By Mary-Rain O’Meara
Since 2012, HUD’s Rental Assistance Demonstration (RAD) program has offered PHA’s a mechanism to exit their properties from Public Housing and convert to a project-based Section 8 platform. RAD enables PHAs to utilize private debt and other sources of financing for rehabilitation or redevelopment. To date, the RAD program has leveraged over $5.4 Billion in investment towards the revitalization of aging public housing units nationwide.
HUD’s fiscal year 2018 appropriation more than doubled the amount of public housing units that can convert to RAD, taking the cap from 240,000 units to 455,000. The application date for RAD has also been extended to September 30, 2024.
Anticipating that more PHAs will start exploring RAD as an option, HUD hosted a two-day conference for PHA staff and other interested parties on May 17th-18th, 2018 at its headquarters in Washington, D.C.
While RAD may sound straightforward in concept, the conference panelists highlighted several considerations a PHA must take before deciding that RAD is right for them. The RAD conversion can instigate an agency-wide transformation impacting everything from staffing levels to funding sources.
Here are five key take-aways from the conference for PHAs new to RAD or just starting to investigate the program as an option for their agency:
- Read the Notice
As much as PHA staff may not like to hear that they need to read a lengthy PIH notice, the RAD notice provides the working road map for what to expect under a RAD conversion and the necessary steps to take along the way. The most recent RAD notice is Revision 3, issued on January 12th, of 2017. This was a repeated suggestion at the conference, as the notice provides full instructions and eligibility criteria for the program.
- Decide on the RAD Approach
RAD offers four major approaches to property or portfolio conversions and each comes with its own set of complexities and options. The right approach is likely to vary by property within a given PHA’s portfolio, but a strategic look early on should be taken to decide which of the four (or a combination) works best:
- Preservation– property has little to no rehab needs- straight conversion to project based rental assistance
- Rehabilitation—property has rehabilitation needs to bring improve and extend its remaining useful life
- Redevelop—property needs demolishing and rebuilding on site, due to age or physical deterioration of the buildings
- Transfer of Assistance—the buildings need to be demolished or sold, with the assistance being transferred to a new site
- Examine Internal Capacity for Development
Depending on the PHAs size and experience with mixed-finance development, it may or may not be able to self-develop its first RAD project. If the agency is not ready to self-develop, it can look at bringing on a development partner to help build capacity and offer expertise throughout the process.
- PBRA vs. PBV
The two main platforms for converted public housing units under RAD are Project Based Rental Assistance (PBRA) and Project Based Vouchers (PBV). Every PHA that has gone down the RAD path has made the decision to choose one over the other for a variety of different reasons, but it is well worth the time to decide what works best for the PHA’s organizational structure and local rental market. HUD has a comparison guide between the two options that can be helpful for agencies in the preliminary stages of RAD.
- Analyze Impact to Agency Structure
RAD can impact the staffing model and funding streams that PHAs have been operating under for decades with the traditional Public and Indian Housing programs. Many agencies choose to take a strategic look as they are considering RAD at how shifting to a project-based Section 8, often LIHTC funded, property model will change their agency’s operations. Key questions such as if the RAD project will be self-managed or third-party property managed are crucial to examine at this stage.
Finally, once a PHA has decided to apply for RAD, it should be communicating with its Resident Advisory Boards and residents of the properties to be converted. Chief amongst resident concerns are whether RAD will impact their rental payment formulas, and if they will continue to have the same rights, services, and access to the PHA once a property has been converted.
Bonus Take Away: HUD is Here to Help
RAD is truly a collaborative program at HUD involving departments that traditionally do not work together including the Office of Recapitalization, the Special Applications Center, Relocation, Multi-Family Housing and the Office of Fair Housing. The technical assistance provided at the conference emphasized the importance of PHAs moving down the RAD path to communicate early and often with their regional HUD offices, but also with the RAD team itself. Questions can be submitted to the RAD Help Desk at: firstname.lastname@example.org.
About the author: Mary-Rain O’Meara
Mary-Rain manages development projects for a Housing Authority taking its very first steps into the world of RAD. She has worked in the field of affordable housing since 2009, after she graduated with a Masters in Urban and Regional Planning from Portland State University.
Questions and comments can be submitted directly to Mary-Rain at: email@example.com