HUD Notice Rental Assistance

Demonstration (RAD) – Partial Implementation and Request for

Comments

April 2012

Public Housing• Capital repair needs in excess of $25.6B across portfolio, or

$23,365/unit• Section 9 funding platform unreliable (pro-rations, cuts), inhibits

access to private debt and equity capital (deed of trust)• Losing 10,000-15,000 hard units/year

Section 8 Moderate Rehabilitation (Mod Rehab) • Cannot renew on terms needed to secure financing

Rent Supplement (RS) & Rental Assistance Payment (RAP)• No option to renew when contracts expire

CURRENT CHALLENGES

2

• February 2010: FY11 Budget requests $350M for Transforming Rental Assistance (TRA) initiative

• May 2010: “Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010” (PETRA) - Administration’s bill

• December 2010: “Rental Housing Revitalization Act” (RHRA) introduced by Rep. Ellison and co-sponsors

• February 2011: FY12 Budget requests $200M for a “Rental Assistance Demonstration” (RAD)

• August 2011: RAD language submitted as “Technical Drafting Service” (TDS) to Rep. Ellison, Rep. Bachus, and Senator Shelby

• November 2011: FY12 Appropriations minibus authorized RAD

HISTORY

3

GOALS

FY12 Rental Assistance Demonstration (RAD)

Allow selected Public Housing & some at-risk assisted Multifamily programs to convert to long-term Section 8 Housing Assistance Payment (HAP) contracts

Goals•Build on proven Section 8 multifamily platform•Leverage private capital to preserve public housing•Offer residents greater choice & mobility

4

Authorized as part of the Consolidated Further Continuing Appropriations Act of 2012 (Public Law 112-55)

• Program Rules outlined in PIH Notice 2012-18

2 Components • 1st Component: Competitive – Public Housing & Mod Rehab• 2nd Component: Non-competitive – Mod Rehab, Rent Supp, &

RAP

AUTHORITY

5

RAD CONVERSION ELIGIBILITY

Public Housing Mod Rehab RS & RAP

Cap of 60,000 Units

PBRA PBV

No Cap , but subject to availability of TPVs

PBV

Effective Immediately

• Public Housing & Mod Rehab– Proposed: Public Comments due April 9, 2012

• Can compete to convert assistance to:– Project-Based Rental Assistance (PBRA) or – Project-Based Vouchers (PBV)

• Cap of 60,000 units• Convert at current funding only• Choice-mobility, with limited exemptions• Extensive waiver authority to facilitate conversion• Applications through September 30, 2015

1ST COMPONENT: COMPETITIVE

7

KEY PROGRAM PROVISIONS: PUBLIC HOUSING

8

Provision RequirementApplication Pools 4 Census Regions, by PHA size; 58,750 total units

Application Ranking Factors Capital Needs Choice-Mobility Green-Building Priority Project

Ownership /Control Public or non-profit ownership or control, except:• For-profit ownership to facilitate tax credits, or• In foreclosure, bankruptcy, termination for cause, dispose first to capable public entity then other capable entities as determined by Secretary

Initial Contract Term • PBRA – 20 years• PBV – 15 years (20 with approval of voucher agency)

Initial Contract Rents Subject to current funding and associated rent caps

Capital and Operating Funds Can be used in financing structure

Contract Rent Adjustments Annually via OCAFs

Contract Renewal Secretary must offer and PHA must accept renewal

Use Agreement Long-term Use Agreement extended with each contract renewal

Resident Choice-Mobility • PBRA – Required after 2 years with PHA option of 20% project cap and 1/3 voucher turnover cap; good-cause exemption for up to 10% of conversions

• PBV – Per normal PBV rules

KEY PROGRAM PROVISIONS: PUBLIC HOUSING

9

Provision RequirementApproval Process (2-Step) 1. Application > Commitment to Enter Housing Assistance Payments

Contract (CHAP)2. Financing Plan > Housing Assistance Payment Contract (HAP)

PBV Inventory Limitation Exempt from 20% limitation

PBV Income Mixing Raised to 50% per property

PBV Competitive Selection of Owner Proposals

Waived

PBRA Limitations on Distributions Waived

No Rescreening at Conversion Required

Resident Consultation Required

Recognition of Legitimate Resident Organizations

Required

Resident Participation Funding Continued at $25 per occupied unit annually

Resident Procedural Rights under Section 6 of 1937 Act

As conveyed under Section 6 of 1937 Housing Act

Davis Bacon Act and Section 3 Required for initial repairs

Continued

CURRENT FUNDING – CONVERSION RENT LEVELS

10ACC Section 8

RAD Authority Could Impact

• ≈220,000 – 270,000 units could potentially convert at current funding*

• 60,000 unit cap ≈5% of public housing inventory

• 300 – 400 projects could potentially convert

• ≈$380M in current PH funding and ACC units to transfer to PBRA or TBRA account

• PBRA HAP conversions shift to Office of Multifamily Housing Programs

* Defined as able to leverage sufficient debt at current funding levels to meet the average regional capital need in the Capital Needs Assessment 2010 (Abt Associates). Estimate assumes debt-only and does not account for the use of other forms of capital.

