RAD Category Search

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.

Faircloth to RAD and RAD/Section 18 Blends

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?

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.

Opportunity Zone Locations

How can I determine if a project is in a designated Opportunity Zone?

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/

Definition of Substantial Rehab

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?

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).

Rent Increase Needed for Viability

For the Opportunity Zone Rent Increase, how will HUD determine whether the rent increase is necessary for the viability for the transaction?

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.

Opportunity Zone Rent Increase Eligibility

What converting projects are eligible for the Opportunity Zone Rent Increase provision?

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

OCAF Adjustments Prior to Closing

Prior to closing, how are my CHAP rents increased by OCAF?

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.

Internet in a PBV Utility Allowance?

Can a RAD owner include the cost of internet in the RAD project's utility allowance?

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.

Missed OCAF Adjustments on RAD PBV Properties

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)?

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.

OCAFs for PBV Properties

I have a PBV property which converted through RAD. How do I obtain the OCAF adjusted rents for this property?

Following conversion to PBV, the project’s contract rents are eligible for an annual OCAF adjustment at each HAP contract anniversary. The administering PHA (or independent entity, if the project is owned by the administering PHA) will be responsible for processing the OCAF and ensuring the owner is receiving the updated rent amounts. Please see the following instructions found in the “RAD PBV OCAF Adjustment Tool (Post-Closing)” spreadsheet available on the RAD Resource Desk Document Library: “Per the RAD Notice and the HAP Contract, the RAD contract rents are adjusted at each anniversary of the HAP contract by the Operating Cost Adjustment Factor (OCAF). 24 CFR 983.301 and 983.302 do not apply. For RAD PBV properties, contract rents are the lesser of reasonable rent and the OCAF-adjusted rent. HUD calculates and publishes the OCAF each year in the Federal Register. The OCAF is applied to the portion of a contract rent not committed to debt service. As a result, the rent adjustment can be more complex than simple multiplication. Further, the Federal Register notice states when the OCAF for each year takes effect - typically, a specified date in February. As a result, a contract with an anniversary date on January 1 or February 1 will usually use the OCAF for the prior year (e.g. a contract with a HAP anniversary date of January 1 will be adjusted on January 1 of 2018 by the 2017 OCAF).” This spreadsheet can assist in calculating what the rents should be, but this Tool is for internal calculation purposes only and does not need to be submitted to HUD.

Energy Savings for PBRA Conversion

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?

(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.

Ability to Switch from a 3 year to 5 year Phase In (PBV)

Once in RAD PBV and a three year phase in was chosen for our policy, are we able to add to our policy the option to use a five year phase in, due to larger rent increases, to benefit tenants that transitioned into RAD PBV?

You are permitted to establish a 3 year, 5 year, or combination of the two as your phase in policy. However, the policy must be in place at conversion and cannot be modified after conversion. Please see Section 3.10.2 of the RAD PBV Quick Reference Guide.

Eligible Units for PBV HAP Subsidy

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?

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.

Process for Updating Utility Allowances Shown in CHAP Award

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?

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.

RAD Contract Rents for Mixed-Finance Projects

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.?

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.

Combining Scattered Sites into a Single CHAP & HAP Contract

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)?

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.

Waiver for Site-Specific Utility Allowance Schedule for PBV RAD Conversion

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?

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

Phase in of Flat Rents after RAD Conversion

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?

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.

Changes to Utility Configurations and Impact on RAD Contract Rents

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?

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.

Elimination of Efficiences (and other unit reconfigurations) and Impact on RAD CHAP Rents

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?

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]

Changes in Classification of Bedroom Size

How does a change in classification of bedroom size impact my RAD rents?

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.

Changes in Bedroom Distribution and Impact on RAD Contract Rents

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?

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.

Charging for Excess Utility Usage After RAD Conversion

In either PBV or PBRA, can an owner charge for excess utilities?

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.

Augmenting RAD Contract Rent with RHF or DDTF

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?

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.

RAD PBRA Conversion Rent Phase In

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.

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."

Assistance Based on Unit Size or Household Size

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?

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.

PHAS Exemption Effective Date

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?

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.

Joint CNI/RAD Application and RAD Award Date

If you submit a joint CNI/RAD application, will the RAD award date be based on the CNI award schedule?

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.

PBRA Rent Setting and Rent Reasonableness

Am I correct in thinking rent reasonableness does not factor into calculating PBRA Contract Rents?

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.

Utility Savings and RAD Contract Rents

If, post-RAD, a RAD project made utility-saving investments, what would happen to Section 8 contract rents and tenant utility allowances?

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.

RAD Utility Consumption

For a RAD project, is the utility consumption frozen at the RAD conversion?

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.

Acheiving Higher Contract Rents Under RAD

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?

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]

RAD Rents and Agency Allocation/Fee Income

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?

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.

CHAP Acceptance

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?

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]

CHAP Contract Rents

How are the rents included in Exhibit A of the CHAP determined?

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]

Utility Allowance at RAD Conversion

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?

The PHA should use the most recent utility allowance at the time of conversion.

Small Area FMRs

How can Small Area Fair Market Rents (SAFMR) be used to increase rents in the project-based voucher (PBV) program?

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.

Applying OCAF Adjustment During Construction Period

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?

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.