HUD: RAD Revisions

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On June 26, 2015, HUD published a Notice in the Federal Register revising some of the rules of the Rental Assistance Demonstration (RAD) Program. The RAD program provides the authority to convert various housing programs to long-term project-based Section 8 rental assistance. The revised Notice PIH-2012-32, REV-2 summarizes key changes made to the program. Most elements of the revised Notice are effective June 26, 2015.

Background
RAD allows for the conversion of assistance under the Public Housing, Rent Supplement (Rent Supp), Rental Assistance (RAP), and Moderate Rehabilitation (Mod Rehab) programs to long-term, renewable Section 8 assistance. RAD has two separate components:
1. First Component: allows projects funded under the Public Housing and Mod Rehab programs to convert to long-term Section 8 rental assistance contracts. These contracts may be either Project-Based Vouchers (PBVs) or Project-Based Rental Assistance (PBRA). The RAD statute authorizes up to 185,000 units to convert under this component.
2. Second Component: allows owners of projects funded under the Rent Supp, RAP, and Mod Rehab Programs with a contract expiration or termination occurring after October 1, 2016, to convert Tenant Protection Vouchers (TPVs) to PBVs or PBRA. There is no cap on the number of units that may be converted under this component of RAD.

Key Changes
First Component:
1. Reflects increase in the unit cap from 60,000 to 185,000 units;
2. Modifies the first-come, first-serve approach for selecting projects for participation in RAD in order to prioritize projects that are part of broader neighborhood revitalization and that have higher investment needs;
3. Limits conversions under the First Component to Public Housing projects. Mod Rehab projects will now be converted only under the Second Component;
4. Extends the time period for submission of the application for the final phase of multi-phase projects to July 1, 2018;
5. Provides contract rents at FY 2014 rent levels for all awards made after the increase in the unit cap;
6. Ensures that residents retain rights and protections when their Total Tenant Payment (TTP) exceeds the gross rent on the HAP Contract;
7. Eliminates interim program milestones to streamline processing and provides additional time to submit financing plans for LIHTC transactions, to better align those deadlines with those of LIHTC providers;
8. Identifies specific HUD nondiscrimination and equal opportunity requirements that are applicable under different conversion plans and established an up-front HUD review of these requirements for certain transactions;
9. Stipulates when non-dwelling property and land can be removed or released from the Public Housing Program in conjunction with the conversion of assistance;
10. Permits RAD contract rents to increase by a portion of the estimated savings in resident utility allowances (this provides an incentive for energy efficiency);
11. Permits Section 8 assistance to “float” within certain mixed-income properties;
12. Provides additional flexibility for voucher agencies to implement Choice-Mobility provisions in PBV conversions;
13. Clarifies the applicability of site and neighborhood standards to new construction on the site of existing public housing;
14. Clarifies that a PHA may operate a PBV program or HCV program-wide waiting list and that a project owner may operate a community-wide waiting list for its PBRA projects; and
15. Provides greater detail regarding conversions that would transfer assistance to a new site.

Second Component:
1. Provides an option for owners of Mod Rehab, Rent Supp, and RAP projects to convert to 20-year PBRA;
2. Permits Mod Rehab SROs that were funded under the McKinney-Vento Homeless Assistance Act to convert to long-term PBV or PBRA contracts;
3. Formalizes the applicability of Davis-Bacon wages for conversions of assistance; and
4. Clarifies the PBV rent setting requirements for Section 236 decoupled projects.

New Waivers & Alternative Requirements
These requirements are effective as of July 6, 2015:
1. Under-Occupied Units at Time of Conversion: Families occupying, at the time of conversion of assistance, a unit that is larger than appropriate, may remain in the unit until an appropriate-sized unit becomes available in the covered project. Under the Second Component, this alternative requirement will only apply to families who are elderly or disabled.
2. Assistance for Families when Total Tenant Payment (TTP) Exceeds Gross Rent: PHAs and owners must continue to treat certain families in public housing that has converted assistance as assisted and charge 30 percent of adjusted gross income for rent. The families covered by this alternative requirement must have incomes high enough for their TTP to exceed the contract rent yet still remain eligible for assistance or otherwise be unable to afford market rate housing in their community;
3. Choice-Mobility Cap for Public Housing Conversions to PBV: PHAs may, for projects that have converted assistance from Public Housing to PBV, provide one of every four turnover vouchers to households on their regular HCV waiting list instead of for Choice-Mobility vouchers;
4. Rent Supp/RAP Contracts After Section 236 Prepayment: The original RAP or Rent Supp contract may remain in place for 60-days after repayment of a Section 236 mortgage until the PBV HAP contract is executed;
5. Uniform Physical Condition Stan- dards (UPCS) Inspections: All units converting assistance to PBRA must meet the Uniform Physical Condition Standards no later than the date of completion of initial repairs as indicated in the RAD conversion commitment; and
6. Floating Units: For certain projects (Choice, Mixed Finance, and HOPE VI), HUD is allowing PBV assistance to float among unassisted units.

Participants in the RAD program should obtain and review the requirements of the revised Notice.