eligibility for Asset Repositioning Fee (see question 16 below). Further, the distribution of RAD and non-RAD PBV units may impact the number of HAP contracts that will be used in the conversion. All RAD units will be under a RAD PBV HAP contract and any Section 18 units will be under a regular PBV HAP contract, so placing RAD and non-RAD units in each building may result in more HAP contracts (see 24 CFR 983.3 and PIH Notice 2017-21 Appx. II for the definition of “Project” in the PBV program, which determines what units might be included under a single RAD or non-RAD PBV HAP contract). |
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| Posted: | 05/24/2022 |
| Question: | In a blended transaction, must the RAD units all convert to PBV or can they convert to PBRA? And can the units that will be processed through Section 18 result in a PBRA contract? |
| Answer: | The units converting under RAD may convert either to PBV or PBRA (see Section 1.2 of the RAD Notice). Since the units processed under Section 18 will result in the issuance of new voucher funding to the PHA, currently there is only statutory authority for those units to result in a PBV contract. Although processed as one “transaction,” the RAD and non-RAD units will ultimately need to be under separate HAP contracts, even if both will be PBV: a RAD HAP for the RAD units (PBRA or PBV) with contract rents set per standard RAD rules and a separate regular PBV HAP or AHAP contract covering the units removed through Section 18 with contract rents set per standard PBV rules. |
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| Posted: | 05/24/2022 |
| Question: | In a RAD/Section 18 blend, are the units that will be disposed under Section 18 subject to RAD requirements for a Capital Needs Assessment, Environmental Review, Section 3, Davis-Bacon, and front-end civil rights reviews? |
| Answer: | The processing of the transaction and review of the Financing Plan will consider the entire Converting Project (the units that will be removed through both RAD and Section 18) and Covered Project (the post-conversion project with units that will be covered under the RAD HAP contract, non-RAD HAP contract(s), and any other units. Accordingly:
1. The entire Converting Project is subject to RAD’s requirement for a Capital Needs Assessment (see Section 1.4.A.1 of the RAD Notice)
2. The entire Converting Project will be subject to an environmental review, which will be confirmed as part of the RAD conversion (see Section 1.4.A.3 of the RAD Notice). PHAs do not need to complete a separate environmental review to satisfy the requirements of 24 CFR 970.13 for the units being disposed under Section 18
3. HUD will perform front-end civil rights reviews described in PIH/H 2016-17 for the entire Converting Project
4. Section 3 requirements for employing low-income individuals and contracting opportunities will apply to all of the Work on the Covered Project (rehab or construction) required by the RAD Conversion Commitment as part of the RAD conversion (see Section 1.4.A.15 of the RAD Notice)
5. Davis-Bacon will apply to all of the Work on the Covered Project (see Section 1.4.A.14 of the RAD Notice). |
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| Posted: | 05/24/2022 |
| Question: | Is the PHA eligible to receive Demolition Disposition Transition Funding (DDTF) and Asset Repositioning Fee (ARF) for the units that will be removed through Section 18? |
| Answer: | PHAs are eligible to receive DDTF, but only for those units transitioning under Section 18, not the RAD units, and only in accordance with 24 CFR part 905. The PHA may use the DDTF for any eligible purposes, including for augmenting the RAD rents of a future RAD conversion (see RAD Notice Section 1.6.B.5 and 1.7.A.5). DDTF is an add-on of Capital Funds in the year following the removal of the Section 18 units. See also Public Housing Funds and Repositioning document and DDTF/ARF summary chart for more information, including eligible uses of DDTF (Capital Funds) once all units are removed from ACC.
PHAs may be eligible to receive ARF.ARF is part of Operating Funds as described in 24 CFR 990.190(h). ARF eligibility shall be in accordance with 24 CFR part 990. PHAs are eligible for ARF for units with Section 18 approval for an entire building. If units do not meet this criterion (i.e., because the RAD and Section 18 units are in the same building), the PHA is not eligible for ARF for the units removed under Section 18.
Within a “converting project”, the RAD and Section 18 units do not need to be in separate buildings. It will be up to the PHA to determine which units within a blend are removed through Section 18 and which units are converted through RAD. However, the selection of units to be removed through Section 18 may impact the PHA’s eligibility for ARF.
ARF will be incorporated into the Operating Fund subsidy calculation for the PHA for the period described in 990.190(h). See also Public Housing Funds and Repositioning document and DDTF/ARF summary chart for more information, including eligible uses of ARF (Operating Funds) once all units are removed from ACC. |
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| Posted: | 05/24/2022 |
| Question: | Is there any flexibility with regard to the Small PHA Blend requirement in PIH Notice 2021-07 which states: “Any PBV contract created under this subparagraph must be administered by an HCV contract administrator with at least 250 HCV units under its HCV ACC prior to creation of such PBV contract?” |
| Answer: | PHAs may request to waive this requirement by following the procedures in PIH Notice 2018-16 and presenting good cause justification. In considering such requests, HUD is likely to consider whether there is another PHA that administers more than 250 HCV ACC units with jurisdiction and, if so, whether that PHA is unwilling or unable to administer the additional PBV assistance. |
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| Posted: | 05/24/2022 |
| Question: | PIH 2021-07 states that RAD/Section 18 blends will result in the “placement of a long-term use agreement at the Covered Project.” Has HUD made available the form of Use Agreement that will be used for the units approved under Section 18? |
| Answer: | Yes. A “RAD/Section 18 Blend Rider” to the RAD Use Agreement that will apply to the PBV units that are approved under Section 18 is available on the RAD Resource Desk. The rider extends all requirements of the RAD Use Agreement to the non-RAD PBV units, except for those items where HUD lacks the statutory authority to extend. Specifically, the rider states that the provision contemplating a future transfer of assistance in the event of a default is not applicable to the non-RAD PBV units since non-RAD PBV units are not subject so any of the transfer provisions under RAD. Further, the rider identifies that the requirement to renew the HAP contract while the Use Agreement is in place is not applicable because HUD does not have the authority to require the PHA and owner to perpetually renew the non-RAD PBV HAP contract. Nevertheless, the parties can have the rider reflect that it is the intention of the parties that the non-RAD PBV HAP contract shall be renewed concurrently with the RAD HAP contract upon the completion of the initial term and renewal term and therefore the use restrictions in the rider shall remain in effect until a release is recorded. |
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| Posted: | 05/24/2022 |
| Question: | PIH Notice 2021-07 requires that “the aggregate number of replacement units (RAD and project-based Section 8) must meet the RAD “substantial conversion of assistance” requirements.” Can you provide examples? |
| Answer: | See PIH Notice 2021-07, 3.A.2.e HUD requires that the PHA will replace the units proposed for Section 18 disposition with PBV units. The totality of replacement units (RAD units + regular PBV HAP contract for the Section 18 units) must fall within the RAD de minimis allowance as defined in Section 1.4.A.4 of the RAD Notice. For example, for a 100-unit property, excluding the exceptions for long-term vacant units, reconfigured apartments, or social service units, the de minimis unit total could not exceed 5 units or 5%. As a result, a PHA could take a 100-unit ACC project with hard costs in excess of 60% of HCC (qualifying the project for a 60/40 RAD/Section 18 construction blend) and:
1. Replace 100 units, with 60 under RAD HAP contract and 40 under a regular PBV HAP contract.
2. Replace 95 units, with 55 under RAD HAP contract and 40 under a regular PBV contract (the 5 de minimis units are not replaced)
3. Replace 100 units, with 55 under RAD HAP contract and 45 under a regular PBV contract (including 5 de minimis units that are backfilled with regular PBVs funded from the PHA’s existing Housing Choice Voucher Budget Authority). |
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| Posted: | 05/24/2022 |
| Question: | RAD and Section 18 normally have different requirements and rights for residents (consultation, relocation, right to return)? Which ones apply? |
| Answer: | The RAD relocation requirements described in PIH/Housing Notice 2016-17 (the RAD Fair Housing, Civil Rights, and Relocation Notice) shall apply to residents of the Section 18 units, in lieu of the relocation requirements under 24 CFR part 970, in accordance with 84 Fed. Reg. 54630 (Oct. 10, 2019) and the Section 1.5.B.2.a of the RAD Notice. All of the RAD relocation requirements shall apply to residents of the Section 18 units, including, but not limited to, the resident notice and meeting requirements, the right to return, and relocation assistance and payments. The PHA may not provide different relocation rights and benefits to residents of the project based on whether they reside in a RAD unit or a Section 18 unit.
All residents of the Converting Project have a right to remain in or return to the project-based replacement units consistent with Section 6.1 of the RAD Relocation Notice (H/PIH 2016-17). The RAD Relocation Notice applies to non-RAD PBV units at the Covered Project, as further explained in the Section 1.5.B.2.a of the RAD Notice. Per Section 1.6.C.1 of the RAD Notice, “current households cannot be excluded from occupancy at the Covered Project based on any rescreening, income eligibility, or income targeting.” This also applies to current public housing residents of the Converting Project that will reside in non-RAD PBV units placed in a project that contains RAD PBV units or RAD PBRA units.
All residents that return to the non-RAD PBV units will have the same resident rights as the residents in the RAD PBV units. A list of resident rights that apply to the non-RAD PBV units is fully described in the RAD Notice. A summary listing can be found in Table 1 of Att. 1D of the RAD Notice (p. 147-148), which lists the resident rights that must be included in the PHA Plan and the sections of the RAD Notice where you can locate detailed information about each resident protection. It states by way of summary that “tenant protections for RAD PBV residents apply to non-RAD PBV residents of the same Covered Project with the exception of Choice Mobility. Standard PBV Choice Mobility requirements apply to non-RAD PBV residents.”
Both RAD (Section 1.8 of the RAD Notice) and Section 18 (24 CFR 970.9) require consultation with residents regarding the proposed actions. Under a RAD/Section 18 blend, these discussions should occur at the same time within the same meetings. PHAs can generally satisfy the Section 18 consultation requirements for impacted residents and with the resident organizations by complying with RAD consultation requirements (i.e., by providing notification letters and resident meetings required by the RAD notice). However, Section 18 also requires the PHA to consult with the Resident Advisory Board (RAB). |
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| Posted: | 05/24/2022 |
| Question: | RAD has waived certain rules for project-basing vouchers. How do I determine which RAD waivers and alternative requirements apply to Blends? |
| Answer: | The units converted under RAD are subject to the waivers and alternative requirements for project-basing laid out in the RAD Notice. RAD waivers apply to non-RAD PBV units, including the Section 18 units in a Blend, that are part of a RAD Covered Project only if such waivers are explicitly provided in the RAD Notice. An explicitly provided waiver will contain a statement such as “any non-RAD PBV units located in the same Covered Project shall be subject to the terms of this provision.” Specifically, HUD has extended RAD waivers and alternative requirements related to resident rights as well as the waiver of the PBV requirements under section 8(o)(13)(C)(ii) of the Act and 24 CFR § 983.57(b)(1) and (c)(2) having to do with deconcentration of poverty and expanding housing and economic opportunity, for the existing site (see RAD Notice § 1.6.A.4). Many RAD waivers do not extend to the Section 18 units that will result in non-RAD PBV assistance through a blend. For instance, these units are subject to regular PBV rules during the pre-HAP contract phase relating to competitions, inspections, and use of an AHAP, and during the post-HAP contract phase relating to contract rent increases and choice mobility. Regular PBV rules may be found in 24 CFR Part 983 and the Housing Opportunity Through Modernization Act (HOTMA) Federal Register (FR) Implementation Notices at 82 FR 5458 (January 18, 2017), 82 FR 32461 (Jul. 14, 2017). |
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| Posted: | 05/24/2022 |
| Question: | How does HUD determine what is a high-cost area? |
| Answer: | See Footnote 5 in PIH Notice 2021-07, 3.A.2.e.1(a) High-cost areas are defined as those where the HUD-published HCC exceeds 120% of the national average. For the purposes of this calculation – both the national average and the HCC for each jurisdiction – HUD uses the average of the 2-BR HCC for Elevator and Walk-up structures. The resulting list of high-cost areas is available here: https://www.radresource.net/output.cfm?id=Highcost. |
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| Posted: | 05/23/2022 |
| Question: | What eligibility criteria apply to the RAD/Section 18 Construction Blend? |
| Answer: | See PIH Notice 2021-07, 3.A.2.e.1. Any project that meets the following criteria will be approved under the Construction Blend:
1. The PHA is converting a portion of the public housing units within a Converting Project and is replacing the units proposed for disposition with project-based Section 8 assistance within the Covered Project, as the terms “Converting Project” and “Covered Project” are defined in the RAD Notice (H-2019-09 PIH-2019-23 (HA)). The aggregate number of “hard” replacement units (RAD and PBVs) in the Covered Project must meet the RAD “substantial conversion of assistance” requirements (see question 8 for more detail).
2. Units in the Covered Project must be either newly constructed or rehabilitated without the use of 9% Low Income Housing Tax Credits (LIHTCs).
3. Hard construction costs, including general requirements, overhead and profit, and payment and performance bonds, must meet one of the following construction thresholds described below. Construction thresholds are determined as a percent of the Housing Construction Costs (HCC) published by HUD for a given market area. The level of proposed rehab or construction in the RAD Financing Plan will determine whether the transaction qualifies for a blend and which tier it falls under.
An 80% RAD / 20% Section 18 blend requires a HCC threshold of >30%.
A 60% RAD / 40% Section 18 blend requires a HCC threshold of >60%.
A 40% RAD / 60% Section 18 blend requires a HCC threshold of >90%.
A 20% RAD / 80% Section 18 blend requires a HCC threshold of >90% plus a high-cost area.
Each of the blends listed above reflect the maximum number of units in a converting project that may be approved under Section 18. The PHA may choose to use Section 18 for a lower percentage of units and a higher percentage through RAD.
For example, if a PHA is proposing to complete $50,000 per unit in rehabilitation, equating to 46% of HUD’s published HCC for the respective market area, HUD will approve up to 20% of the units at the project under Section 18 Disposition, at the PHA’s discretion.
HUD has created a Workbook to Test HCC Threshold: For RAD Section 18 Blends and Opportunity Zone Rent Increases (available here: https://www.radresource.net/output.cfm?id=0613WB) that PHAs can use to assess whether the proposed rehab/construction level in a transaction qualifies for a RAD/Section 18 Construction Blend. |
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| Posted: | 05/17/2022 |
| Question: | What can be included in the RAD scope of work to measure against Housing Construction Costs for the Construction Blend? |
| Answer: | For purposes of calculating aggregate construction costs vis-à-vis various HCC thresholds, HUD will consider the combined per unit construction costs of the overall project budget as identified by the PHA in the RAD Financing Plan. The project may include a mixture of new construction and substantial rehabilitation and may include other units besides the converting units (e.g., through the development of new units). However, if the project includes units that have already been approved and will be removed from public housing inventory under the Section 18 physical obsolescence criteria (Section 4.A.1 of PIH Notice 2021-07 HA), HUD will exclude the costs equal to the amounts necessary to equal the Section 18 obsolescence threshold when calculating eligibility for the blend. HUD has also developed an Excel tool available on the RAD Resource Desk (https://www.radresource.net/output.cfm?id=0613WB) that PHAs can use to assess whether the scope of work meets any of the thresholds for the Construction Blends and whether the site is in a high-cost area. |
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| Posted: | 05/17/2022 |
| Question: | What eligibility criteria apply to the RAD/Section 18 Small PHA Blend? |
| Answer: | See PIH Notice 2021-07, 3.A.2.e.2. For any project that meets the following criteria HUD will approve up to 80% of units under Section 18 and 20% will convert under RAD.
1. The PHA must have 250 or fewer public housing units under its ACC.
2. The PHA is converting a portion of the public housing units within a Converting Project and is replacing the units proposed for disposition with project-based Section 8 assistance within the Covered Project, as the terms “Converting Project” and “Covered Project” are defined in the RAD Notice (H-2019-09 PIH-2019-23 (HA)). The aggregate number of “hard” replacement units (RAD and PBVs) in the Covered Project must meet the RAD “substantial conversion of assistance” requirements. The Converting Project may constitute the PHA’s entire public housing inventory (if the Covered Project will qualify as a single project defined in the RAD Notice) or may be one of multiple projects in the PHA’s inventory.
3. The PHA must submit to HUD a repositioning plan approved by the PHA’s board of commissioners and acceptable to HUD that removes all its public housing ACC units and will result in the closeout of the PHA’s Section 9 public housing program and termination of its Section 9 ACC. The repositioning plan must reflect that the PHA will not develop additional public housing units under otherwise available Faircloth authority. After removing all units as described in its repositioning plan, PHA must follow close-out procedures under PIH 2019-13.
4. Any PBV contract created under this blend must be administered by an HCV contract administrator with at least 250 HCV units under its HCV ACC prior to creation of such PBV contract.
Note that as an alternative means of closing out under the requirements of PIH Notice 2019-13, PHAs may closeout their public housing programs through a Voluntary Transfer of their public housing program under PIH Notice 2014-24. After a PHA has removed all of its public housing units through Section 18, RAD, or another repositioning tool, the Divesting PHA would not have any public housing units to transfer to the Receiving PHA, but would transfer all remaining liabilities and assets (Faircloth authority, remaining Capital and Operating Funds, including Reserves). |
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| Posted: | 11/30/2021 |
| Question: | If a PHA is considering a RAD/Section 18 blend for a property, and that property has an over-income resident, would the over-income resident be moved back into a RAD unit or a Section 18 unit? What's the rent subsidy source for the original resident who is over-income? Do they still qualify for rental subsidy under RAD and/or Section 18 if they are over-income? |
| Answer: | According to the RAD Relocation Notice Section 6.2, “any public housing or Section 8 assisted resident that may need to be relocated temporarily to facilitate rehabilitation or construction has a right to return to an assisted unit at the Covered Project once rehabilitation or construction is complete. The right to return is not a right to any specific unit in the Covered Project.” The Covered Project refers to both the RAD and Section 18 units in a Blend, so a relocated resident could be moved back into a unit under the RAD or Section 18 HAP Contract. Regardless of their income, the resident has the right to return to a properly sized unit.
