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RENTAL ASSISTANCE DEMONSTRATIONNOTICE PIH 2012-32 (HA)

ISSUED: July 26, 2012

RENTAL ASSISTANCE DEMONSTRATION (RAD)

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To be eligible a PHA must:

Have Public Housing Units under an ACC (Annual Contributions Contract).

PHA has to be classified as Standard or High Performance under Public Housing Assessment System (PHAS).

PHA has to be classified as Standard or High Performance under PHA Assessment System under Section 8 Management Assessment Plan (SEMAP).

PHA has to be compliant with all reporting and programmatic requirements.

ELIGIBILITY

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PHA can not be debarred, suspended or have limited participation in Federal Programs against the PHA, Executive Director, Board Members or Affiliates.

PHA has to submit completed RAD Application that complies with all RAD requirements.

PHA has to be compliant with all Fair Housing and Civil Right Requirements under 24 CFR 5.105(a).

ELIGIBILITY (CONT’D)

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TIMELINE OVERVIEW

When What0 Days CHAP issuance by HUD15 Days Applicant timeframe to reject Chap expires30 Days Lender engagement letter, development team

information60 Days PBRA-PBV decision; Significant Amendment to PHA

Plan90 Days RPCA; certification that all other due diligence has

been received150 Days

Firm Commitment applications for all financing

180 Days

Financing Plan

320 Days

Firm Commitments for all financing

360 Days

Closing

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1. It is not a HAP Contract , it is a commitment to enter into a HAP contract. The CHAP gets issued at the closing of the RAD transaction.

2. It is needed to show the Lender that HUD will enter into the HAP Contract at closing.

3. It is non-negotiable. The PHA must execute it without changes or reject it.

4. PHA has 15 days from date of issuance of the CHAP to accept or reject it.

5. Once PHA accepts the CHAP, the asset is assigned to a Transaction Manager who drives the RAD process.

CHAP

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The PHA should get its entire development team to join the Kickoff Call:

PHA Executive Director and key PHA Development Staff Lender PHA and Lender Counsel Architect General Contractor RPCA Contractor

The Transaction Manager will invite PIH Field Office contact, Multifamily HUD Director and if FHA-insured loan is involved the Multifamily Originating Office Director.

KICKOFF CALL

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KICKOFF CALL

1. Introductions and Roles

2. Questions from the Application review

3. The RAD Physical Condition Assessment (RPCA) Ordering the RPCA Assembling utility bills for owner-paid utilities Getting tenant releases for tenant-paid utilities Supporting the RPCA Contractor Provide existing components: installation, cost, usage

Discuss recent major maintenance and capital improvementsDiscuss plans for upcoming capital improvementsDiscuss owner-initiated rehab plans

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KICKOFF CALL

Review RAD Program rehab requirements (Notice pgs. 17-19)

Minimum: Energy Star, Water Sense, Federal Energy Management Program designated products and appliances

Cost effective utility-saving components that are financially feasible

4. RAD Physical Condition Assessment (RPCA)Supporting the RPCA ContractorIdentify Green Standard ( if applicable) i.e. LEED, Enterprise GreenCommunities, etc.Provide ample notice of property inspection to tenants.

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(continued from prior slide)Join in the property inspectionShare other recent property inspections and studies

5. Other necessary due diligence

6. RAD FHA Processing Mortgagee Letter (if FHA-insured loan) Mortgagee Letter 2012-20

KICKOFF CALL

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PROCESSING MILESTONES

30 days from CHAP Issuance Lender Engagement Letter (Notice, pg. 59)

This letter will include proposed loan amount, terms of the loan, pro forma sources and uses and pro forma stabilized cash flow.

The letter may be conditional upon lenders due diligence and underwriting and approval process.

Development Team Description (Notice, pg. 50)Identify development team members with applicable evidence of recent successful experience with financing, developing, rehabilitation, construction, ownership and operation of similar properties.

Proven experience with at least three transactions with mixed or multiple sources of financing.

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60 days from CHAP Issuance Significant Amendment to Annual/5 year Plan (Notice, pgs. 25-26)

o RAD Notice requires RAD conversions be subject to a Significant Amendment.o Plan addresses the mission, goals and objective for achieving preservation of

affordable housing stock in their portfolio.o PHA makes decision for conversion to Project Based Rental Assistance (PBRA) or

Project Based Voucher (PBA).

90 days from CHAP Issuanceo RPCA is submitted for review (Notice, pg. 60)o RAD Physical Condition Assessment Statement Work (radresource.net)o Davis Bacon applies to all rehab work even with FHA Financing.o Davis Bacon is required due to public housing requirements and not the FHA

Financing.

PROCESSING MILESTONES

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o Transaction Manager will review the report for accuracy and compliance to the RAD PCA Scope of Work found on radresource.net

o Additional due diligence may be submitted in conjunction with the RPCA include environmental reports, or related lender due diligence such as appraisal, survey, title commitment, etc.

150 days from CHAP Issuanceo Certification that all Firm Commitments applied for (Notice, pg. 60)o For FHA insured financing this would be in the form of the Firm Commitment o Application to FHA.

PROCESSING MILESTONES

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180 days from CHAP Issuanceo Financing Plan is submitted (Notice, pg. 60)o HUD will have 60 calendar days from date of submission of the Financing Plan to

approve, reject or request additional information.o 223(f) deals will be underwritten by OAHP (Office of Affordable Housing

Preservation) Senior Underwriters.o 221(d) 4 deals will be processed by a select team of MAP underwriters in

Multifamily HUBs.

320 days from CHAP Issuanceo Firm Commitments for all Financing (Notice, pg. 62)o Firm Commitments must cover all sources of financing required to close the

transaction.

360 days from CHAP Issuanceo Closing (Notice, pgs. 62-63)

PROCESSING MILESTONES

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Contact Information

Glenda M. Brown, Underwriter/Transaction Manager Office of Affordable Housing Preservation Glenda.M.Brown@hud.gov (312) 913-8158