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Changing Bedroom Sizes on PRAC TOA
In regards to transfer of assistance, the existing PRAC units are tax credit units currently occupied by single-person, elderly households. We would not be looking to expand the existing contract authority. As we start to process this information, our first question is if the receiving units for transferred assistance can be two-bedroom units?While assistance could be transferred from the current PRAC 1-BDM units to 2 BDM units, households moving into a larger unit must meet the occupancy standards for the larger unit.
Rents on PRAC Transfer of Assistance
If we transferred the assistance to a newly constructed 10-unit project, would the post-conversion rents be capped at 120% of that location’s FMR or 120% of originating project’s FMR?The initial rents for a PBRA RAD Conversion are the lesser of current PRAC rents and 120% of FMR/SAFMR of the newly constructed 10-unit property to which the contract is being transferred.
Rents Exceeding Market Rents
During the 20 year term, can rents be marked down based on an RCS or would the RCS only prevent properties from receiving an increase that exceeds market levels? It seems it may be possible that properties in declining markets could never/rarely receive an OCAF during the 20 year term?The RCS is at the Owner’s discretion and would only need to be provided when the OCAF adjusted rents for the project are above the HUD-established FMR. The RCS would validate whether the OCAF adjusted rents are below true market, and HUD will rely on the RCS rents when calculating the 120% max. If the RCS shows that the market rents are not higher than the HUD FMRs then yes, the rents may be decreased to 120% of FMR.
Increasing Rents at RAD for PRAC Properties
Can I increase my rents to the maximum of 120% of Fair Market Rents (FMR) when I convert my project?All rent increase requests are reviewed and approved according to established PRAC budget-based rent adjustment submission and analysis requirements. Rent increases are not automatic as a result of RAD conversion.
Determination of RAD for PRAC Rents
Will a Rent Comparability Study be required to determine rents?No, PRAC rents are established are established based on the project operating budget. When converting under RAD, a Rent Comparability Study is not required.
Rent Bundling in RAD for PRAC
Are there geographic limits to rent bundling (i.e. could converting properties in California and Florida be rent bundled)?Rent bundling is permitted without geographic limit.