An over-income tenant would not receive subsidy but would be placed on and/or remain under the applicable HAP Contract, as described in Section 1.6.C.9 of the RAD Notice. This provision applies to both the RAD and Section 18 units. If the tenant’s income drops and they are eligible for HAP subsidy, their subsidy source would depend on which unit they moved back to. |
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| Posted: | 12/09/2020 |
| Question: | If a PHA closes on a RAD/Section 18 Blend transaction on December 15, 2020, I am pretty sure that its 2021 Capital Fund grant will include funds for the 75% of the units that went RAD. Will the PHA’s 2021 Capital Fund grant include funds for the 25% of the units that went PBV via Section 18?
In the same scenario, will HUD fund the Section 8 payments in 2021 for the 25% of the units that went PBV, or will HUD not fund the Section 8 payments for the 25% units until January 2022? |
| Answer: | The RAD units will follow regular RAD funding procedures. As such, a property with a 1/1/21 HAP effective date will receive Public Housing Operating and Capital funds in 2021 and use those funds to pay rental assistance to the property in CY 2021. With respect to the section 18 units:
1) The PHA will receive Capital Funds for those units in the FY 21 grant if the units were in public housing as of 6/30/20. The PHA will subsequently receive DDTF for these units for five years. None of these funds may be used on the converted property
2) The PHA will receive Tenant Protection Voucher (TPV) funding, which it will use to make payments under the non-RAD PBV HAP contract once it is effective. RAD funding procedures, including the use of Rehab Assistance Payments (RAP), would not apply to these units. |
|
| Posted: | 10/28/2020 |
| Question: | How can I forecast the income my project is eligible to receive in Rehab Assistance Payments? |
| Answer: | Rehab Assistance Payments are provided under the HAP contract to provide subsidy payments to the property during the period of rehab. Units are only eligible for Rehab Assistance Payments if they were eligible for Operating Subsidy prior to conversion (i.e., included in “Eligible Unit Months” in the Form 52723 for the Calendar Year of conversion) and are uninhabitable during the period of rehab or construction. Rehab Assistance Payments are sized by HUD based on the Operating Fund and Capital Fund subsidy that formed the basis of a property’s RAD rent. For example, a property has a RAD rent of $500 PUM, which was based on Operating and Capital subsidy of $300 and tenant rents of $200. The HAP contract would include a Rehab Assistance Payment of $300 (adjusted by the OCAF, if the rents were due an OCAF adjustment). The PHA can find these amounts in the PUM Capital Fund, PUM Tenant Rents, and PUM Op Fund columns of the applicable RAD Rents spreadsheet, available on https://www.hud.gov/RAD/library/notices. |
|
| Posted: | 06/08/2020 |
| Question: | The RAD Conversion Commitment requires that any transaction where the Work includes new construction or substantial rehabilitation, the PHA and/or Project Owner must engage a qualified general contractor who shall obtain either (i) a payment and performance bond from a properly licensed surety, which bond and surety shall be acceptable to HUD, or (ii) a letter of credit, acceptable to HUD. How does HUD define “substantial rehabilitation” for the purposes of determining when a payment and performance bond or letter of credit is required? |
| Answer: | For purposes of determining when a payment and performance bond or letter of credit is needed, HUD defines substantial rehabilitation as hard construction costs, including general requirements, overhead and profit, and payment and performance bonds, in excess of 60% of the Housing Construction Costs as published by HUD for a given market area. |
|
| Posted: | 05/21/2020 |
| Question: | How will HUD handle delays due to COVID-19 in the completion of construction required by the RAD Conversion Commitment (RCC), including increases in costs, modification of resident relocation? How will it approve periods for rehab assistance payments? |
| Answer: | HUD will approve extensions to the rehab period and rehab assistance payments. Such requests can be made through the RAD Resource Desk. Note that the RAD construction deadlines do not supersede other parties’ requirements, so development teams should also consult with their lenders, investors, and other stakeholders as applicable when modifying the construction schedule. Increases in costs should be reflected on the sources and uses log on the RAD Resource Desk. HUD encourages PHAs to maintain routine communication with residents whose length of relocation may be impacted and to alert HUD if relocation plans change such that resident relocation will exceed 12 months. |
|
| Posted: | 05/21/2020 |
| Question: | Public Housing Authorities (PHAs) and their development teams are currently implementing renovations and tenant moves to facilitate construction. How should property owners reconcile the construction schedule with COVID-19 concerns? |
| Answer: | PHAs and their Rental Assistance Demonstration (RAD) development partners should consider the health and well-being of the residents and the public as the first priority and use CDC guidance and guidance from state and local health officials. In doing so, RAD development teams should consider the impact of their renovation activities on the potential to exacerbate or mitigate exposure to the virus, particularly among vulnerable populations. Every construction project is different - in the vulnerability of the residents, the extent of tenant relocation, the extent of construction, the timing of construction and the deadlines created by natural conditions or financing sources. In all cases, development teams should follow the instructions of applicable governmental authorities (such as a government-issued shelter-in-place or similar order). |
|
| Posted: | 03/25/2019 |
| Question: | What is the trigger for Davis-Bacon and Section 3 under a RAD conversion? |
| Answer: | Davis-Bacon and Section 3 are triggered by any any rehabilitation or new construction performed as part of the “Year One” repair schedule defined by the RPCA, Financing Plan and Rad Conversion Commitment. In addition, and substantial repairs undertaken prior to conversion (i.e., pre-conversion rehabilitation with Capital Funds). |
|
| Posted: | 03/21/2019 |
| 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: | 01/25/2019 |
| 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: | 01/25/2019 |
| Question: | Does RAD have a standard for the reasonableness of Architectural and Engineering (A/E) fees? |
| Answer: | For projects subject to Subsidy Layering Reviews, the RAD SLR has a threshold of 5% of hard construction costs for architectural fees. Engineering fees, however, should be reported separately, as should construction management, permitting, and commissioning services. For any amount above 5%, the PHA would need to provide documentation that such amounts are consistent with local practices, including allowable amounts under the applicable State Qualified Allocation Plan (QAP). |
|
| Posted: | 01/25/2019 |
| Question: | I'm considering a RAD transaction, versus pursuing demolition-disposition through the SAC. It appears that, under RAD, approval of new financing is simpler. However, one advantage that the SAC provides (or used to provide) was the possibility of Tenant Protection Vouchers,that had the effect of increasing a PHAs voucher pool and providing the means for vouchers to be deployed via PBV using a true FMR-based payment standard. However, I understand that RAD brings with it no corresponding bonus of "extra" vouchers (please confirm). |
| Answer: | You are correct that, under RAD, a PHA does not receive TPVs. See Notice PIH-2012-07 for procedures for authorizing TPVs under demolition / disposition.
Note that the RAD-HAP contract does begin to fund at construction closing and funds throughout construction. Some PHAs intend to use that rental income to assist with temporary relocation costs for residents. Those PHAs must ensure that their relocation plan complies with all requirements of the Uniform Relocation Act. |
|
| Posted: | 01/25/2019 |
| Question: | My PHA previously met the standard for accessibility across the public housing portfolio. However, now that we are converting to RAD, there are individual projects that exceed the standard and some that do not meet the standard (but, again, overall we are in compliance). When we convert to RAD, will we be “grandfathered” in, or will we have to have all projects meet the accessibility standards on their own? |
| Answer: | Each project covered under a HAP contract must meet the 5%/2% accessibility standards under Section 504 if the project is undergoing substantial alterations. |
|
| Posted: | 01/25/2019 |
| Question: | The energy savings provision of the new HUD RAD notice (Attachment 1C, pages 116-118 of the Notice REV-2) allows PHAs to apply 75% of the energy savings back to the contract rent. (1) When can a PHA apply the energy savings?; 2) How does it get documented?; 3) Can the PHA take the energy savings in the first year of the new HAP? |
| Answer: | (1) The Notice provides that, for rehab projects, the energy savings will result in an increase to the post-rehab rents (at the RAD closing the PBRA HAP contract will specify both pre-rehab and post-rehab rents). Thus, you must complete the rehab before the energy savings can be applied. For new construction, the energy savings can be applied once construction is completed.
(2) The Notice discusses documentation requirements at the bottom of page 116 and top of page 117. "PHAs can submit UA projections performed by a professional engineer, based on the project’s plans and specifications that, at a minimum, take into account specific factors including, but not limited to, unit size, building orientation, design. and materials, mechanical systems, appliances, and characteristics of the building location. The projections must be submitted in the RAD UA Projections Template." Note that approval is at HUD's discretion.
(3) See item (1) regarding timing of the increase in RAD Contract Rent. |
|
| Posted: | 01/25/2019 |
| Question: | Under what circumstances can units covered by a CHAP Award be considered "Units Undergoing Modernization"? |
| Answer: | Units in a project with CHAP approval, which the PHA plans to modernize, that are vacant because a PHA has not reoccupied them in preparation for modernization pursuant to a for RAD conversion, can be considered as “Units Undergoing Modernization,” provided they comply with 24 CFR 990.145 (excerpted below). To be eligible, such vacant units must need to be vacated for the modernization work to occur. Such vacant units may be categorized as undergoing modernization for a maximum of two years (24 months) prior to the RAD conversion (HAP Effective Date). The units must be approved by the Field Office, and the unit status correctly reflected in PIC. The RAD conversion and planned modernization must be in: 1) A HUD approved PHA Annual Plan for non-qualified PHAs (24 CFR 903); 2) A HUD approved 5-Year Plan for qualified PHAs (24 CFR Part 903) (if no Capital Funds are being used as part of the modernization, a narrative description of the work, including the projected start and completion date, should be included in the Capital Improvements section of the Plan); or 3) a HUD approved Capital Fund Plan (24 CFR 905.300) if Capital Funds are also being used for modernization
Units converting to RAD that will not be modernized are not eligible to be categorized as Units Undergoing Modernization.
§ 990.145 Dwelling units with ap¬proved vacancies.
(a) A PHA is eligible to receive oper¬ating subsidy for vacant public housing units for each unit month the units are under an ACC and meet one of the fol¬lowing HUD-approved vacancies:
(1) Units undergoing modernization. Vacancies resulting from project mod-ernization or unit modernization (such as work necessary to reoccupy vacant units) provided that one of the fol¬lowing conditions is met:
(i) The unit is undergoing moderniza¬tion (i.e., the modernization contract has been awarded or force account work has started) and must be vacant to perform the work, and the construc¬tion is on schedule according to a HUD-approved PHA Annual Plan; or
(ii) The unit must be vacant to per¬form the work and the treatment of the vacant unit is included in a HUD-approved PHA Annual Plan, but the time period for placing the vacant unit under construction has not yet expired. The PHA shall place the vacant unit under construction within two federal fiscal years (FFYs) after the FFY in which the capital funds are approved. |
|
| Posted: | 01/25/2019 |
| Question: | What is the process for clearing critical repairs that have been completed? |
| Answer: | The RAD Conversion Commitment contains an exhibit (Ex. G) for all critical repairs associated with the RAD conversion and states that they must be completed prior to closng. The Owner must provide a written certification that all critical repairs listed in Exhibit G of the RCC have been completed prior to closing. This certification can be made via the Consolidated Owner Certification template which is available on www.radresourc.net > Contracts & Closing Documents. [Updated 5.30.14] |
|
| Posted: | 01/25/2019 |
| Question: | What level of work is considered "new construction" for a RAD project when rehab is being done? For example, would a PHA be required to perform an FHEO review for "new construction" if it is gut-rehabbing all of the units? |
| Answer: | For the purposes of RAD, new construction refers to the construction of entirely new structures and/or significant extensions of existing structures. Substantial rehabilitation of an existing structure that may include the demolition of units and walls but that will re-use the existing foundation is not considered new construction. |
|
| Posted: | 01/24/2019 |
| Question: | Are the existing EPC incentives maintained under the new RAD Section 8 rent? |
| Answer: | Yes. The RAD rents for each public housing project incorporate any existing Frozen Rolling Base (FRB), Add-On Subisdy (AOS), and Rate Reduction Incentive associated with an existing EPC that were in place at the time of each project’s “RAD rent base year” – FY 2012 for properties awarded under the original 60,000 unit cap or FY 2014 for properties awarded as a result of the increase of the cap to 185,000 units. The methodology for calculating RAD rents includes the Operating Subsidy Utility Expense Level (UEL) and Energy Add-on so that projects retain the value of existing EPC incentives when they convert through RAD. The PHA should consider the impact of essentially switching from the AOS to the Frozen Rolling Base incentive as part of its RAD conversion.
However, due to incomplete administrative data, HUD did not incorporate the Resident Paid Utility Incentive (RPU) into the rent levels posted in the RAD Application and Tool. As a result, for projects proposed for RAD conversion with an existing EPC using the RPU, HUD will allow an amendment to the posted RAD rent to add the Per Unit Month (PUM) EPC Resident Paid Utility Incentive. If the PHA has the RPU incentive, they should notify their Transaction Manager who will work with PIH to determine an accurate incentive amount.
For additional details on the specific line items utilized in calculating the posted RAD rents, see Attachment 1C in PIH Notice 2012-32 REV 2. |
|
| Posted: | 01/24/2019 |
| 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: | 01/24/2019 |
| 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: | 01/24/2019 |
| Question: | How can a PHA determine how many units under HAP contract are eligible for Rehab Assistance Payments? |
| Answer: | During the period of rehabilitation or construction as identified in the HAP Contract, the maximum number of units for which a Project Owner can receive RAD Rehab Assistance Payments is limited to the number of units eligible for Operating Fund subsidy prior to conversion. The number of units eligible for Operating Fund subsidy prior to conversion is equal to the number of Total Eligible Unit Months (EUMs) on the project’s Form-52723 submission (Section 2, Column B, Row 15.) divided by twelve and rounded down to the nearest whole number. For conversions where only a portion of a PIC Development has converted, the number of EUMs associated with the converted portion can be derived from the Initial Year Funding Tool (See “2a. Operating Fund” worksheet, cell R28). |
|
| Posted: | 01/24/2019 |
| Question: | How is the ESCo guarantee impacted when an EPC is amended as a result of a conversion of a portion of units covered under an EPC? |
| Answer: | Any changes to an ESCo guarantee are to be determined between the PHA and their ESCo. ESCO guarantees are not required for an EPC so if changes to it do occur they do not affect the conversion process.
HUD is committed to providing PHAs with ongoing assistance in understanding RAD’s intersection with green and energy efficiency objectives. As additional best practices, success stories, and helpful decision frameworks are identified, HUD will maintain those resources on the RAD web site for interested parties. HUD also strongly encourages PHAs and partners to discuss creative ideas around maximizing energy and water efficient improvements through RAD. We look forward to continued dialogue with partners around this and other related issues.
For questions or additional feedback, please contact us at the RAD mailbox at RAD@hud.gov, or at the EPC Policy mailbox at PHI_EPC_Policy@hud.gov. |
|
| Posted: | 01/24/2019 |
| Question: | If I have a RAD award and my project is covered under an existing EPC, what are the options available in terms of satisfying that EPC obligation? |
| Answer: | Essentially, there are two basic options:
Option A: Pay off the EPC debt, either with proceeds from the RAD conversion (say, mortgage proceeds or tax credit equity) or through other eligible uses, e.g., existing Operating or Capital Fund accounts. Some EPC contracts require EPC lender approval to pay off (or pay down) any debt.
Or
Option B: Assume the debt and continue to make the EPC debt payments post-conversion with projects or other proceeds. If the converting project will assume the debt, the lender will have to agree to subordinate all interests to the RAD Use Agreement. Further, if, in addition to assuming the EPC debt, you plan on taking on new debt as part of the RAD conversion, the EPC lender and the non-EPC lender will need to negotiate over which position each will take, which often pushes the PHA towards paying off the EPC debt. Sometimes, a PHA will assume the obligation of the existing EPC debt but with non-program and non-project funds, depending on the existing EPC contractual provisions,
Either of these options must be reflected in a PHA’s Financing Plan submission. Where the debt will be paid down or paid off, the debt would be included in the development budget. Where the debt will be assumed, HUD will underwrite the transaction to ensure there is adequate cash flow to continue debt service payments.