IMPACTS ON PUBLIC HOUSING

11

RAD CONVERSION ELIGIBILITY

Public Housing Mod Rehab RS & RAP

Cap of 60,000 Units

PBRA PBV

No Cap , but subject to availability of TPVs

PBV

Effective Immediately

KEY PROGRAM PROVISIONS: MOD REHAB

13

Provision RequirementApplication Pools 4 Census Regions; 1,250 units

Application Ranking Factors Capital Needs Green Building Choice-Mobility

Initial Contract Terms PBRA – 20 years PBV – 15 years (20 with approval of voucher agency)

Initial Contract Rents Subject to current funding and associated rent caps

Contract Rent Adjustments Annually via OCAFs

Contract Renewal PBRA – if owner requests, Secretary renews per MAHRA terms PBV – per normal PBV rules (up to 15 years)

Resident Choice-Mobility PBRA – Required after 2 years with owner option of 20% project cap & PHA option of 1/3 voucher turnover cap; good-cause exemption for up to 10% of conversions.

PBV – Per normal PBV rules

Approval Process (2-Step) 1. Application > Commitment to Enter Housing Assistance Payments Contract (CHAP)2. Financing Plan > Housing Assistance Payment Contract (HAP)

PBV Inventory Limitation Exempt from 20% limitation

PBV Income Mixing Raised to 50% per property

PBV Competitive Selection of Owner Proposals

Waived

No Rescreening at Conversion Required

Resident Consultation Required

Recognition of Legitimate Resident Organizations

Required

1st Component

PBV• Adhere to current program rules:

– Minimum residency: 1 year– Waitlist priority if comparable TBRA is not immediately available

PBRA• Minimum residency: 2 years• PHA may limit:

– Choice-mobility vouchers to one-third of its turnover vouchers– Choice-mobility moves to 20 percent of the assisted units in the project

• HUD may exempt up to 10% of converted units for:– PHAs/owners without voucher program– PHAs with one-third of voucher turnover already committed to veterans

or to the homeless• Ranking factor (in competition) for applicants who obtain/commit choice-

mobility vouchers

RESIDENT CHOICE-MOBILITY

14

RAD CONVERSION ELIGIBILITY

Public Housing Mod Rehab RS & RAP

Cap of 60,000 Units

PBRA PBV

No Cap , but subject to availability of TPVs

PBV

Effective Immediately

16

KEY PROGRAM PROVISIONS: MOD REHAB

2nd Component

Provision Requirement

Initial Contract Term Per normal PBV rules (up to 15 years)

Initial Contract Rents Per normal PBV rules

Contract Rent Adjustments Annually per normal PBV rules

Contract Renewal Per normal PBV rules (up to 15 years)

Resident Choice-Mobility Per normal PBV rules

PBV Inventory Limitation Exempt from 20% limitation

PBV Income Mixing Raised to 50% per property

PBV Competitive Selection of Owner Proposals

Waived

Resident Consultation Required

• Mod Rehab, Rent Supp & RAP – All Public Comments due April 9, 2012– Proposed: Mod Rehab– Interim Authority: Rent Supp & RAP

• Upon contract termination/expiration, convert Tenant Protection Vouchers (TPVs) to PBVs

• No cap, but subject to availability of TPVs• Choice-mobility requirement as found in PBV program • Limited waiver authority to facilitate conversion• 2-year prospective conversion authority (ends 9/30/2013)• 5-year retroactive conversion authority (10/1/2006)

2ND COMPONENT: NON-COMPETITIVE

17

RAD CONVERSION ELIGIBILITY

Public Housing Mod Rehab RS & RAP

Cap of 60,000 Units

PBRA PBV

No Cap , but subject to availability of TPVs

PBV

Effective Immediately

• Rent Supp program authorized under Section 101 of the Housing and Urban Development Act of 1965

• RAP program authorized under Section 236(f)(2) of the National Housing Act

• Contracts authorized for 30 to 40 year terms. Budget authority provided for contract term. No option for renewal.

– All contracts expire by 2019, most prior to 2016

• Today: Approximately 25,000 Rent Supp/RAP units remain, in 345 properties (236 and some 202s). In most cases the Rent Supp or RAP provides assistance to some, but not all units.

RENT SUPP & RAP BACKGROUND

19

GEOGRAPHY OF RENT SUPP & RAP

20

21

KEY PROGRAM PROVISIONS: RENT SUPP & RAP

Provision Requirement

Initial Contract Term Per normal PBV rules (up to 15 years)

Initial Contract Rents Per normal PBV rules

Contract Rent Adjustments Annually per normal PBV rules

Contract Renewal Per normal PBV rules (up to 15 years)

Resident Choice-Mobility Per normal PBV rules

PBV Inventory Limitation Exempt from 20% limitation

PBV Income Mixing Raised to 50% per property

PBV Competitive Selection of Owner Proposals

Waived

Resident Consultation Required

22

SUBMISSION OF PUBLIC COMMENTS

Due April 23, 2012

2 methods for submitting public comments•Electronic – Federal eRulemaking Portal at www.regulations.gov. HUD strongly encourages electronic submissions of comments. •Mail – Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street, SW, Room 10276, Washington, DC 20410-0500

Submissions must refer to HUD Notice (PIH 2012-18)

All comments submitted will be posted for public viewing on www.regulations.gov

Initial Notice Published 3/8/201245-Day Public Comment Period Ends 4/23/2012Final Notice Published 6/15/2012

First Component (Public Housing & Mod Rehab)Initial Application Window Opens 8/1/2012Public Housing Ongoing Application Window Opens 9/1/2012Initial CHAP Awards 10/1/2012

Second Component (Mod Rehab, Rent Supp, & RAP)Rent Supp/RAP Requests for Conversions UnderInterim Authority 3/8/2012Rent Supp/RAP/Mod Rehab Requests for Conversions Under Final Notice 8/1/2012

PROJECTED TIMELINE

23

All Notice and application materials, as well as additional resources, can be found at

www.hud.gov/rad

RAD WEB PAGE

24