Rental Assistance Demonstration (RAD) Program Questions
1. Why does PHA want to take part in this program?
Congress is attacking social service programs including public housing.
RAD is the HUD’s plan to address the defunding of public housing.
The administration is focused on investing capital dollars in the current needs of our existing developments. Prior administrations invested capital dollars in new developments – 22 Tax Credit Sites.
2. Tell me more.
Capital repair needs are in excess of $25.6 billion across the national public housing portfolio.
Capital repairs at PHA are in excess of $1 Billion.
Section 9 (public housing) funding is unreliable due to both cuts and sequestration.
Across the nation, public housing is losing 10,000‐15,000 hard units/year.
3. Okay, so what is this thing called RAD?
RAD is an affordable housing finance program created by the Obama Administration.
RAD allows public housing authorities to expand funding options beyond what is provided by HUD.
Currently, over 93% of PHA’s funding comes directly from HUD.
4. So, why does PHA need RAD?
The trend in capital funding for public housing is falling.
Operating funding has been inconsistent.
The trend in Tenant Based Rental Assistance (TBRA) and Project Based Rental Assistance (PBRA) has been more consistent and has risen steadily for the past several years.
In other words, Operating funds for RAD developments will come from the Section 8 program, which has historically been more stable and less prone to dramatic funding cutbacks.
Also, PHA has over $1 billion in unfunded capital improvement needs at existing public housing sites, for which HUD granted only $39 million in funding in 2013. RAD is not a perfect solution but, RAD has the potential to generate new capital dollars and to stabilize ongoing operating funding.
5. What are the benefits of RAD to PHA?
RAD creates a dedicated funding source for supportive services by site.
PHA would have the ability to get access to non-public funds to invest in PHA’s long term capital and maintenance needs TODAY not over a period of years.
Under RAD, PHA can borrow against its rental income and HUD subsidies which will generate funding for capital improvements.
This will give PHA more funds today to improve maintenance, rehab properties, and expand public housing.
PHA will continue to own the property and can continue to control ownership of the site.
6. Yes, but PHA already has MTW flexibility, so how will RAD provide any more flexibility?
RAD will provide PHA funding from more sources instead of relying on HUD; more funding for PHA gives PHA more flexibility to maintain, expand, and rehab public housing sites.
7. RAD sounds good. Are there any risks?
There are several risks. The funding level under Section 8 is NOT Guaranteed.
However, NO social service program has guaranteed funding.
PHA may not be awarded a RAD contract.
If we are not awarded a contract, we don’t get the additional funds so we will have to continue to address capital and maintenance needs as Congress make funds available.
If Moving to Work ends in 2018, RAD Sites are treated like Section 8, so they won’t have access to Public Housing Capital Funds.
8. Can you give me more detail about the benefits under RAD to PHA?
PHA would be able to raise $102 Million from investors (of the $1 Billion in maintenance and capital needs). PHA could then invest the $102 Million in:
• Plumbing, Electrical and Mechanical improvements
• Rehabilitation of kitchens & baths
• Computer Labs & Resident Services
9. Would residents be able to benefit from all this work?
Yes, Section 3 is applicable to RAD rehabilitation.
PHA anticipates construction projects that will create approximately 400 construction jobs.
The agency has a M/WBE subcontracting goal of 30%.
PHA’s Section 3 New Hires Goal is at least 15% or 60 resident jobs.
10. What about residents’ rights?
RAD offers better resident rights than HOPE VI or traditional tax credit sites.
Residents will have a right of return, no additional screening, their rent will remain at no more than 30% of income, the right to organize and elect a resident council, provide input on housing operations, and receive Tenant Participation Funds. PHA will retain the ownership of the land at RAD sites.
RAD is NOT a takeover by HUD. Developments converted to RAD will remain under the control and ownership of PHA or its non-profit affiliates. RAD is less control by HUD with more resident protections than prior tax credit developments.
RAD requires that rents remain no more than 30% of adjusted household income.
PHA may request approval to continue to utilize its MTW rent simplification calculations as part of any future RAD conversions.
11. Is RAD basically “privatizing” public housing?
A for-profit corporation will NOT own public housing.
Like current tax credit sites, RAD developments will remain heavily regulated, and tenants will have substantial protections similar to those of public housing residents.
PHA is likely to establish affiliated non-profits – just like the PAPMC sites to operate RAD sites.
A long-term use agreement will guarantee that the development rents remain affordable.
12. So, what’s PHA’s strategy for using RAD?
PHA will replace existing sites with new construction at Norris Apartments and Blumberg.
The agency will submit an application for approximately 1,000 long term vacant properties.
A portion of the units will be rehabilitated.
The majority of the subsidy associated with the RAD units will be transferred to a development partner who submitted under the ACC Unit Based Subsidy RFP.
Also, some subsidy will be transferred to the Strawberry Mansion LIHTC New Construction Project.
13. How did PHA figure out what units to rehab?
To determine which, if any, units were suitable for RAD, the agency conducted an extensive review of our inventory that included:
- Physical Needs at PHA’s developments
- Supportable debt of the PHA property and the capital needs funding gap with and without 4% LIHTC
- Community & Quality of Life Factors
- Architectural Considerations
Tell me more about the rehabilitation selection process.
The Physical Needs Assessment identified the repairs needed to keep a site viable for next 20 years including:
- Building Systems (hot water, heating, plumbing)
- Interior (kitchen and bath upgrades)
- Green Upgrades required by HUD to systems to save energy and water (more)
There are other factors, to.
Quality of life
Architectural features at PHA developments were reviewed to see if
they met the needs of modern families including:
- Floor plan/Unit layout
- Bedroom size
- Kitchen/Bathroom size and layout
- Facility Amenities (e.g. would a substantial rehabilitation allow for the installation of air conditioning) Financial Analysis
Our financial consultant also prepared an analysis of PHA’s properties including:
- PHA Operating Costs
- Supportable Debt
- PHFA Volume Cap
14. So, what did PHA learn from its review of properties?
Based on all of the factors mentioned, the following eight developments are the recommended sites to RAD:
- Arch Homes (73)
- Abbottsford Homes (235)
- Haddington Homes (147)
- Harrison Plaza (299)
- Plymouth Hall (60)
- Blumberg Senior (96)
- Westpark Plaza (65)
- *Bartram (399) – Phase II of the application
15. So, what happens when residents have to relocate during the rehab work?
PHA has a relocation plan that:
- Minimizes time away from the development
- Calls for rehab in phases where possible
- Provides temporary vouchers
In some cases, no relocation will be required.