HUD recommends a PHA consult with legal and financial advisors, the EPC lender and the new first mortgage lender (if applicable), to determine which approach will work best for the PHA and the project. HUD also encourages PHAs to work with ESCos ealy in the process to develop options and reach out to the OFO Energy Center at OFOEnergyCenter@hud.gov for comment. |
|
| Posted: | 01/24/2019 |
| Question: | We converted to PBV and units were vacated due to rehab and thus we are eligible to receive Rehab Assistance Payments (RAP). How do we report the use of the RAP funds in VMS? |
| Answer: | The VMS Users Manual instructs PHAs to report Rehab Assistance Payments in the RAD 1 HAP Expense field in VMS. PHAs should not report the units as leased. |
|
| Posted: | 01/24/2019 |
| Question: | What do I need to submit to HUD if I am converting a property covered under an EPC? |
| Answer: | Where the PHA will pay-off or assume all of the EPC debt as part of the conversion, the PHA will need to notify of its intent. The PHA will draft a letter from the Executive Director to the Field Office (copying the Transaction Manager and Energy Center) formally requesting HUD to end the EPC incentives at the time of conversion and describing the PHA plan to address EPC debt (i.e. Pay off or assume). After conversion, the Field Office will finanlize the cessation of EPC incentives through a letter to the PHA Executive Director. However, where a portion of the EPC will remain following the conversion, HUD will need to amend the EPC approval letter. To do this, the PHA must propose the amount to be paid off or assumed so as to ensure that the project’s conversion does not increase the risk of default on the remaining EPC loan and, for partial AMP conversions, determine the appropriate updates to the project’s Operating Subsidy forms (HUD 52722, 52723). This information will be submitted to the Energy Center, in the format requested, along with the supporting documents delineated in Appendix A, the PHA is highly encouraged to engage their ESCo in developing this submission. The Energy Center will review the submission and if it determines the PHA proposal to be accurate, the Energy Center will create a draft approval letter, which PHAs must submit with their Financing Plan. After closing, HUD will finalize the amendment to the EPC approval letter. |
|
| Posted: | 01/24/2019 |
| Question: | Where I am converting a project that is part of a larger EPC, and I am proposing to pay down the project’s EPC debt, how will I determine the proportionate amount that must be addressed as part of the conversion? |
| Answer: | HUD’s primary interest is to ensure that a converting property addresses, at a minimum, the debt proportionate with the amount of savings the project had been projected to achieve in the original EPC approval so that once the property is converted and removed from the public housing inventory, the PHA’s remaining EPC remains financially viable. Accordingly, the information that PHAs must submit must clearly show the savings that were projected for the converting project, especially when it is not adequately presented in the EPC approval letter. HUD reserves the right to require additional debt treatment in the event that the remaining EPC would fail to meet the EPC statutory and regulatory standards.
Note that the EPC lender is likely to also evaluate the debt that should be addressed as part of the conversion and may require a different amount than HUD calculates. Notwithstanding the requirements of an EPC lender, PHAs must comply with HUD’s requirements. |
|
| Posted: | 07/30/2018 |
| Question: | If I am using both the de minimus reduction and the 75%/25% RAD/Section 18 blend provisions on a RAD transaction, do I need to submit the FHEO Change in Unit Configuration review? All reduced units will be replaced by other PBV units and Tenant Protection Vouchers (TPV), so the number of low-income dwelling units is the same. |
| Answer: | If all of the reduced units are being replaced with project-based assistance, an FHEO Change in Unit Configuration review is not needed. |
|
| Posted: | 10/14/2014 |
| Question: | Is a RAD Property Condition Assessment (RPCA) required on a new construction or substantial renovation transaction? |
| Answer: | A RPCA is required for all RAD transactions, except the following: 1) New Construction; 2) Gut Rehab (essentially, down to the stud); or 3) Recently modernized or constructed buildings (based on the recommendation of the HUD RAD Transaction Manager and approval by the RAD Team Lead). However, the RPCA Excel tool is still required to size the reserve for replacement deposit on all sub-rehab transactions, with the exception of “gut rehabs”. “Gut rehabilitation” is defined as “removal/replacement of all or substantially all interior finished surfaces”.
|
|
| Posted: | 09/08/2014 |
| Question: | If a PHA has accessibility improvements identified in the PCA, can it perform that work post-closing as part of the scope of immediate repairs? |
| Answer: | Critical repairs are repairs that must be done on an accelerated schedule, including health and safety issues (such as an improperly vented gas appliance). Note that identified accessibility modifications that pose imminent health and safety risks, may be considered critical repairs. All critical repairs must be completed prior to the RAD closing. If your property has a critical repair that you believe cannot be completed prior to RAD closing due to time constraints, please discuss this with your RAD Transaction Manager who may permit the repair to be moved into rehab as long as it can be demonstrated that doing so does not present an immediate health or safety hazard to residents. Rehab items also must be done, but the schedule is governed by the rehab provisions of the RAD Conversion Commitment. Year One items typically reflect systems or components that were functioning at the time of the inspection and are anticipated to require replacement in the first year. Whether and when these are done will be up to the property owner. A typical example would be a 20 year roof that is not leaking but that either has reached 20 years of age or will reach 20 years of age within the first year after the closing. The Reserve for Replacement would contain sufficient funds to pay for the roof replacement, and the timing of the roof replacement would be up to the owner. |
|
| Posted: | 07/29/2014 |
| Question: | I am pursing a 2nd component conversion. Under the wording of the new PBV Final Rule, I am unclear if the transaction will be subject to Davis Bacon wage rates. Can you please confirm? |
| Answer: | In the June 25, 2014 final rule, HUD clarified the reference to statutory labor standards provisions that are applicable to assistance under the PBV program. The Final Rule states that when the nature of the work planned to be performed prior to execution of a Housing Assistance Payments (HAP) contract, or after HAP contract execution within such post-execution period as may be specified by HUD, constitutes development of the project, statutory Davis-Bacon requirements may apply to existing housing (which is not subject to an agreement to enter into a housing assistance payments contract, or AHAP). The Department is preparing additional guidance to clarify when Davis Bacon requirements apply to existing PBV housing, including 2nd Component RAD transactions. In the meantime, we offer the following general rule of thumb: if the project will undergo rehabilitation in connection with the RAD conversion (either pre or post HAP contract execution), the development team should budget assuming Davis Bacon wage rates will apply. |
|
| Posted: | 06/02/2014 |
| Question: | A PHA receives a CHAP award and, because of the scope of repairs, chooses not to re-fill vacancies, waiting instead until conversion to make repairs. How would these units be treated under the Operating Fund Program for the period prior to conversion? |
| Answer: | Units vacant for RAD can be considered as “Under Vacant for Modernization” per the 990 regulation. For 2014, the RAD conversion would have to be in the PHA Plan. The months in 2013 during the reporting period when the unit was vacant for RAD purposes must be reflected in PIC as a unit status change. Additionally, if it is intended that the unit receive funding in 2014 as “Unit Vacant undergoing Modernization” but the current eligibility in the HUD-52723 indicates the unit as simply vacant then a revision will need to be submitted. The revision deadline for 2014 is June 27th. The PHA can also reference the Notice PIH 2011-7 Guidance IMS/PIC Development |
|
| Posted: | 04/29/2014 |
| Question: | I am a PHA with a CHAP and would like to complete some repairs prior to the closing of the RAD conversion. Is this allowed? |
| Answer: | All repairs identified as "critical" in the RAD PCA must be completed prior to closing. If the PHA wishes to complete additional repairs to the property prior to closing, it is permitted to do so but must follow all applicable Public Housing rules. It is important to remember that until the RAD conversion has closed, the property is still considered Public Housing and is subject to Public Housing rules. The PHA must also make sure the Financing Plan and RAD PCA are updated to reflect the changes to the repair schedule and scope of work. Please note that RAD conversions pursuing FHA financing should discuss the completion of additional repairs with their Transaction Manager as additional approvals may be necessary. |
|
| Posted: | 02/03/2014 |
| Question: | Once awarded, what is the time frame to complete capital improvements? |
| Answer: | The Financing Plan and RCC must include a reasonable timeline for completion of all rehabilitation items acceptable to HUD, generally 12 to 18 months from the date of closing the conversion and any financing, depending on the scope of rehabilitation funded. (Notice PIH-2012-32 REV-1 page 79). |
|
| Posted: | 12/04/2013 |
| Question: | A PHA is considering applying for RAD for a project that has already been demolished. Is this project still eligible for RAD? |
| Answer: | No. Only projects with units under ACC and in PIC are eligible for RAD. |
|
| Posted: | 10/01/2013 |
| Question: | If a HA is proposing to do a RAD conversion of Public Housing that involves demolishing an existing project and rebuilding an equal or greater number of units on the same site, is this treated in essentially the same way as for a RAD conversion with rehab? Is it unnecessary to do a transfer of assistance as long as the units are being rebuilt on the same site? Where and how does the RAD PCA fit into this scenario? |
| Answer: | In the situation you describe, a transfer of assistance would not be needed, because the RAD project would be located on the same site as the current public housing. In demolition-and-reconstruction projects, a RAD PCA is not required. See Notice PIH-2012-32, page 26, footnote 6; and Attachment 1A.1 paragraph B. [Updated 7.29.13] |
|
| Posted: | 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: | Relocation |
| Posted: | 01/28/2022 |
| Question: | In the case of a multi-phase transaction where a PHA is replacing a public housing project through multiple phases on the same campus, a resident has a right to return to the Covered Project or to other converted phases of the property which have converted and are available for occupancy at the time the resident is eligible to exercise the right to return. However, generally, a family living in a converting public housing unit cannot be relocated until a RCC has been issued. In the context of a multi-phase redevelopment of a public housing property, can a family living in a public housing unit that is in the early stages of conversion planning (i.e., the RCC has not been issued) be offered the opportunity to move to a unit in a phase that has already been completed if it has available units? |
| Answer: | It will generally be in the best interests of residents to be able to move to newly constructed units as soon as they are available. Where a resident is living in a public housing unit that has not yet been re-replaced through new construction, the PHA may provide the resident the opportunity to move to the newly constructed unit. Where the conversion of the unit the resident is living in has not yet reached the RCC stage, the PHA may request from HUD permission to undertake early relocation in order to offer such residents the opportunity to move to the newly constructed unit. If a resident accepts such an offer, they would be exercising their right of return to a phase within a multi-phase transaction and would not need to provide a consent relinquishing their right of return.
If an early phase is getting modest rehabilitation, rather than being newly constructed, if the resident’s unit is anticipated to be replaced through new construction, and if the PHA is offering the resident the ability to move to the rehabilitated unit, the difference should be disclosed to the resident and HUD may require that, as a condition of the early relocation approval, the resident must be offered a right of return to the resident’s phase (i.e., the new construction unit).
In any event, when planning a relocation, particularly in the context of a multi-phase redevelopment, it is always a best practice to consider social supports residents receive from their neighbors and to facilitate maintaining such networks to the greatest extent feasible. This may include offering residents a subsequent move even if their right of return has been satisfied.
|
|
| Posted: | 08/08/2019 |
| Question: | Can relocation take place before closing/RAD Conversion? |
| Answer: | Relocation may not begin until RCC issuance. However, in rare cases, some project plans may necessitate relocation prior to RCC issuance. In these cases, PHAs need prior HUD approval to relocate residents prior to the RCC issuance date, as described in section 6.8 of the RAD Fair Housing, Civil Rights, and Relocation Notice. PHAs must contact their assigned RAD transaction manager (TM) to discuss plans as early as possible in the process to ensure compliance with all URA and RAD requirements. PHAs should refer to Section 9: Initiation of Relocation of Notice H 2016-17/PIH 2016-17 for further information and requirements related to relocation prior to RCC issuance. |
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| Posted: | 03/25/2019 |
| Question: | Can a family voluntarily waive its right to return? |
| Answer: | Yes. A family may voluntarily waive its right to return. If a PHA is going to obtain a voluntary waiver of the right to return, HUD recommends the PHA first offer the family a public housing unit or Housing Choice Voucher in lieu of a right to return. If this is not possible, the PHA is still required to provide permanent relocation assistance as defined in the URA, and must ensure that all fair housing and civil rights conditions are met. |
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| Posted: | 03/25/2019 |
| Question: | Does the Uniform Relocation Act require an owner to be financially responsible for the cost of packing a resident’s belongings if the resident is being moved on site, one time (as opposed to off site, then returning to the property). I know the owner is responsible for the cost of the move itself. I’m just not sure about the requirement to have movers pack the belongings. |
| Answer: | As provided in Footnote 15 of the RAD Relocation Notice (H 2014-09/PIH 2014-17), the PHA must provide reimbursement for all reasonable out-of-pocket expenses incurred by a resident in connection with the resident’s permanent move to another unit within the same building/complex. The PHA has the option of undertaking the move itself. If the PHA chooses to do so, the Notice provides that it is the PHA’s responsibility to pack and move the resident’s belongings and household goods, if the resident so desires. If the resident prefers to pack their own belongings, the PHA may nonetheless still be responsible for reasonable out-of-pocket expenses that the resident incurs in connection with the move, including costs associated with packing and unpacking of personal property. The PHA is responsible for making a reasonableness determination with respect to a resident’s claim for reimbursement. If the PHA does not undertake the move itself, the PHA should be aware that the cost of packing and unpacking personal property is considered to be an eligible actual moving expense under URA regulations at 49 CFR 24.301(g)(2). |
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| Posted: | 03/21/2019 |
| Question: | Under RAD, will the relocation costs be subject to URA for former tenants returning to the property? |
| Answer: | Yes. |
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| Posted: | 03/21/2019 |
| 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. |
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| Posted: | 03/19/2019 |
| Question: | Can the PHA charge residents fees for missing move dates? |
| Answer: | According to federal public housing rules, PHAs have limited abilities to charge additional fees unless permitted by state and local law. PHAs should consult with local counsel and review their lease terms to determine whether or not such fees would be allowed. |
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| Posted: | 03/19/2019 |
| 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.) |
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| Posted: | 03/19/2019 |
| Question: | My deal is closed. I’ve converted my units to PBRA. Can my relocation plan involve relocating families temporarily to other public housing units? |
| Answer: | Yes, a PHA can move families temporarily into available public housing units as long as the PHA’s public admissions and occupancy procedures allow for this. Families temporarily relocated to public housing units would be treated as public housing residents during that period (e.g. the family would use a public housing lease and the PHA could consider the unit occupied for purposes of the Operating Fund subsidy, etc.). PHAs should note that the temporary relocation unit must be decent, safe, and sanitary. |
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| Posted: | 03/19/2019 |
| Question: | What are the ramifications for residents who absolutely will not move – due to illnesses and severely disabled HHM’s? The PHA’s legal counsel is addressing this from the legal standpoint, however do you have any advice from the relocation perspective? |
| Answer: | This issue involves a temporary move and the residents are expected to return to the units. Generally, assuming that the relocation process is done in accordance with the RAD Relocation Notice, H 2014-09/PIH 2014-17, the temporary relocation of residents should proceed smoothly. Keep in mind that the Notice gives more specific requirements for relocating residents with disabilities. See Notice at §10, pages 10-12. Specifically, PHAs should consult the disabled residents’ information to provide them with replacement housing appropriate to their accessibility needs. To the extent the PHA has complied with these Notice requirements and the residents still refuse to move, the PHA should consult State and local law for any legal remedies. |
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| Posted: | 03/19/2019 |
| Question: | What is the best way to determine a resident’s moving benefits? |
| Answer: | The URA rules for moving expenses for a displaced person are located at 49 CFR 24.301-24.306. Additional guidance on expenses relating to residential moves is found at Paragraph 3-2 of HUD Handbook 1378, “Tenant Assistance, Relocation and Real Property Acquisition,” http://portal.hud.gov/hudportal/documents/huddoc?id=1378c3CPDH.pdf. PHAs participating in RAD should also follow the guidance regarding moves in Appendix 1 of the RAD Relocation Notice, H2014-09/PIH2014-17.
If not all members of the family being relocated are persons lawfully present in the United States, proration of moving expenses may be necessary. See other FAQs on proration for more information. |
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| Posted: | 03/01/2019 |
| Question: | What are the reporting procedures should there be a change in family composition changes while the family is in a temporary unit? Would we just update the information using our current management software and submit to PIC or is there a different action needed. |
| Answer: | A change in family composition during a temporary relocation period should be reported into either TRACS or PIC. Under PBRA conversions, once the property has converted, families will not be reported in PIC. Instead, owners will submit tenant data through 50059s in TRACS. Families should continue to be reported in TRACS even while temporarily relocated from the property under HAP contract. For conversion to the PBV program, families temporarily relocated into units subsidized through the public housing, HCV, PBV, or other program that normally reports into PIC should report these changes in PIC. |
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| Posted: | 01/25/2019 |
| Question: | We are moving tenants under Transfer of Assistance. If we offer the dislocated tenants a new unit at the receiving site and they refuse the new site is our obligation terminated? What if we offer a voucher after the refusal, are there any other obligations long term. (We would still offer relocation payment.) |
| Answer: | In the situation you mention, your obligation is limited to the relocation assistance that you provided in the RAD Notice of Relocation. You may choose to, but are not required to, offer relocation assistance in addition to what you provided in the RAD Notice of Relocation .You should consult with local counsel regarding any local legal actions regarding legal actions/termination of assistance. |
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| Posted: | 01/25/2019 |
| Question: | We plan to offer Housing Choice Vouchers to residents who choose permanent relocation and waive their right to return. If a resident accepts the voucher, does that satisfy RAD and URA relocation requirements and relieve the PHA of its relocation obligations? |
| Answer: | No. Vouchers are a useful tool in the relocation process and can be part of the relocation assistance package offered to a public housing resident. However, the offer and use of a voucher alone does not satisfy all applicable RAD and URA relocation requirements.
For example, the URA requires that displaced residents be provided relocation advisory services and moving options and payments. Additionally, the URA generally provides that a resident cannot be required to move permanently before receiving at least 90 days advance written notice of the earliest date on which they will be required to move. If the 90-day notice is issued before a comparable replacement dwelling is made available to the resident, the notice must inform that the resident that they will not have to move earlier than 90 days after a comparable replacement dwelling is made available. Residents that will be displaced may not be required to move unless at least one, and when possible, three or more comparable replacement dwellings are made available to them in accordance with 49 CFR 24.204(a).
When Housing Choice Vouchers are reflected in a PHA’s offers of comparable replacement dwellings, the PHA must ensure that comparable replacement dwellings are made available to residents before displacement. This includes ensuring that the identified dwellings are eligible to participate in the HCV program. PHAs also need to determine whether any resident will be eligible to receive a replacement housing payment (gap payment) determined in accordance with 49 CFR 24.402.
For further guidance on the Housing Choice Voucher (HCV) program and its applicability to the URA and RAD, please refer to the following online resources:
• HUD RAP Newsletter- Vol. 5 No. 1, dated May 15, 2014, is available at: http://portal.hud.gov/hudportal/documents/huddoc?id=HUD_RAP_Vol5_No1.pdf
• HUD Handbook 1378 – Chapter 2-6 “gap payments” when using a voucher is available at: http://portal.hud.gov/hudportal/documents/huddoc?id=1378c2CPDH.pdf
• The RAD Relocation Notice is available at: http://portal.hud.gov/hudportal/documents/huddoc?id=RAD_Notice2.pdf |
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| Posted: | 01/25/2019 |
| Question: | What happens if tenants who are relocated off-site choose not to come back? What is the PHA's responsibility for relocation costs for such tenants? Is there any impact on the RAD PBRA or PBV Contract? |
| Answer: | Your question describes a tenant who accepts temporary relocation assistance but later decides not to return to the completed project.
In this situation, the PHA's responsibility for relocation assistance is limited to the assistance that the PHA offered (and the tenant accepted) in the RAD Notice of Relocation. See Notice H-2014-09 / PIH-2014-17 "Relocation Requirements under the REntal Assistance Demonstration (RAD) Program, Public Housing in the First Component".
In the situation you describe, the RAD project itself, and the RAD HAP Contract, are unaffected, except that the RAD project no longer needs to hold a unit for the tenant who decided not to return. |
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| Posted: | 01/24/2019 |
| Question: | If a family is currently over-crowded in their unit according to HQS standards and there is no way to accommodate them in the building because there are no vacancies, is the new owner obligated to honor the family’s right to return to the property or to find the family housing elsewhere because the owner would be violating the over-crowding standard? If it’s the latter, what options are the new owner entitled to give to this family? |
| Answer: | In the situation you describe, the owner must offer the family a unit in the converted project. The owner may also choose to offer another unit elsewhere that is of the proper size, but the family may not be required or pressured to accept the alternative unit. |
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| Posted: | 04/20/2018 |
| Question: | What is RAD's definition of "personally served" regarding the delivery of GIN notices? |
| Answer: | The GIN should be hand delivered to the head of household and the PHA should get written acknowledgement of receipt for their records. Leaving the GIN in a mailbox or under the door is not sufficient. HUD needs to know that the head of the household actually received the GIN and that requires a signature by the head of household. |
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| Posted: | 10/11/2017 |
| Question: | When does a resident first get the Right to Return? With the issuance of the RIN? The CHAP? Some other milestone? |
| Answer: | Under Section 6 of the RAD Relocation Notice (H 2016-17), eligibility for protections under said Notice apply to any person residing at the Converting Project and who is legally on the public housing lease, has submitted an application to be added to an existing lease, or is otherwise in lawful occupancy at the time of CHAP issuance. Consequently the Right to Return would apply to anyone meeting these conditions at the time of CHAP issuance. |
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| Posted: | 06/01/2017 |
| Question: | When there is a transfer of assistance (ToA) to an occupied, non-public housing site, are occupants of the receiving site entitled to RAD or other protections? |
| Answer: | When the project-based assistance is transferred from one site (transferring site) to another (receiving site) in connection with a RAD conversion, generally, residents of the transferring site have protections and rights under RAD. Occupants of the receiving site are not generally entitled to RAD protections and rights due to the incoming assistance. However, if acquisition, rehabilitation or demolition is planned and will cause occupants of the receiving site to move, the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) may apply. In that event, the project owner is required to provide a General Information Notice (GIN) to occupants of the receiving site “as soon as feasible”. Under these circumstances, HUD anticipates that “as soon as feasible” will generally mean no later than when the site is identified to receive the proposed transfer of assistance in connection with the RAD conversion. Where a receiving site was not identified in the initial RAD application or CHAP, a GIN should be provided at the time the site is identified, or more specifically, when the PHA submits a revised CHAP application identifying the site, but no later than 30 days after submitting the revised CHAP application identifying the receiving site. Project owners and PHAs should be mindful that although occupants of the receiving site may not be eligible for RAD related protections and assistance, occupants that are required to move may be protected and eligible for relocation assistance and payments under the URA. In some cases, where CDBG or HOME funds are involved, those occupants may also be protected and eligible for relocation assistance and payments under section 104(d) of the Housing and Community Development Act (section 104(d)). Additional information and resources on the URA and section 104(d) are available on HUD’s Acquisition and Relocation website at www.hud.gov/relocation
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| Posted: | 05/26/2017 |
| Question: | The Housing Authority will be doing a transfer of assistance. However, some residents may decide that they would rather not relocate to the Transfer of Assistance site. If a resident does not wish to move to the Transfer of Assistance site, may the PHA allow these residents to initiate a move to other nearby project-based Section 8 RAD housing owned by the PHA? If so, can such moves be treated by the PHA similarly to a “Resident Initiated Public Housing Transfer Related to the RAD Transaction” as described in Section 7.4 of the RAD Notice Regarding Fair Housing and Civil rights Requirements and Relocation Requirements (PIH 2016-17)? |
| Answer: | We believe this is addressed on pages 45-46 of the RAD Relocation Notice- see excerpt below. If this scenario applies to your project, please contact your RAD Transaction Manager so that HUD approval can be obtained. - "If HUD determines that the distance from the Converting Project to the site of the Covered Project is significant and the resident could not reasonably be required to move to the new site, then HUD will require the PHA to adjust project plans to accommodate the resident in an assisted unit (e.g., a public housing unit, some other project-based Section 8 unit or a market unit 46 with a housing choice voucher) within a reasonable distance of the site of the Converting Project. HUD will evaluate whether this requirement applies on a case by case basis, considering whether the distance would impose a significant burden on residents’ access to existing employment, transportation options, schooling or other critical services. Accommodating the resident may also be satisfied by the resident’s consent to an alternative housing option pursuant to Section 6.10. The requirement set forth in this paragraph is in addition to all protections, including, for example, the offer of comparable replacement dwellings, which are required in all instances where a transfer of assistance is subject to the URA and/or Section 104(d)."
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| Posted: | 10/14/2014 |
| Question: | Are security or utility deposits for replacement housing units considered a reasonable relocation expense? |
| Answer: | URA regulations consider refundable security and utility deposits to be an ineligible expense in connection with a permanent move. However, in the context of temporary relocation, HUD policy allows for a PHA to advance funds for such deposits under a repayment agreement or pay such deposits on behalf of a temporarily relocated resident (provided any refund will be made to the PHA). For more information, see paragraph 2-7(A)(3) of HUD’s Relocation Handbook, HUD Handbook 1378. |
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| Posted: | 10/14/2014 |
| Question: | How is the proration calculated? i.e., if the PHA pays for the move, for example $1200 – and the family has ineligible members, would the family have to pay back the prorated portion to the PHA? |
| Answer: | Moving expenses provided for an eligible family that includes displaced persons that are lawfully present and persons that are not lawfully present in the United States are to be calculated based on the proportion of lawful occupants to the total number of occupants, except where the move is undertaken by the PHA from one public housing unit to another public housing unit and is set at a flat rate (that is, not based on the number of eligible individuals in the family). As an example, if 3 out of 5 total occupants are found to be eligible to receive relocation assistance, then the family is eligible to receive assistance to cover 3/5 (or 60%) of the moving expenses that the family would otherwise have been eligible to receive. For additional information, please see Frequently Asked Questions attached to an August 9, 1999 Federal Highway Administration memorandum relating to Section 104 of the URA (available at: http://www.fhwa.dot.gov/real_estate/uniform_act/relocation/illegaqa.cfm).
Please note that when a PHA undertakes the move at no cost to the resident, the PHA is responsible for doing so in accordance with all applicable Public Housing requirements, including any requirements that govern the provision of assistance to persons that are not U.S. citizens or lawfully present resident noncitizens. If a PHA undertakes the family’s move at no cost to the family, a subsequent discovery that the family contains an ineligible family member does not justify seeking repayment from the family. However, the PHA should address the issue to ensure that the overpayment is not charged to public housing funds or characterized as an eligible moving expense under the URA.
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| Posted: | 10/14/2014 |
| Question: | When do resident relocation requirements begin, at CHAP Award or at Closing? Our PHA wants to make sure they are providing required notices and assistance on time. |
| Answer: | PHAs should begin to engage residents on relocation matters as soon as they begin to develop any RAD development or rehabilitation plans that may involve relocation. PHAs should refer to Section 4: Relocation Planning of Notice H 2014-09/PIH 2014-17. The chart provided in this section presents a general sequencing of relocation planning activities within the RAD milestones. |
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| Posted: | 10/14/2014 |
| Question: | When is proration of moving expenses necessary, and why? |
| Answer: | Section 104(a) of the URA, and implementing regulations at 49 CFR 24.208, provide that a displaced person is not eligible to receive relocation payments or other assistance under the URA if the person is an alien not lawfully present in the United States. This general rule is subject to the hardship exception discussed in another FAQ. To comply with section 104 and the regulations, moving expenses must be prorated, that is, computed based on the eligible members of the family. Similar requirements apply to the use of public housing funds. See 24 CFR 5.520(“Proration of Assistance”). |
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| Posted: | 08/22/2014 |
| Question: | Can the form 40030 “Claim for Temporary Expenses” be used for the temporary moves or do we need to use form 40054 “Residential Claim for Moving and Related Expenses” for all moves? This would ease the reporting burden significantly. |
| Answer: | HUD-40030 is specifically designed to be used for temporary (residential) moves under the URA. HUD-40054 is specifically designed to be used for permanent (residential) moves under the URA. The forms are not interchangeable. Each form serves a different purpose. Persons who temporarily relocate are not eligible for the same relocation payments and moving options as persons who permanently relocate and vice versa. |
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| Posted: | 08/21/2014 |
| Question: | Are housing authorities expected to walk residents through the process of moving utilities and forwarding mail, or just to pay the out-of-pocket expenses of those kinds of activities? |
| Answer: | Part of URA requirements are to provide relocation advisory services for any permanent relocations. Under RAD, advisory services are required for relocations lasting longer than a year and strongly recommended for relocations that are for shorter periods. |
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| Posted: | 08/21/2014 |
| Question: | Do Mod Rehab conversions under the First Component of RAD need to complete the RAD Relocation and Accessibility checklist as part of the Financing Plan? |
| Answer: | No. |
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| Posted: | 08/21/2014 |
| Question: | If a resident decides to accept a Housing Choice Voucher, how is the right of return affected? |
| Answer: | When a resident chooses to accept permanent relocation payments and assistance in accordance with URA or at URA levels for a RAD conversion (for example accepting a HCV as their permanent relocation housing), the resident is also choosing to decline their right to return to the completed RAD property.
If a resident accepts an HCV as a temporary relocation housing option, this acceptance does not mean that the resident is declining their right to return. A resident can choose to accept temporary relocation assistance and payments without declining their RAD right to return.
PHAs are reminded that residents must give informed consent to decline their right to return, meaning they are making a decision based on an informed understanding of their housing options, and that PHAs must keep auditable records of this decision.
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| Posted: | 08/21/2014 |
| Question: | When converting to PBRA or PBV under RAD, does the URA apply to persons temporarily relocating – for less than twelve months – or only for those residents who relocate either permanently or for more than one year? |
| Answer: | URA applies to RAD projects that involve acquisition, demolition, or rehabilitation. So if your deal involves acquisition, demolition, or rehabilitation, then URA applies. Both URA and RAD have requirements for relocations that last less than a year. For example, URA requires that a resident who will be temporarily relocated receive reimbursement for reasonable out of pocket expenses connected to the move, such as moving expenses and increased housing costs. Additionally, RAD would require residents that move temporarily receive a RAD Notice of Relocation, which is a specific RAD requirement, and not one that comes from the URA. |
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| Category: | Resident Eligibility after RAD |
| Posted: | 09/15/2023 |
| Question: | How are over-income tenants treated following conversion to a RAD PBV HAP contract? |
| Answer: | Any existing tenants at the time of RAD conversion may remain in the project, and the unit may remain under HAP, even if the tenant's Total Tenant Payment (TTP) exceeds the Gross Rent. In these instances, the tenant will pay a rent amount equal to the lesser of (a) the applicable FMR, less the utility allowances, or (b) any applicable maximum rent setting requirement the unit is subject to under another federal, state, or local program (e.g., LIHTC or HOME).
For RAD PBV units, the unit is removed from the contract after 180 days of the resident paying the Zero-HAP Rent. The unit is re-instated (or substituted for partially assisted properties) if the family leaves. If the family remains and their income decreases, the PHA shall re-admit the family.
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| Posted: | 09/15/2023 |
| Question: | How are over-income tenants treated following conversion to a RAD PBRA HAP contract? |
| Answer: | Any existing tenants at the time of RAD conversion may remain in the project, and the unit may remain under HAP, even if the tenant's Total Tenant Payment (TTP) exceeds the Gross Rent. In these instances, the tenant will pay a rent amount equal to the lesser of (a) the applicable FMR, less the utility allowances, or (b) any applicable maximum rent setting requirement the unit is subject to under another federal, state, or local program (e.g., LIHTC or HOME). If the "lesser of test" results in a rent cap that is below the Gross Rent (which would cause the tenant to fall out of zero-HAP status), then TTP is capped at the Gross Rent for the unit. |
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| Posted: | 05/24/2022 |
| Question: | RAD and Section 18 normally have different requirements and rights for residents (consultation, relocation, right to return)? Which ones apply? |
| Answer: | The RAD relocation requirements described in PIH/Housing Notice 2016-17 (the RAD Fair Housing, Civil Rights, and Relocation Notice) shall apply to residents of the Section 18 units, in lieu of the relocation requirements under 24 CFR part 970, in accordance with 84 Fed. Reg. 54630 (Oct. 10, 2019) and the Section 1.5.B.2.a of the RAD Notice. All of the RAD relocation requirements shall apply to residents of the Section 18 units, including, but not limited to, the resident notice and meeting requirements, the right to return, and relocation assistance and payments. The PHA may not provide different relocation rights and benefits to residents of the project based on whether they reside in a RAD unit or a Section 18 unit.
All residents of the Converting Project have a right to remain in or return to the project-based replacement units consistent with Section 6.1 of the RAD Relocation Notice (H/PIH 2016-17). The RAD Relocation Notice applies to non-RAD PBV units at the Covered Project, as further explained in the Section 1.5.B.2.a of the RAD Notice. Per Section 1.6.C.1 of the RAD Notice, “current households cannot be excluded from occupancy at the Covered Project based on any rescreening, income eligibility, or income targeting.” This also applies to current public housing residents of the Converting Project that will reside in non-RAD PBV units placed in a project that contains RAD PBV units or RAD PBRA units.
All residents that return to the non-RAD PBV units will have the same resident rights as the residents in the RAD PBV units. A list of resident rights that apply to the non-RAD PBV units is fully described in the RAD Notice. A summary listing can be found in Table 1 of Att. 1D of the RAD Notice (p. 147-148), which lists the resident rights that must be included in the PHA Plan and the sections of the RAD Notice where you can locate detailed information about each resident protection. It states by way of summary that “tenant protections for RAD PBV residents apply to non-RAD PBV residents of the same Covered Project with the exception of Choice Mobility. Standard PBV Choice Mobility requirements apply to non-RAD PBV residents.”
Both RAD (Section 1.8 of the RAD Notice) and Section 18 (24 CFR 970.9) require consultation with residents regarding the proposed actions. Under a RAD/Section 18 blend, these discussions should occur at the same time within the same meetings. PHAs can generally satisfy the Section 18 consultation requirements for impacted residents and with the resident organizations by complying with RAD consultation requirements (i.e., by providing notification letters and resident meetings required by the RAD notice). However, Section 18 also requires the PHA to consult with the Resident Advisory Board (RAB). |
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| Posted: | 05/12/2022 |
| Question: | How long should PBV and PBRA retain the converted tenant files and tenant files in general? |
| Answer: | Tenant files for RAD properties should be retained for three years. This applies to both PBV and PBRA properties. |
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| Posted: | 11/30/2021 |
| Question: | If a PHA is considering a RAD/Section 18 blend for a property, and that property has an over-income resident, would the over-income resident be moved back into a RAD unit or a Section 18 unit? What's the rent subsidy source for the original resident who is over-income? Do they still qualify for rental subsidy under RAD and/or Section 18 if they are over-income? |
| Answer: | According to the RAD Relocation Notice Section 6.2, “any public housing or Section 8 assisted resident that may need to be relocated temporarily to facilitate rehabilitation or construction has a right to return to an assisted unit at the Covered Project once rehabilitation or construction is complete. The right to return is not a right to any specific unit in the Covered Project.” The Covered Project refers to both the RAD and Section 18 units in a Blend, so a relocated resident could be moved back into a unit under the RAD or Section 18 HAP Contract. Regardless of their income, the resident has the right to return to a properly sized unit.
An over-income tenant would not receive subsidy but would be placed on and/or remain under the applicable HAP Contract, as described in Section 1.6.C.9 of the RAD Notice. This provision applies to both the RAD and Section 18 units. If the tenant’s income drops and they are eligible for HAP subsidy, their subsidy source would depend on which unit they moved back to. |
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| Posted: | 09/04/2020 |
| Question: | When a household is living in a Covered Project unit assisted under a Section 8 HAP contract, the unit is not subject to LIHTC requirements and the household’s total tenant payment (TTP) exceeds the Section 8 Gross Rent, how are rents determined? |
| Answer: | For units that convert under RAD that are not subject to LIHTC requirements, households pay to owners 30% of their adjusted income, also referred to as Total Tenant Payment (TTP), minus any applicable utility allowance. See 24 CFR §5.628. Owners may find that a given household’s calculated TTP exceeds the Gross Rent for their unit, particularly where the household has a RAD right to return to the unit. Under RAD, the household’s payment to the owner is the calculated TTP minus any applicable utility allowance even when the TTP exceeds Gross Rent. TTP is not capped at the Gross Rent for the unit. However, the owner/PHA may choose to implement a maximum rent equal to the 60% of AMI LIHTC rents for the metropolitan area in which the project is located for households whose TTP exceeds Gross Rent (or 80% of AMI LIHTC rents if other units at the Covered Project are part of an LIHTC project using the average income test). If an owner chooses to implement the LIHTC maximum rent, it must apply uniformly to any household living in the Covered Project and not in an LIHTC unit whose TTP exceeds Gross Rent. |
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| Posted: | 08/04/2020 |
| Question: | When a household is living in a unit at a Covered Project assisted under a Section 8 HAP contract and the unit is subject to LIHTC requirements, how are rents determined? |
| Answer: | Section 8 rent calculation rules apply to households living in units that are assisted under a Section 8 HAP contract and are also subject to LIHTC requirements. As such, households pay to owners 30% of their adjusted income, also referred to as Total Tenant Payment (TTP), minus any applicable utility allowance. See 24 CFR §5.628. As long as HAP is paid under the contract, the tenant’s rent is calculated in this manner regardless of the normally applicable LIHTC rent.
The RAD notice says that when TTP rises above the Gross Rent and no assistance is paid under the HAP contract (or “zero-HAP”), the tenant pays to the owner the lower of TTP, less any utility allowance, or "any applicable maximum rent allowable under LIHTC regulations." The maximum rent refers to the designated Area Median Income (AMI) set-aside (e.g. 40%, 50% or 60% of AMI) for the unit that the household occupies. Some tax credit allocating agencies may have set aside requirements in addition to the federal set aside requirements under Section 42 of the Internal Revenue Tax Code, which can vary by project depending on their LIHTC award. In that event, the applicable maximum rent shall be the maximum rent agreed to by the allocating agency for the unit in the tax credit allocation process.
Based on the locality and the designated AMI set-aside, the maximum LIHTC rent for a particular unit may be above or below the Gross Rent under the HAP contract. Accordingly, in some rare cases where the LIHTC rents are below the Section 8 Gross Rent and a family’s incomes rises such that TTP exceeds the Section 8 Gross Rent, a household’s rent could decrease. |
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| Posted: | 10/25/2019 |
| Question: | Our PHA has a large AMP that contains two buildings, one of which has a preference for the elderly and the other is for general occupancy. These two buildings are adjacent to one another and have historically been managed as one site. We wish to process both buildings as part of a single RAD transaction (to be owned as one single-asset entity) and wish to pursue an FHA-insured first mortgage. Under RAD, can an FHA transaction include both elderly and general occupancy populations? |
| Answer: | Yes. FHA does have restrictions on combining elderly and family populations for unassisted properties that are developed through the Housing for Older Persons Act (HOPA). Generally, for HOPA properties, not more than 20% of the residents can be under 62 years of age. However, RAD transactions are not eligible for HOPA and, therefore, there is no FHA restriction in combining elderly and family populations as long as the project otherwise does not prohibit family members under the age of eighteen. |
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| Posted: | 03/21/2019 |
| 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. |
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| Posted: | 03/21/2019 |
| 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. |
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| Posted: | 03/21/2019 |
| Question: | The RAD Notice indicates that a Tenant Selection Plan is only required to be submitted for HUD approval if the owner plans to adopt any local or residency preferences. My building currently serves the elderly/disabled and will continue to do so after closing but we do not wish to establish a preference and have indicated that in our AFHMP. Do we still need to submit a Tenant Selection Plan to HUD? |
| Answer: | While a TSP must be created and maintained on file for all Multifamily PBRA projects, HUD does not review or approve tenant selection plans unless the Owner adopts a local or residency preference. There are various types of owner-adopted preferences allowable under PBRA as defined in HUD Handbook 4350.3, REV-1, Chapter 4, Paragraph 4-6.C.
1) A Residency Preference, provides applicants who live in a specific geographic area at the time of an application a priority over nonresidents on the waiting list.
2) A Working Families preference would give applicants in which the head of household or spouse is employed priority over other applicants on the waiting list.
3) A Disability Preference would give applicants that include a disabled family member preference over other applicants on the waiting list.
4) A Victims of Domestic Violence preference would give priority to families who have been victim of domestic violence, dating violence, or stalking priority over other applicants on the waiting list.
5) Owners may also adopt a preference for single persons who are elderly, displaced, homeless, or persons with disabilities over other single persons.
In order for a RAD converted projects to continue to serve an elderly/disabled population, the Owner must adopt a preference as described in number 5 above, however, the adoption of a Single Elderly or Disabled Preference would not trigger the TSP submission requirement. Refer to HUD Handbook 43503., REV-1, Chapter 4, Paragraph 4-6.C. for further information on owner-adopted preferences. |
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| Posted: | 03/19/2019 |
| 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. |
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| Posted: | 03/19/2019 |
| Question: | My PHA is the recipient of a ROSS Service Coordinator Grant and plans to submit a RAD Application. Will we be permitted to continue assisting families (who, because of the RAD conversion) will be residing in non-public housing units) after the conversion? |
| Answer: | Yes. Section 1.5H of the Notice provides that residents who are currently participating in ROSS may continue to participate after the RAD conversion for the term of ROSS grant. Also, with the PBRA HAP, the converted properties will be eligible to apply for the Multifamily Housing Service Coordinator Grants which are available to subsidized properties. These competitive grants are offered through a Notification of Funding Availability to serve properties designated as elderly and/or disabled. [Revised 7.17.14] |
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| Posted: | 03/19/2019 |
| 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). |
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| Posted: | 03/01/2019 |
| 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. |
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| Posted: | 03/01/2019 |
| 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. |
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| Posted: | 03/01/2019 |
| Question: | Tenants in place at the time of conversion will be housed in accordance to existing PH occupancy standards; is it permissible to have subsequent tenants housed in accordance with our S8 occupancy standards of number of bedrooms? |
| Answer: | After conversion, occupancy requirements will be in accordance with the new HAP contract (either PBVs or PBRA). If your project converts to PBRA, the occupancy standards in HUD Handbook 4350.3 would be applicable. If your project converts to PBV, the occupancy standard are determine by your HCV occupancy standard. |
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| Posted: | 03/01/2019 |
| Question: | What are the reporting procedures should there be a change in family composition changes while the family is in a temporary unit? Would we just update the information using our current management software and submit to PIC or is there a different action needed. |
| Answer: | A change in family composition during a temporary relocation period should be reported into either TRACS or PIC. Under PBRA conversions, once the property has converted, families will not be reported in PIC. Instead, owners will submit tenant data through 50059s in TRACS. Families should continue to be reported in TRACS even while temporarily relocated from the property under HAP contract. For conversion to the PBV program, families temporarily relocated into units subsidized through the public housing, HCV, PBV, or other program that normally reports into PIC should report these changes in PIC. |
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| Posted: | 01/25/2019 |
| Question: | Are work requirements for new residents (not returning residents) permitted under PBRA? |
| Answer: | Owners may not require a specific minimum income, however, owners may adopt a Working Families preference in selecting families from the waiting list for those families in which the head of household or spouse is employed. Even if the owner adopts such a preference, however, discrimination against persons unable to work is prohibited. Owners must not deny the preference to households in which the head or spouse is 62 or older, or to a person with disabilities. Refer to HUD Handbook 4350.3, REV-1, Chapter 4, Paragraphs 4-6.C.2 and 4-8.A. |
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| Posted: | 01/25/2019 |
| Question: | Eligibility is grandfathered for public housing residents that occupy units converted to PBV via
RAD. Would this grandfathering also apply to residents that were working through their Earned Income Disregard periods? In public housing, the EID eligibility is not limited to persons with disabilities as it is in Section 8. I am assuming that their EID eligibility would continue through to completion and during their tenancy in the PBV unit. However, wanted to confirm that here. |
| Answer: | See pages 42 and 43 of Notice PIH-2012-32 REV-1 that discuss the continuation of Earned Income Disregard. Also see pages 39 and 40 that discuss the process for phasing in the rent increase that would occur at the end of the EID period. |
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| Posted: | 01/25/2019 |
| Question: | How will Family Self-Sufficiency participates be handled in a RAD project? |
| Answer: | Family Self-Sufficiency is specifically discussed in Notice PIH-2012-32 REV-1. See pages 40-41 for PBV conversions and page 54 for PBRA conversions. |
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| Posted: | 01/25/2019 |
| Question: | I am converting a public housing project to RAD using PBRA. There is an existing public housing project-specific waiting list, and I’m planning to implement a project-specific PBRA waiting list. What happens to folks currently on the public housing project-specific waiting list? Post-RAD, how would we select an applicant to fill a vacated unit? |
| Answer: | See Section 1.7.C.3 of the RAD Notice, which discusses establishment of the new waiting list. Because your project has an existing project-specific public housing waiting list, all applicants on that waiting list would transfer to the new post-RAD PBRA waiting list, where their priority will be “in accordance with the date and time of their application to the original
project's waiting list” as required by the RAD Notice. After transferring all applicants from the existing public housing waiting list, you would then manage the new PBRA waiting list, and select applicants from that waiting list to fill vacated units, in accordance with the requirements of HUD Handbook 4350.3 (Chapter 4 Waiting List and Tenant Selection). |
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| Posted: | 01/25/2019 |
| Question: | In a RAD conversion to PBVs, can a PHA “designate” a building as elderly |
| Answer: | No. Prior to the enactment of HOTMA, the PBV program had an income mixing component, wherein not more than 25% of the units in the project could be assisted, with exceptions for units made available for certain types of households, including elderly households. Under those requirements, a PHA could designate specific units for elderly occupancy. Since HOTMA has eliminated this income-mixing requirement, PHAs can no longer designate units in such a manner. A PHA may, however, adopt a project-specific waiting list and an admission preference for elderly households. |
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| Posted: | 01/25/2019 |
| Question: | Some of the families are currently over-housed. How will these units be treated for subsidy purposes at conversion? |
| Answer: | If there is not an appropriately-sized bedroom for the family to transfer into, the family can remain in the unit and unit will continue to be funded based on the actual bedroom size and the contract rent. But if an appropriately-sized unit becomes available, the family will be required to move at that time. |
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| Posted: | 01/25/2019 |
| Question: | Under RAD, if an applicant or resident needs a reasonable accommodation, who is to pay for the accommodation? |
| Answer: | Section 504 (of the Rehabilitation Act of 1973) requires property owners to provide and pay for physical and procedural accommodations, as needed by applicants and residents with disabilities, for properties with "federal financial assistance". Public housing is "federal financial assistance", and so are PBRA and PBVs. Accordingly, under RAD you have the same responsibilities regarding reasonable accommodations as you did under the public housing program.
The HUD website contains a one-stop Section 504 resource at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/disabilities/sect504. |
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| Posted: | 01/25/2019 |
| Question: | What is the policy with respect to tenants who were not properly screened upon initial occupancy and do not qualify for a particular public housing unit? |
| Answer: | RAD does not allow re-screening of tenants, meaning residents cannot be rescreened because of a RAD conversion. PHAs should be following their occupancy policies up until the RAD closing. These policies should outline when re-certifications and interim re-examinations may take place. |
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| Posted: | 01/25/2019 |
| Question: | Who is responsible for monitoring the provision of supportive services, the PHA or the owner? Any guidance that you can provide would be greatly appreciated |
| Answer: | The responsibility for monitoring, per 24 cfr 983.56(b)(2)(ii)(C), is on the PHA. “The PHA must monitor the excepted family’s continued receipt of supportive services and take appropriate action regarding those families that fail without good cause to complet either supportive services requirement. The PHA administrative plan must sate the form and frequency of such monitoring.” |
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| Posted: | 01/24/2019 |
| Question: | Are new tenants who come under lease post-RAD conversion eligible for the Family Self Sufficiency (FSS) program? |
| Answer: | For PBV conversions, new residents would be eligible for FSS as long as the PHA administers an FSS program.
For PBRA conversions, FSS funds awarded in FY14 and prior FSS funds may be used only to continue to serve FSS participants living in units converted under RAD to PBRA. Pursuant to FY 2015 Appropriations Act, any FSS funds awarded in FY 2015 (and forward if the provision is extended), may be used to also serve any other PBRA resident, affected by RAD or not. |
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| Posted: | 01/24/2019 |
| Question: | Do residents of properties need to be re-certified at conversion? |
| Answer: | No. All residents will maintain the same annual recertification date they would have had as public housing residents. Current residents are not subject to the rescreening, income eligibility, or income targeting provisions of either the PBV or PBRA programs. Following conversion: 1)For PBRA conversions, for the purposes of recording the resident in TRACS, owners should complete an initial HUD-50059 certification for each household that includes the same information previously found on the 50058, including the next annual reexamination date found on Line 2i; 2) For PBV conversions, the PHA would continue to use HUD Form 50058 for each household, but would consider the family a new admission and complete Section 11 (instead of Section 10). The Form should include the same information previously found on the 50058, including the next annual reexamination date found on Line 2i. |
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| Posted: | 01/24/2019 |
| 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 |
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| Posted: | 01/24/2019 |
| Question: | If a family is currently over-crowded in their unit according to HQS standards and there is no way to accommodate them in the building because there are no vacancies, is the new owner obligated to honor the family’s right to return to the property or to find the family housing elsewhere because the owner would be violating the over-crowding standard? If it’s the latter, what options are the new owner entitled to give to this family? |
| Answer: | In the situation you describe, the owner must offer the family a unit in the converted project. The owner may also choose to offer another unit elsewhere that is of the proper size, but the family may not be required or pressured to accept the alternative unit. |
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| Posted: | 01/24/2019 |
| Question: | If an over-housed household remains in their unit and continues to receive PBV assistance under the RAD program, will the assistance received be based on the unit size, and not on the household size? |
| Answer: | The contract rent, and HAP assistance, will be based on the unit size, for both PBVs and for PBRA. If there is no appropriately sized unit available to move the family into and the over-housed household is therefore permitted to remain in the unit, it will not impact the rent due from the tenant or the subsidy provided under the contract. |
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| Posted: | 01/24/2019 |
| Question: | If we elected to covert our ACC assistance to PBV or PBRA, will we be certifying tenants and receiving funding through the PIH office or Multi-Family? Will we use 50058 or 50059? Will we be using the TRACS system? |
| Answer: | RAD conversions to PBVs will use the 50058 which will be submitted into PIC, just like certifications for any other family assisted under the Housing Choice Voucher program. Subsidy will be administered by the housing authority with whom the PBV HAP contract is signed, rather than through PIH. RAD conversions to PBRA will use the 50059 which will be submitted into TRACS. Subsidy will be administered by the Office of Multifamily Housing at HUD. |
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| Posted: | 01/24/2019 |
| Question: | To help deter crime, we have police officers who live in the public housing units even though they do not qualify for assistance. Are police officers allowed to continue to live at the property following conversion? |
| Answer: | If converting to PBRA 245 CFR 5.661 provides for police and other security personnel to reside in an assisted project. MFH Handbook 4350.3, Section 3-8.D provides guidance on the admission of over-income tenants, and further in the Handbook, how to calculate rents. These will need to be approved by the contract administrator (HUD field office) to ensure the needs are there and the rents are appropriate. Under PBV, there is no provision for police officers to live in assisted units. However, if the police officer family was living in public housing at the time of the conversion, they can remain in the unit even though they may be over-income because RAD prohibits the re-screening of current public housing residents. However, once that family moves out, only income eligible applicants can be admitted into the PBV program and the participant must be receiving some amount of HAP to move into the unit. A PHA that wishes to continue to have police officers reside in units in the project may consider not including those units on the HAP contract. |
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| Posted: | 01/24/2019 |
| Question: | We expect to have vacancies at the property that we are converting between now and closing. When a Public Housing tenant signs a lease, they are required by HUD to sign for a year for the initial lease term. We don’t want to have vacancies because that negatively impacts the budget, but we wouldn’t be able to keep a PH tenant on a PH lease once we convert. How should this be handled? Can we modify the PH lease to make it shorter? |
| Answer: | PHAs should enter into normal lease terms with any resident moving in prior to conversion. All public housing residents, regardless of when they moved in, will need to be given at least 30-day prior notification that their public housing lease will be terminated at the effective date of the new HAP contract. |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | When a site-based waiting list is transferred following conversion, am I required to serve all of the existing applicants on the waiting list in their current order before serving any new applicants and without respect to adopted preferences? |
| Answer: | No. Once the waiting list is transferred, applications and preferences continue to operate in accordance with applicable regulations and locally adopted policies. As a result, new applicants following conversion may get housed ahead of applicants who were on the public housing site based waiting list at the time of conversion if they qualify for a higher preference even though they are entering the waiting list at a later date. There is no requirement to house all of the people who were on the PH site-based waiting list at the time of conversion before housing anyone else. |
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| Category: | The PBV Program |
| Posted: | 03/05/2024 |
| Question: | Can a housing authority process OCAF adjustments during the construction period? If so, does the authority take into account any of the construction loans when adding in debt in the excel RAD OCAF tool HUD provides? |
| Answer: | The OCAF should be applied every year, including during the construction period. There is no deduction of debt service when calculating OCAF adjustments during the period the owner is making interest-only payments on a construction loan. They would only deduct debt service when calculating the OCAF after they’ve converted to permanent financing. |
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| Posted: | 02/14/2024 |
| Question: | Can a RAD converted property receive OCAF adjustments for prior years which have not been taken on an annual basis? For instance, a property converts to RAD in 2017 but has not applied for an OCAF adjustment since the conversion. In 2020, the property requests an OCAF adjustment. Is that property eligible to receive all of the OCAF adjustments since 2017 (meaning 2018, 2019, and 2020)? |
| Answer: | Yes, the OCAF must be applied retroactively if it was missed, since the RAD PBV HAP Contract gives the owner the right to contract rents adjusted by each year’s OCAF. The Contract Administrator must make sure that all OCAFs have been applied correctly since the RAD closing and calculate the current rents accordingly, including making sure that the RAD PBV contract rents do not exceed the PBV program caps. If the Contract Administrator is also the project owner, then the calculations must be performed by an independent entity. As a reminder, there is a PBV OCAF Tool available on www.radresource.net to help ensure the calculation is done correctly. Once the calculations have been made, the Contract Administrator must reach out to the PIH Financial Management Center (FMC), including the Operations Division Director and Team Lead, to request the make a retroactive subsidy payment. Contact information for the FMC can be found here: https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/contact#FMC. Contract Administrators should also include their local Public Housing field office on discussions regarding the OCAF, or if the retroactive adjustment may adversely impact the PHA’s HCV program. |
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| Posted: | 09/15/2023 |
| Question: | How are over-income tenants treated following conversion to a RAD PBV HAP contract? |
| Answer: | Any existing tenants at the time of RAD conversion may remain in the project, and the unit may remain under HAP, even if the tenant's Total Tenant Payment (TTP) exceeds the Gross Rent. In these instances, the tenant will pay a rent amount equal to the lesser of (a) the applicable FMR, less the utility allowances, or (b) any applicable maximum rent setting requirement the unit is subject to under another federal, state, or local program (e.g., LIHTC or HOME).
For RAD PBV units, the unit is removed from the contract after 180 days of the resident paying the Zero-HAP Rent. The unit is re-instated (or substituted for partially assisted properties) if the family leaves. If the family remains and their income decreases, the PHA shall re-admit the family.
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| Posted: | 09/15/2023 |
| Question: | Prior to completing a RAD/Section 18 Blend and execution of HAP contracts, is it necessary for the PHA to conduct inspections of the units for compliance with Housing Quality Standards (HQS)? |
| Answer: | Before units can be placed on the HAP Contract and assistance can be paid on behalf of a household, in lieu of an inspection, a PHA can rely on an owner certification that the owner has no reasonable basis to have knowledge that life-threatening conditions exist in the unit or units. The PHA must conduct unit inspections when needed (e.g., in response to tenant complaints) and Owners must correct any identified deficiencies within timeframes specified in the HAP Contract -- 24 hours for life threatening deficiencies, and 30 days or such longer time as agreed to by the PHA for non-life threatening deficiencies (i.e. the completion of the Work under the RCC) . |
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| Posted: | 08/23/2023 |
| Question: | How can Small Area Fair Market Rents (SAFMR) be used to increase rents in the project-based voucher (PBV) program? |
| Answer: | HUD published the SAFMR Final Rule allowing for the determination of Housing Choice Voucher (HCV) payment standards using the Small Area Fair Market Rents (SAFMRs), which are calculated at the ZIP code level, rather than at the metropolitan area. SAFMRs allow for payment standards to be established that more accurately reflect the local market. Implementing SAFMRs is an option PHAs can use to increase PBV rents. When converting assistance to PBV under the RAD and RAD/Section 18 blend programs, PHAs may adopt SAFMRs for the following scenarios:
-RAD Rents are higher than 110% of FMR (RAD units)
-Reasonable rents are higher than 110% of FMR (Section 18 units)
PHAs that are not in designated SAFMR areas (where SAFMR adoption is mandatory) have two options to utilize SAFMRs voluntarily:
-Opt-In – A PHA may choose to fully utilize SAFMRs throughout its entire jurisdiction by requesting and receiving approval from their local HUD field office. An Opt-in PHA must decide whether to apply SAFMRs to it’s PBV program or whether to continue using the Metro Area FMRs (MAFMR).
-SAFMR-based Exception Payment Standards – A PHA may choose to establish exception payment standards using the SAFMR in just certain ZIP codes within their jurisdiction. This can be done by simple notification to SAFMRs@hud.gov. Exception payment standards must be applied to all vouchers (tenant-based and PBV) in the exception area (i.e. ZIP code).
Whether the PHA intends to opt-in or establish SAFMR-based exception payment standards, the PHA must carefully follow the instructions in PIH Notice 2018-01. |
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| Posted: | 01/13/2021 |
| Question: | Can a RAD owner include the cost of internet in the RAD project's utility allowance? |
| Answer: | According to 24 CFR 982.517, "A PHA's utility allowance schedule, and the utility allowance for an individual family, must include the utilities and services that are necessary in the locality to provide housing that complies with the housing quality standards (HQS). However, the PHA may not provide any allowance for non-essential utility costs, such as costs of cable or satellite television." Since internet is not necessary to comply with HQS and is therefore also considered "non-essential", its cost cannot be included as part of a utility allowance. Internet cannot be included on PBRA properties either. |
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| Posted: | 05/21/2020 |
| Question: | Where can a PHA or owner find guidance regarding PBRA or PBV program requirements that customarily involve in-person meetings? |
| Answer: | Guidance is available and will be continually updated at www.hud.gov/coronavirus. Guidance for PBRA can be found within “FAQs for Multifamily Housing Providers” (Available at https://www.hud.gov/sites/dfiles/Housing/documents/HUD_Multifamily_Corona_QA_FINAL.pdf). For PBV, please see “FAQs for Public Housing, Housing Choice Voucher, Project-based Voucher Program, and Native American Programs.” (Available at https://www.hud.gov/sites/dfiles/PIH/documents/COVID19_FAQ_PIH_Final.pdf) |
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| Posted: | 12/19/2019 |
| Question: | Is the administrative fee that is paid to the contract administrator at the same rate as for tenant based vouchers? |
| Answer: | If you are referring to a RAD PBV conversion, the admin fee PHAs receive for regular vouchers is the same admin fee PHAs receive for PBVs. If you are referring to PBRA and the admin fee that performance based contract administrators (PBCAs) get to administer a PBRA HAP contract, it is a different fee (but also a different set of work). It is also important to note that RAD PBRA HAP contracts are currently administered by HUD and not PBCAs. |
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| Posted: | 09/16/2019 |
| Question: | Are PBV units separately identified under the HAP Contract (e.g., unit 101 and 102) and, if so, can they be changed? |
| Answer: | Yes, all PBV units are separately identified in the HAP Contract. After the signing of the HAP, the PHA may substitute units, but only in accordance with 24 CFR §983.206. |
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| Posted: | 03/21/2019 |
| 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. |
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| Posted: | 03/01/2019 |
| Question: | How can a PHA own a property covered under a PBV contract that it will administer? |
| Answer: | Under the PBV program, the Contract Administrator and the Owner listed on the contract cannot be the same legal entity (i.e., the PHA cannot execute a contract with itself). To avoid this situation, the PHA may either: 1) Transfer the ownership of the project to a non-profit affiliate or instrumentality of the PHA (including to a “single-purpose entity” that owns nothing other than the property, which will typically be a requirement of a lender or investor) or 2) The PHA can form a related entity that is responsible for management and leasing and can serve as the owner for purposes of the Section 8 HAP contract; in this scenario, the HAP is then executed between the PHA (as the Contract Administrator) and the PHA’s related entity (as the Owner for HAP contract purposes). Note that in the second scenario, both the PHA and the entity serving as the Owner for HAP contract purposes will be required to sign the RAD Use Agreement.
Additionally, where the PHA owns a property covered under the PBV contract, the PHA must utilize an independent entity, approved by HUD, to perform the HQS inspections and rent reasonableness (24 CFR 983.59). The independent entity that performs these tasks can be the unit of general local government for the PHA jurisdiction (unless the PHA it itself the unit of general local government or an agency of such government), or any other HUD-approved public or private independent entity. |
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| Posted: | 03/01/2019 |
| 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. |
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| Posted: | 01/25/2019 |
| Question: | Can an owner administer the PBV waitlist? |
| Answer: | The obligation that the waiting list be maintained by the administering PHA is statutory. A PHA may choose to use a broad HCV waiting list, a PBV waiting list, or a project-specific PBV waiting list, but it is still the responsibility of the PHA to maintain that waiting list. |
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| Posted: | 01/25/2019 |
| Question: | For a PBV conversion, where the property is undergoing initial repairs, the RAD Notice requires that all units meet HQS no later than the date of completion of initial repairs as indicated in the RAD Conversion Commitment, rather than prior to entering into the HAP contract. If an HQS inspection does not occur until the initial repairs are completed, what dates should be entered into the Form-50058 for the date of last inspection for residents that are residing in the units while the repairs occur? |
| Answer: | In such cases, the PHA should carry over the date that the unit was last inspected as a public housing unit. |
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| Posted: | 01/25/2019 |
| Question: | In a RAD conversion to PBVs, can a PHA “designate” a building as elderly |
| Answer: | No. Prior to the enactment of HOTMA, the PBV program had an income mixing component, wherein not more than 25% of the units in the project could be assisted, with exceptions for units made available for certain types of households, including elderly households. Under those requirements, a PHA could designate specific units for elderly occupancy. Since HOTMA has eliminated this income-mixing requirement, PHAs can no longer designate units in such a manner. A PHA may, however, adopt a project-specific waiting list and an admission preference for elderly households. |
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| Posted: | 01/25/2019 |
| 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: | 01/25/2019 |
| Question: | This is for a public housing conversion to PBVs. During the conversion year under PBV, the voucher-administering agency earns no admin fee (Notice, REV-2, page 60). However, can the converting agency choose to reimburse the voucher-administering agency for its admin costs? |
| Answer: | Yes, the PHA may do so long as (1) the amount paid is not more than the allowable HUD schedule of admin fees and (2) the PHA identifies these amounts in the Development Budget (Sources and Uses). This action is allowable even if the converting agency is also the voucher-administering agency. |
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| Posted: | 01/24/2019 |
| Question: | Does a PHA receive the admin fee for administering PBV as part of a RAD conversion? In other words, the money paid to PBRA is limited to RAD contract rents. Is the money paid to a PHA for PBV include the RAD Contract rents PLUS an admin fee? |
| Answer: | Yes, the PHA that administers the PBV contract will receive monthly administrative fees under the Voucher program, beginning in the first full calendar year following conversion. This amount is not funded through the RAD contract rents but is funded from the larger Tenant Based Rental Assistance (TBRA) account. |
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| Posted: | 01/24/2019 |
| Question: | We converted to PBV and units were vacated due to rehab and thus we are eligible to receive Rehab Assistance Payments (RAP). How do we report the use of the RAP funds in VMS? |
| Answer: | The VMS Users Manual instructs PHAs to report Rehab Assistance Payments in the RAD 1 HAP Expense field in VMS. PHAs should not report the units as leased. |
|
| Posted: | 01/24/2019 |
| Question: | When a site-based waiting list is transferred following conversion, am I required to serve all of the existing applicants on the waiting list in their current order before serving any new applicants and without respect to adopted preferences? |
| Answer: | No. Once the waiting list is transferred, applications and preferences continue to operate in accordance with applicable regulations and locally adopted policies. As a result, new applicants following conversion may get housed ahead of applicants who were on the public housing site based waiting list at the time of conversion if they qualify for a higher preference even though they are entering the waiting list at a later date. There is no requirement to house all of the people who were on the PH site-based waiting list at the time of conversion before housing anyone else. |
|
| Posted: | 11/28/2017 |
| Question: | If a tenant is in the RAD PBV phase-in period and transfers to a different size unit in the same PBV project, does the phase-in still apply or will rent be based on TTP at that point? |
| Answer: | If the rent increase is occurring because of new income, the rent phase-in does not apply. If the tenant's monthly rent increases because the tenant moved to a new unit as a result of the RAD conversion, then the phase-in does apply. |
|
| Posted: | 11/06/2017 |
| Question: | We are a Property Management company that was previously processing the annual recertifications for the Public Housing units. The units have now converted to PBV under RAD. Do we continue to do the annual/interim recertifications until Jan. 1 of the following year, and do we issue the utility reimbursement checks? Or, does the Housing Authority take over the recertifications/interims and issue the utility reimbursement checks as the of RAD closing date? |
| Answer: | It is up to the PHA how they wish to handle processing of recertifications and utility allowances for its voucher program. HUD does not prevent PHAs from contracting with a management company to perform these tasks. |
|
| Posted: | 10/06/2014 |
| Question: | We are preparing to occupy our RAD site, however we do not know the process for 50058 submission. Is there a RAD program code for the 50058? Further should we submit a code "10" when the voucher is issued and a code "1" 50058 when the resident moves in? Also, will be 50058 be submitted as a public housing or housing choice voucher, both have different and distinct reporting information? Without a RAD program code HUD will not be able to actively track the success of the RAD program through the 50058 submission process. |
| Answer: | The 50058 should be filled out as it normally is for the Project-Based Voucher program, including completing Section 11 of the Form. In addition, the PHA should enter in line 2N “RADPH.” Action Code 10, Issuance of a Voucher, does not apply under the PBV program |
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| Category: | Transitioning Funding After Closing |
| Posted: | 12/09/2020 |
| Question: | If a PHA closes on a RAD/Section 18 Blend transaction on December 15, 2020, I am pretty sure that its 2021 Capital Fund grant will include funds for the 75% of the units that went RAD. Will the PHA’s 2021 Capital Fund grant include funds for the 25% of the units that went PBV via Section 18?
In the same scenario, will HUD fund the Section 8 payments in 2021 for the 25% of the units that went PBV, or will HUD not fund the Section 8 payments for the 25% units until January 2022? |
| Answer: | The RAD units will follow regular RAD funding procedures. As such, a property with a 1/1/21 HAP effective date will receive Public Housing Operating and Capital funds in 2021 and use those funds to pay rental assistance to the property in CY 2021. With respect to the section 18 units:
1) The PHA will receive Capital Funds for those units in the FY 21 grant if the units were in public housing as of 6/30/20. The PHA will subsequently receive DDTF for these units for five years. None of these funds may be used on the converted property
2) The PHA will receive Tenant Protection Voucher (TPV) funding, which it will use to make payments under the non-RAD PBV HAP contract once it is effective. RAD funding procedures, including the use of Rehab Assistance Payments (RAP), would not apply to these units. |
|
| Posted: | 10/28/2020 |
| Question: | How can I forecast the income my project is eligible to receive in Rehab Assistance Payments? |
| Answer: | Rehab Assistance Payments are provided under the HAP contract to provide subsidy payments to the property during the period of rehab. Units are only eligible for Rehab Assistance Payments if they were eligible for Operating Subsidy prior to conversion (i.e., included in “Eligible Unit Months” in the Form 52723 for the Calendar Year of conversion) and are uninhabitable during the period of rehab or construction. Rehab Assistance Payments are sized by HUD based on the Operating Fund and Capital Fund subsidy that formed the basis of a property’s RAD rent. For example, a property has a RAD rent of $500 PUM, which was based on Operating and Capital subsidy of $300 and tenant rents of $200. The HAP contract would include a Rehab Assistance Payment of $300 (adjusted by the OCAF, if the rents were due an OCAF adjustment). The PHA can find these amounts in the PUM Capital Fund, PUM Tenant Rents, and PUM Op Fund columns of the applicable RAD Rents spreadsheet, available on https://www.hud.gov/RAD/library/notices. |
|
| Posted: | 03/19/2019 |
| Question: | When should a property receive voucher payments through the TRACS system relative to the effective contract date? |
| Answer: | Payments through TRACS would start with the first January following the RAD closing. |
|
| Posted: | 01/25/2019 |
| Question: | If a public housing-only PHA converts its entire inventory to RAD, does it need to submit one last FASS-PH report (for that last partial or full year)? |
| Answer: | Yes. Because it received Federal funds for a portion of that fiscal year, the PHA will need to submit a close-out FDS. |
|
| Posted: | 01/25/2019 |
| Question: | This is for a public housing conversion to PBVs. During the conversion year under PBV, the voucher-administering agency earns no admin fee (Notice, REV-2, page 60). However, can the converting agency choose to reimburse the voucher-administering agency for its admin costs? |
| Answer: | Yes, the PHA may do so long as (1) the amount paid is not more than the allowable HUD schedule of admin fees and (2) the PHA identifies these amounts in the Development Budget (Sources and Uses). This action is allowable even if the converting agency is also the voucher-administering agency. |
|
| Posted: | 01/25/2019 |
| Question: | We have a RAD conversion entering into the final phases (post-construction) of closing out to the permanent loan from our lender. Is there is any RAD requirement to send excess cash to a residual receipts account? |
| Answer: | No. Per page 66 of the RAD Notice REV-2, Distributions: "Regardless of type of financing, Converted Projects will not be subject to any limitation on distributions of surplus cash, contingent on the availability of surplus cash as determined by year-end audited or certified financial statements. To implement this provision, HUD will not apply 24 CFR § 880.205, which, among other provisions, establishes certain limitations on distributions for profit-motivated owners and authorizes HUD to require the owner to establish a residual receipts account. Distributions are not considered program or project funds."
However, this refers only to limitations by HUD. The PHA may choose to accept limitations on distributions that may be imposed by non-FHA lenders or other funders. |
|
| Posted: | 01/24/2019 |
| Question: | How can a PHA determine how many units under HAP contract are eligible for Rehab Assistance Payments? |
| Answer: | During the period of rehabilitation or construction as identified in the HAP Contract, the maximum number of units for which a Project Owner can receive RAD Rehab Assistance Payments is limited to the number of units eligible for Operating Fund subsidy prior to conversion. The number of units eligible for Operating Fund subsidy prior to conversion is equal to the number of Total Eligible Unit Months (EUMs) on the project’s Form-52723 submission (Section 2, Column B, Row 15.) divided by twelve and rounded down to the nearest whole number. For conversions where only a portion of a PIC Development has converted, the number of EUMs associated with the converted portion can be derived from the Initial Year Funding Tool (See “2a. Operating Fund” worksheet, cell R28). |
|
| Posted: | 01/24/2019 |
| Question: | If a conversion occurs early in the calendar year before HUD has made its Capital Fund grants, how can a PHA that is converting its last public housing project make sure to apply the entire Capital Fund grant to the converting project? |
| Answer: | Capital Funds are used for funding HAP payments in the initial year of closing and can also be used for development costs (in the Sources & Uses). First, the PHA will want to ensure that enough of the Capital Fund grant is set aside for HAP payments. In such a case, a portion, based on the number of months remaining in the calendar year of the PHA’s Capital Fund grant, can be used for rental assistance to support the Covered Project for the remainder of the calendar year of the conversion. Within 2 weeks of the Capital Fund grant award, the PHA should complete the updated Initial Year Funding Tool to calculate the amount of Capital Funds needed and then complete HUD form 50075.1 with that amount shown in BLI 1503. The executed 50075.1 and the Initial Year Funding Tool should be emailed to resourcedesk@radresoucre.net, with a copy to Ivan Pour. Upon receipt, HUD will review and move the funds to BLI 1503 in LOCCS.
The remaining balance of the Capital Fund grant can be contributed to the Covered Project as part of the development budget if in the Financing Plan and memorialized in the RCC (Sources & Uses Exhibit), the PHA identifies that this source will come into the project after conversion by, for example, including in the Sources “TBD- 2017 Capital Fund balance.” This would authorize the use of those funds for the Covered Project when the funds become available, even though that would occur after conversion. Given that the precise amount that will be available will be unknown at the time of Financing Plan submission and at closing, in its review of the Financing Plan, HUD will make sure that the transaction does not rely on those funds in order to meet RAD’s minimum underwriting standards. In other words, the transaction must be able to stand on its own without the funds. The funds could then be used to enhance replacement reserves or operating reserves. Within 2 weeks of the Capital Fund grant award, the PHA should complete the 50075.1 with BLI 1504 populated with the corresponding Capital Fund amount and then email the 50075.1 to resourcedesk@radresource.net, with a copy to Ivan Pour. Upon receipt, HUD will review and move the funds to BLI 1504 in LOCCS. |
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| Posted: | 01/24/2019 |
| Question: | If we elected to covert our ACC assistance to PBV or PBRA, will we be certifying tenants and receiving funding through the PIH office or Multi-Family? Will we use 50058 or 50059? Will we be using the TRACS system? |
| Answer: | RAD conversions to PBVs will use the 50058 which will be submitted into PIC, just like certifications for any other family assisted under the Housing Choice Voucher program. Subsidy will be administered by the housing authority with whom the PBV HAP contract is signed, rather than through PIH. RAD conversions to PBRA will use the 50059 which will be submitted into TRACS. Subsidy will be administered by the Office of Multifamily Housing at HUD. |
|
| Posted: | 01/24/2019 |
| 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: | 01/24/2019 |
| Question: | Please tell me what Budget Line Items (BLIs) are used for RAD activities on Capital Funds HUD Form 50075.1 along with a description of planned activities that should be reflected under each applicable account. |
| Answer: | Use BLI 1504 for Capital Funds that are contributed into a RAD project's development budget. Use BLI 1503 for Capital Funds that are or will be used to make rental assistance payments. |
|
| Posted: | 01/24/2019 |
| Question: | Suppose that the PHA's operating expenses increase following conversion and the project doesn't have the cash to make the deposit into the R4R as required under RAD- what would be the likely consequences of a failure to make required replacement reserve deposits?
Does it make a difference whether it's PBV or PBRA? |
| Answer: | Failure to make required deposits to the replacement reserve is a violation of both the RAD Conversion Commitment (which survives the closing) and the PBRA or PBV HAP Contract and HUD may take enforcement action in such an event. If a property experiences an unexpected and substantial increase in operating expenses, the owner should contact HUD to determine options that will not result in HUD initiating an enforcement action. |
|
| Posted: | 01/24/2019 |
| 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: | 01/24/2019 |
| 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: | 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: | 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.
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|
| 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. |
|
| Category: | Underwriting and Funding Sources |
| Posted: | 07/28/2022 |
| Question: | In a RAD for PHA conversion in which a PHA is project basing its own vouchers at the RAD project as part of the conversion, including as part of a RAD/Section 18 blend, is a separate HUD subsidy layering review required? |
| Answer: | No. Attachment 1A, Section F.6 of the RAD Notice states, “A separate SLR will not be conducted by HUD if there is non-RAD PBV or another HUD subsidy at the time of conversion; the SLR performed as part of the RAD conversion will satisfy the requirements under section 102(d) of the HUD Reform Act.” Non-RAD PBV HAPs for existing housing do not trigger an SLR, although the project as a whole will still be subject to RAD SLR requirements. Executing an AHAP does trigger an SLR (see 85 Fed. Reg. 12001 (Feb. 28, 2020)) and if the AHAP is being executed in conjunction with the RAD closing and the units will be located at the RAD project, the RAD SLR satisfies the voucher program SLR requirement. The PHA must ensure that the non-RAD PBV units are accounted for in the RAD Transaction Log as part of the Financing Plan submission. |
|
| Posted: | 05/24/2022 |
| Question: | Is the PHA eligible to receive Demolition Disposition Transition Funding (DDTF) and Asset Repositioning Fee (ARF) for the units that will be removed through Section 18? |
| Answer: | PHAs are eligible to receive DDTF, but only for those units transitioning under Section 18, not the RAD units, and only in accordance with 24 CFR part 905. The PHA may use the DDTF for any eligible purposes, including for augmenting the RAD rents of a future RAD conversion (see RAD Notice Section 1.6.B.5 and 1.7.A.5). DDTF is an add-on of Capital Funds in the year following the removal of the Section 18 units. See also Public Housing Funds and Repositioning document and DDTF/ARF summary chart for more information, including eligible uses of DDTF (Capital Funds) once all units are removed from ACC.
PHAs may be eligible to receive ARF.ARF is part of Operating Funds as described in 24 CFR 990.190(h). ARF eligibility shall be in accordance with 24 CFR part 990. PHAs are eligible for ARF for units with Section 18 approval for an entire building. If units do not meet this criterion (i.e., because the RAD and Section 18 units are in the same building), the PHA is not eligible for ARF for the units removed under Section 18.
Within a “converting project”, the RAD and Section 18 units do not need to be in separate buildings. It will be up to the PHA to determine which units within a blend are removed through Section 18 and which units are converted through RAD. However, the selection of units to be removed through Section 18 may impact the PHA’s eligibility for ARF.
ARF will be incorporated into the Operating Fund subsidy calculation for the PHA for the period described in 990.190(h). See also Public Housing Funds and Repositioning document and DDTF/ARF summary chart for more information, including eligible uses of ARF (Operating Funds) once all units are removed from ACC. |
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| Posted: | 09/24/2021 |
| Question: | How can a PHA obtain HUD approval to spend over $100,000 on predevelopment costs? |
| Answer: | The housing authority would have to seek approval from their PIH Field Office in order to spend over $100,000 on predevelopment. |
|
| Posted: | 11/08/2019 |
| Question: | How can I determine if a project is in a designated Opportunity Zone? |
| Answer: | Each state has designated certain census tracts as Opportunity Zones. HUD has created a national map where users can identify whether a project is situated within a designated Opportunity Zone. See opportunityzones.hud.gov/ |
|
| Posted: | 10/31/2019 |
| Question: | For Opportunity Zone rent increases, how is “substantial rehabilitation” defined and what can be included in the RAD Scope of Work to measure against Housing Construction Costs? |
| Answer: | Substantial rehabilitation is defined here as a proposed RAD scope of work where the hard construction costs, including general requirements, overhead and profit, and payment and performance bonds, exceed of 60% of the “Housing Construction Costs.” Housing Construction Costs for a given market area can be found at https://www.hud.gov/sites/dfiles/PIH/documents/TDC.pdf We have also developed a tool available on the RAD Resource Desk that PHAs can use to check to quickly assess whether proposed rehab level meet this threshold.
For purposes of calculating aggregate construction costs vis-à-vis the 60% threshold, HUD will consider the combined construction costs of the overall development. The development may include a mixture of new construction and rehabilitation and may include other units besides the converting units (e.g., through the development of new units).
|
|
| Posted: | 10/31/2019 |
| Question: | For the Opportunity Zone Rent Increase, how will HUD determine whether the rent increase is necessary for the viability for the transaction? |
| Answer: | PHAs may request an increase to the rents in their CHAPs by up to $100 per unit per month. Generally, HUD will take the following approach to determining whether the rent increase is necessary for the viability of the transaction:
1) HUD will consider the total revenue for the property, including any other adjustments to the CHAP rents and other revenue producing units at the site.
2) The transaction must utilize “hard,” must-pay financing.
3) Using a trending rate of 2% for revenue and 3% for expenses, the transaction must maintain a debt coverage ratio that is no greater than 1.35 over a 20-year pro forma.
4) The transaction cannot include any cash-out financing or net acquisition proceeds to the PHA.
5) For transactions with more than 50 units, the transaction must defer or exclude at least 25% of the maximum allowable developer fee that would be allowable under the state Qualified Allocation Plan.
As a result of these tests, HUD may deny the rent increase or reduce the amount from what was requested. HUD reserves the right to consider other unique factors in the analysis of individual transactions.
|
|
| Posted: | 10/31/2019 |
| Question: | What converting projects are eligible for the Opportunity Zone Rent Increase provision? |
| Answer: | A project, as defined in the RAD Notice and which equates to a single transaction or phase, must meet all of the following criteria. The project must:
• Be converting to a Project Based Rental Assistance (PBRA) HAP contract
• Be located in a designated Opportunity Zone
• Propose in its Financing Plan to be newly constructed or substantially rehabilitated
• Require the rent increase in order to achieve viability of the transaction |
|
| Posted: | 10/31/2019 |
| Question: | When may a PHA make the request for an Opportunity Zone Rent Increase and how will HUD document approval? |
| Answer: | PHAs may make an initial request for the rent increase up to six months prior to submission of the Financing Plan and will make the final request when the Financing Plan is submitted.
The PHA’s initial request should affirm that the project:
Is converting to a Project Based Rental Assistance (PBRA) HAP contract
Is located in a designated Opportunity Zone
Will be newly constructed or substantially rehabilitated
Requires the rent increase in order to achieve viability of the transaction
Unless the project is not converting to PBRA or if it is located outside of an Opportunity Zone, HUD will issue a CHAP addendum that will provide a modified rent schedule conditioned on 1) submission of a complete and acceptable Financing Plan within six months of the date of the addendum and 2) HUD’s verification at the time of Financing Plan that the transaction meets the criteria for the rent increase as described above. The PHA can use the CHAP addendum to support lender and investor underwriting.
Please note that while HUD anticipates being able to fund most requests, HUD may need to delay issuance of a CHAP addendum if there is inadequate funding available to support the request.
If a complete and acceptable Financing Plan is not submitted within six months of the date of the CHAP addendum is issued, the CHAP addendum will expire. HUD will not provide extensions. The PHA may submit a subsequent request for the rent increase, which HUD will consider subject to the availability of funding.
In reviewing the submitted Financing Plan, HUD will confirm that the project meets all criteria to be eligible for the increase and confirm that the amount of the rent increase is necessary for the viability of the transaction. Once confirmed, HUD will amend the CHAP to fully incorporate the increased rents. |
|
| Posted: | 03/25/2019 |
| Question: | How do Capital Funds become part of a RAD conversion? |
| Answer: | A PHA wishing to use Capital Funds in its conversion should include the Capital Funds in the Sources & Uses section of their RAD Financing Plan. Upon closing, a PHA including Capital Funds into a conversion will transfer the Capital Funds into a rehab escrow. |
|
| Posted: | 03/21/2019 |
| 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: | 03/21/2019 |
| 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: | 03/18/2019 |
| Question: | How should PHAs handle existing tenant repayment agreements through a RAD conversion? Must the repayment agreement stay with the PHA? |
| Answer: | As with any other assets/liabilities of a property, the PHA and new owner must determine whether to transfer the repayment agreement with the property at conversion or to retain the repayment agreement on the PHA's books. Once determined, it is the responsibility of the PHA or Owner to maintain the terms of the repayment agreement and tenant rights. |
|
| Posted: | 03/01/2019 |
| 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. |
|
| Posted: | 01/25/2019 |
| Question: | Are HOME funds eligible for pre-development costs during RAD conversion? For example, can HOME funds be used to pay for the CNA and repairs identified in the CNA? If so, can the funds be drawn down before closing? |
| Answer: | What you propose would not be a problem from a RAD standpoint. You should check with the HOME Participating Jurisdiction to see if what you propose would be acceptable from a HOME program standpoint. For example, the HOME PJ would need to satisfy itself that the particular costs to be funded are HOME-eligible. Similarly, the HOME PJ would decide when HOME funds could be advanced. |
|
| Posted: | 01/25/2019 |
| Question: | Are Housing Authorities eligible to receive subsidy phase-down payments for units converted under RAD? |
| Answer: | No. Housing Authorities are not eligible to receive subsidy phase-down payments for units converted under RAD, or what, under the public housing program, is referred to as "Asset Repositioning Fee." Nor will PHAs, under RAD, be eligible for Replacement Housing Factor (RHF) funds for units that convert. Essentially, the act of conversion makes the PHA "whole" in terms of assisted units. |
|
| Posted: | 01/25/2019 |
| Question: | Attachment 1A of the RAD Notice Rev-2 states, "For leveraged transactions, the debt-coverage ratio should not be less than 1.11 over a ten year period using 2% growth in revenue and 3% growth in expenses." Will HUD be only reviewing the DCR for the first 10 years of a property? In effect, do we only need to submit a proforma with cash flow projections for 10 years? If so, is that also true for non-leveraged transactions? |
| Answer: | HUD requires an operating pro forma that projects out for the length of the initial HAP contract (either 15 or 20 years) for both leveraged and non-leveraged projects. Although we require that you submit a pro-forma for the 15 or 20 year period of the HAP, for purposes of analyzing the project’s feasibility, if it’s a self-financed deal (no debt), then we only test the first 10 years for DSCR and net cash flow. Please note that in the revised Notice, HUD has instructions that say that the Financing Plan will be reviewed and evaluated as a whole. |
|
| Posted: | 01/25/2019 |
| Question: | Can housing authorities use sale proceeds from public housing units as a source for financing in a RAD development? |
| Answer: | Yes; indeed, such proceeds are a common source of funding in RAD applications. |
|
| Posted: | 01/25/2019 |
| Question: | For purposes of Replacement Housing Funding (funds are permitted to be used 'for development'), are construction costs considered 'development'? |
| Answer: | Yes. Under RAD, RHF funds may be used for renovation (of the converting site) or new construction. [Updated 7.29.13] |
|
| Posted: | 01/25/2019 |
| Question: | How do I submit a request to extend the obligation and expenditure dates of my capital funds? |
| Answer: | Section 1.5A of the revised Notice (page 27) contains the following new language: "If the PHA requests, in accordance with section 9(j)(2)(A)((ii) of the United States Housing Act of 1937 and the relevant HUD Appropriation Acts, HUD will extend the obligation end date for Capital Funds used in the conversion for up to five years from the point when Capital Funds became available to the PHA for obligation. By extending the obligation end dates, the expenditure end dates will correspondingly be also extended. Such extensions will prevent PHAs from otherwise losing its unobligated Capital Funds prior to conversion."
The PHA should send a request to the Office of Capital Improvements, to the attention of Jeff Riddell, with copies to the RAD Transaction Manager and the local PIH field office. |
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| Posted: | 01/25/2019 |
| Question: | How is RAD responding to concerns of commercial lenders and Low-Income Housing Tax Credit (LIHTC) investors with regard to foreclosure matters and continued rental assistance? |
| Answer: | HUD has posted a standard rider to the public housing conversion RAD HAP contracts to address the concerns LIHTC investors have raised while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. These riders document and set forth conditions for: providing notice to LIHTC investors; accepting the investor’s offer to cure on behalf of a defaulted owner; providing HUD consent to the transfer of the investor’s interest in the ownership; and pre-approving replacement of the general partner or managing member with the special limited partner or similar entity for a limited period of time in order to facilitate an acceptable permanent replacement. To access these riders, go to www.radresource.net > Contracts & Closing Documents.
HUD is also in the process of drafting standard riders to the Use Agreement and the public housing conversion RAD HAP contracts to clarify that HUD will not assert an interest to prohibit a lender from foreclosing when there is cause, but that the Use Agreement -- which establishes affordability requirements -- survives foreclosure by its terms and that continuation of HAP assistance requires HUD consent. It is also HUD’s goal through these riders to provide for a limited continuation of HAP assistance if the lender or its designee comes into ownership of the project in accordance with its rights under the loan documents. When final, these riders will be published on the RAD website. Until these riders are finalized, HUD has developed several provisions that can be provided by the RAD Closing Coordinator to assist with transactions currently moving into the closing phase. These provisions address lender concerns while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control.
Importantly, neither rider changes RAD statutory and RAD notice requirements around ownership and control. The RAD Use agreement and RAD HAP contract – two means through which long-term affordability for residents are secured – survive foreclosure, leaving current and future residents protected. |
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| Posted: | 01/25/2019 |
| Question: | How would cell tower income be underwritten? |
| Answer: | As with all other sources of income, HUD would review past history and supporting documentation (e.g., long-term cell tower lease), with reasonable allowance for loss/bad debt. |
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| Posted: | 01/25/2019 |
| Question: | Is there any limit on how much of the developer fee can be deferred to finance a RAD conversion, assuming all project financing will be from Housing Authority sources? |
| Answer: | While in tax credit deals only a certain amount of deferred developer fee can be counted towards basis, there’s no such rule outside of that context. As a general principle, the RAD team generally wants a material amount of non-deferred developer fee because it acts as an additional contingency (if there are cost overruns, the developer can defer more fee without having to invest more cash in the deal). Additionally, funding requirements may change based on the findings from the completed RAD Physical Condition Assessment (RPCA). |
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| Posted: | 01/25/2019 |
| Question: | Our authority has section 8 admin fee reserves as well as section 8 project based new construction reserves. Can these be used toward a RAD transaction? Does it make a difference whether the RAD transaction is PBV or PBRA? |
| Answer: | Yes. Admin fee reserves from the Section 8 program can be used to support a RAD transaction. |
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| Posted: | 01/25/2019 |
| Question: | When a PHA contributes Capital Fund grants to a RAD development budget, are those funds treated as both obligated and expended at closing? |
| Answer: | Yes. A PHA should withdraw those funds from LOCCS and deposit into the escrow account at closing, which will then also serve to obligate and expend the funds under the Capital Fund program. |
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| Posted: | 01/24/2019 |
| Question: | A PHA will be using their 2012 funds for RAD and want to make sure they meet the obligation deadline. What is the process for doing this? |
| Answer: | The PHA should send an extension request (to extend the obligation deadline) to the Capital Fund Office, attention: Alan Kaufmann and Ivan Pour. [Updated 5.13.15] |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 07/30/2018 |
| Question: | I am about to apply for RAD but am also in the process of applying for a Resident Opportunities and Self-Sufficiency (ROSS) grant. The ROSS grant regulations state that HA’s cannot apply for a ROSS grant if they have received a CHAP at the time of the application due date. Would I have any issues applying for a ROSS grant while waiting for my CHAP award? |
| Answer: | As long as you don't have a CHAP by the application due date, you are eligible to apply for the ROSS grant. You can continue to use the grant until it has expired, even if the AMP converts under RAD. |
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| Category: | Use of Public Housing Funds |
| Posted: | 05/24/2022 |
| Question: | Can a PHA contribute Public Housing funds (i.e., Capital Funds, Operating Funds, Program Income) into the RAD budget, even though the property will include non-RAD units? |
| Answer: | Yes. The RAD Notice (Section 1.5.A) permits public housing funds to be used as a source of capital in the development budget to support conversion. Consistent with HUD’s approach to subsidy layering reviews, in the case of a PHA that will no longer have ACC units as a result of the pending or simultaneous closing, or have less than 50 units remaining and have initiated procedures to dispose of their final ACC units, when the PHA is contributing public housing funds in a conversion, there is no restriction on the amount of public housing funds that may be contributed to the Covered Project(s) through the conversion. In all other cases, HUD will apply a proportionality test to make sure that the funds contributed relative to the total project budget are proportional to the RAD units relative to the total units. In addition, the PHA must estimate and plan for costs for operating and maintaining its remaining public housing units (if any) until such units are also removed from public housing, as well as the closeout costs (e.g., audits, legal fees) described in PIH Notice 2019-13 and 2014-24 (as applicable). |
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| Posted: | 03/03/2022 |
| Question: | Can Public Housing Funds be expended after all the public housing units have been removed (i.e., after all units are in Removed from Inventory (RMI) status in PIC)? |
| Answer: | PHAs cannot spend Public Housing funds on units or properties after RMI removal, but PHAs can still expend funds on eligible program costs which must be reasonable under 2 CFR part 200, and within the Grant Period of Performance. Eligible program costs may include:
• Costs for Moving to Work (MTW) agencies as approved in an MTW plan;
• Administrative closeout costs (e.g., staff, operations, security, disposing of non-dwelling property, liquidation of equipment/supplies);
• Final program audits, legal reviews, and final PHA Board Resolution (e.g., auditor fees, Board costs, legal fees);
• Resolution of all outstanding legal matters (subject to the OGC Litigation Handbook (OGC Handbook 1530.1 REV-5);
• PHA public housing liabilities and if consistent with 2 CFR part 200 requirements related to benefits (e.g., pensions);
• Staff transitions, such as severance packages required by a pre-existing employment contract or PHA employment policy consistent with state/local law and 2 CFR part 200;
• Record keeping for three years or otherwise in compliance with 2 CFR section 200.333 on recordkeeping, but not outside of the Grant Period of Performance;
• Maintenance or site remediation of any remaining public housing property (real or personal) prior to DOT removal and disposition;
• Development of new Public Housing units as identified in Form HUD-5837, provided the PHA has the authority and complies with 24 CFR part 905. |
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| Posted: | 09/24/2021 |
| Question: | How can a PHA obtain HUD approval to spend over $100,000 on predevelopment costs? |
| Answer: | The housing authority would have to seek approval from their PIH Field Office in order to spend over $100,000 on predevelopment. |
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| Posted: | 03/30/2020 |
| Question: | The RAD Notice states that PHAs may not use Public Housing funds (i.e., Operating and Capital) after a RAD conversion has closed to support a post-conversion RAD PBV project, unless these planned expenditures were identified in their Financing Plans. Is there an exception to this rule for Moving to Work (MTW) PHAs? |
| Answer: | Yes, an MTW PHA may use Public Housing funds (and Housing Choice Voucher funds) after closing to support a converted RAD PBV project, as this would be an allowable use of MTW funding flexibility (i.e., fungibility) under the MTW Agreement. The MTW Agreement allows MTW PHAs to use Public Housing Funds for an eligible Section 8 purpose. These planned expenditures must be included in the MTW PHA’s approved Annual MTW Plan in Section V – MTW Sources and Uses of Funds under “Planned Use of Single Fund Flexibility.” |
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| Posted: | 03/25/2019 |
| Question: | How do Capital Funds become part of a RAD conversion? |
| Answer: | A PHA wishing to use Capital Funds in its conversion should include the Capital Funds in the Sources & Uses section of their RAD Financing Plan. Upon closing, a PHA including Capital Funds into a conversion will transfer the Capital Funds into a rehab escrow. |
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| Posted: | 03/25/2019 |
| Question: | When, under RAD, are Capital Funds considered obligated and/or expended? |
| Answer: | If a PHA is contributing Capital Funds to the development budget (Sources & Uses), those Capital Funds are considered both obligated and expended as of the effective date of the RAD closing. If a PHA needs to extend the obligation end date for capital funds in order to use capital funds in the development budget, the PHA should send a request to the Office of Capital Improvements, to the attention of Jeff Riddell, with copies to the RAD Transaction Manager and the local PIH field office. |
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| Posted: | 03/21/2019 |
| Question: | Our PHA is considering applying to convert all of its public housing to RAD. What can future RHF funds be used for? Can future RHF units be converted to RAD? |
| Answer: | PHAs can contribute any existing/accumulated RHF to the converted projects. The converted units are not eligible to generate RHF, so you would not receive any RHF for the converted units. If you have a future stream of RHF funds due to your agency in future years, they may be used for convention RHF purposes (i.e. constructing new public housing units) or, under RAD you may choose to forgo any ongoing RHF grants and re-purpose the foregone subsidy to augment the initial RAD rent for a converting project. The RAD rent may be augmented by the following amount:
2012 RHF grant × Years of RHF funding the PHA is eligible to receive, but has not yet received = Total Anticipated RHF grants
Total Anticipated RHF Grants ÷ 20 ÷ Number of Units converting under RAD ÷12 = PUM RAD Rent Augmentation
The PUM RAD Rent Augmentation would be reflected in the initial rents established in the HAP contracts. The contract rents will still be subject to applicable rent caps. [Updated 7.29.13] |
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| Posted: | 03/21/2019 |
| 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. |
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| Posted: | 03/18/2019 |
| Question: | PHAs may contribute public housing funds as a Development source in a RAD conversion in the form of a loan. If there are debt service payments made on the loan, are those receipts restricted? |
| Answer: | Yes, any debt service payments on a loan made from public housing funds are considered program income and can only be used for Section 8 or public housing purposes. |
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| Posted: | 03/01/2019 |
| Question: | I am the E.D. of a very small, rural PHA. If we convert our entire PIH inventory to RAD, what would happen to our existing financial public housing reserves? Would these funds be completely de-regulated (allowing us to leverage them for additional affordable units) or would they be somehow recaptured by HUD? |
| Answer: | If you convert your entire Public Housing inventory to RAD then you are permitted to bring all of your current public housing funding with your RAD conversion. It would not be recaptured by HUD. |
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| Posted: | 03/01/2019 |
| Question: | Under what circumstances can I use other public housing funds, such as operating reserves, unobligated Capital Funds, Replacement Housing Factor (RHF) funds, etc., to facilitate conversion under RAD? |
| Answer: | PHAs can use available public housing funding, including Operating Reserves, Capital Funds, and RHF funds, as an additional source of capital to support conversion. Eligible conversion-related uses for these funds include pre-development, development or rehabilitation costs and establishment of a capital replacement reserve or operating reserve. As stated in the Notice, these funds must be identified in the Financing Plan submitted to HUD for review.[See RAD Final Notice Reference: Paragraph 1.5, A.] [Update 7.29.13] |
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| Posted: | 01/25/2019 |
| Question: | Are Housing Authorities eligible to receive subsidy phase-down payments for units converted under RAD? |
| Answer: | No. Housing Authorities are not eligible to receive subsidy phase-down payments for units converted under RAD, or what, under the public housing program, is referred to as "Asset Repositioning Fee." Nor will PHAs, under RAD, be eligible for Replacement Housing Factor (RHF) funds for units that convert. Essentially, the act of conversion makes the PHA "whole" in terms of assisted units. |
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| Posted: | 01/25/2019 |
| Question: | Can a PHA doing a straight RAD conversion without any rehab work take all the remaining Capital Funds or Operating Reserves at conversion? So, it would be listed as a source with $0 uses. |
| Answer: | If a PHA converts all of its units under RAD, it may bring all of its capital funds and operating reserves without restriction. The PHA should still have a balanced Sources and Uses - many PHAs create a "PHA Reserve" as a use of funds. |
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| Posted: | 01/25/2019 |
| Question: | Can housing authorities use sale proceeds from public housing units as a source for financing in a RAD development? |
| Answer: | Yes; indeed, such proceeds are a common source of funding in RAD applications. |
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| Posted: | 01/25/2019 |
| Question: | For purposes of Replacement Housing Funding (funds are permitted to be used 'for development'), are construction costs considered 'development'? |
| Answer: | Yes. Under RAD, RHF funds may be used for renovation (of the converting site) or new construction. [Updated 7.29.13] |
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| Posted: | 01/25/2019 |
| Question: | How do I submit a request to extend the obligation and expenditure dates of my capital funds? |
| Answer: | Section 1.5A of the revised Notice (page 27) contains the following new language: "If the PHA requests, in accordance with section 9(j)(2)(A)((ii) of the United States Housing Act of 1937 and the relevant HUD Appropriation Acts, HUD will extend the obligation end date for Capital Funds used in the conversion for up to five years from the point when Capital Funds became available to the PHA for obligation. By extending the obligation end dates, the expenditure end dates will correspondingly be also extended. Such extensions will prevent PHAs from otherwise losing its unobligated Capital Funds prior to conversion."
The PHA should send a request to the Office of Capital Improvements, to the attention of Jeff Riddell, with copies to the RAD Transaction Manager and the local PIH field office. |
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| Posted: | 01/25/2019 |
| Question: | My agency is scheduled to receive Replacement Housing Factor (RHF) or Demolition/Disposition Transition Funds (DDTF) as a result of other public housing properties that were removed from our inventory through demolition or disposition. We would like to augment our RAD contract rent instead. How do we request the rent increase and how do we determine the amount that the RAD rents can be increased? |
| Answer: | To request a RAD contract rent augmentation, PHAs should email their RAD Transaction Manager who will obtain the amount of future RHF/DDTF funds for which PHAs are eligible. Once PHAs have received confirmation of the available amount, the PHAs complete the RHF/DDTF Rent Boost/Cancellation Certification form found in the Document Library on the RAD Resource Desk and email it to the RAD Transaction Manager. The PHAs should note in their email whether they wish to apply the amount to a specific CHAP or across multiple CHAPs. The Office of Recap will then issue an amended RAD CHAP award reflecting the revised contract rents. Note that the augmented contract rents are still subject to existing PBV and PBRA rent caps. |
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| Posted: | 01/25/2019 |
| Question: | When a PHA contributes Capital Fund grants to a RAD development budget, are those funds treated as both obligated and expended at closing? |
| Answer: | Yes. A PHA should withdraw those funds from LOCCS and deposit into the escrow account at closing, which will then also serve to obligate and expend the funds under the Capital Fund program. |
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| Posted: | 01/24/2019 |
| Question: | A PHA will be using their 2012 funds for RAD and want to make sure they meet the obligation deadline. What is the process for doing this? |
| Answer: | The PHA should send an extension request (to extend the obligation deadline) to the Capital Fund Office, attention: Alan Kaufmann and Ivan Pour. [Updated 5.13.15] |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| Question: | If a conversion occurs early in the calendar year before HUD has made its Capital Fund grants, how can a PHA that is converting its last public housing project make sure to apply the entire Capital Fund grant to the converting project? |
| Answer: | Capital Funds are used for funding HAP payments in the initial year of closing and can also be used for development costs (in the Sources & Uses). First, the PHA will want to ensure that enough of the Capital Fund grant is set aside for HAP payments. In such a case, a portion, based on the number of months remaining in the calendar year of the PHA’s Capital Fund grant, can be used for rental assistance to support the Covered Project for the remainder of the calendar year of the conversion. Within 2 weeks of the Capital Fund grant award, the PHA should complete the updated Initial Year Funding Tool to calculate the amount of Capital Funds needed and then complete HUD form 50075.1 with that amount shown in BLI 1503. The executed 50075.1 and the Initial Year Funding Tool should be emailed to resourcedesk@radresoucre.net, with a copy to Ivan Pour. Upon receipt, HUD will review and move the funds to BLI 1503 in LOCCS.
The remaining balance of the Capital Fund grant can be contributed to the Covered Project as part of the development budget if in the Financing Plan and memorialized in the RCC (Sources & Uses Exhibit), the PHA identifies that this source will come into the project after conversion by, for example, including in the Sources “TBD- 2017 Capital Fund balance.” This would authorize the use of those funds for the Covered Project when the funds become available, even though that would occur after conversion. Given that the precise amount that will be available will be unknown at the time of Financing Plan submission and at closing, in its review of the Financing Plan, HUD will make sure that the transaction does not rely on those funds in order to meet RAD’s minimum underwriting standards. In other words, the transaction must be able to stand on its own without the funds. The funds could then be used to enhance replacement reserves or operating reserves. Within 2 weeks of the Capital Fund grant award, the PHA should complete the 50075.1 with BLI 1504 populated with the corresponding Capital Fund amount and then email the 50075.1 to resourcedesk@radresource.net, with a copy to Ivan Pour. Upon receipt, HUD will review and move the funds to BLI 1504 in LOCCS. |
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| Posted: | 01/24/2019 |
| Question: | The Notice provides that a PHA may use up to $100,000 in pre-development funds without prior HUD approval. We anticipate spending about $300,000 in architectural work, due diligence, legal, etc. prior to financial closing. Can the PHA put in these additional funds? Would they need to seek approval from their Transaction Manager? |
| Answer: | If the PHA needs to spend more than $100,000 in pre-development costs, it can do one of the following: (1) request approval from HUD to exceed this amount, which would need to follow the normal public housing (24 CFR part 85) procurement rules, unless the PHA submitted a good-cause waiver, or (2) use non-public housing funds for these purposes, which would then be reimbursed at closing, if necessary. [Updated 7.29.13] |
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| Posted: | 01/24/2019 |
| 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. |
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| Posted: | 01/24/2019 |
| 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. |
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| 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. |
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