Rental Assistance
Demonstration “RAD” Program
Homes Within Reach
November18, 2014
Martin Walsh
Reno & Cavanaugh, PLLC
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RAD Overview
• Goal: Preserve vulnerable federally-assisted projects by converting
existing subsidies to long-term Section 8 to leverage debt/equity
• Premise: Converting Public Housing Units to RAD (HAP) contract
(PBRA or PBV)– allowing PHA to finance property without Mixed
Finance Process
• Authority: (1) FY 2012 HUD Appropriations Act (2) Notice PIH
2012-32, REV-1 (July 2, 2013)
• 1st Component: Public Housing & Mod Rehab:
• 60,000 Unit Cap
• No cost conversions (but 2012 rents for some)
• 2nd Component: Mod Rehab, Rent Supp & RAP:
• Non-Competitive
• No Unit Cap, but subject to availability of Tenant Protection
Vouchers (TPVs)
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Deal Structure
Options
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RAD Deal Prototypes
1. Conversion/No Rehab (includes conversion-only HUD
mixed-finance transactions)
2. FHA/No LIHTC; Basic Rehab/Conversion
3. 4% LIHTC/Bond/FHA; Substantial Rehab/Conversion
4. 4% LIHTC/Bond/Private Financing; Substantial
Rehab/Conversion
5. 9% LIHTC/FHA or Private; Substantial
Rehab/Conversion or New Construction
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Sample Deals
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9% LIHTC/Conventional Debt
• CHAP on 100-unit public housing development; divided
redevelopment into two phases
• Demolished existing project
• On-site New construction; de minimis reduction in unit count
• Phase 1: 55 unit development, of which 44 are RAD units and
remaining market rate
• Funding: LIHTC equity, construction loan, private perm debt,
and PHA subordinate loan
• PHA could increase rents with MTW authority
• Phase 2: 51 unit development (all RAD units)
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9% LIHTC/No Perm Debt
• CHAP on 50-unit public housing development
• Converted to 40 RAD units with de minimis unit reduction and
reconfiguration of units (fewer larger units)
• Gut rehab of existing project
• Funding: LIHTC equity, construction loan, no perm debt, and
FHLB AHP
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FHA/RAD/4% LIHTC
• Substantial Rehab of 100- Unit Family Development
• Self-Developed by Housing Authority
• Financing: Tax Exempt Bonds with FHA 221(d)(4)
Mortgage Insurance, 4% LIHTC equity, HA Capital and
RHF Funds, HOME Funds
• Challenging to coordinate FHA and RAD processes –
although this was an early RAD deal and HUD now has a
streamlined process (FHA submission includes RAD
docs)
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RAD In Practice –Issues
• RAD requirements can conflict with LIHTC program
income limits (e.g. existing PH resident > 60% AMI)
• Creative Financing Plans - mortgagees for RAD
properties must be paid from project income
• Relocation – pairing URA with RAD relocation req’ts
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See RAD Relocation Notice PIH 2014-17 (H 2014-09), July 14, 2014
Prior to Closing – Must be HUD approved
• Demolition/Disposition 1:1 replacement requirements
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Asking HUD for flexibility to allow de minimis reductions
Demolition prior to closing – difficult to obtain HUD approval
• Duel Tracking – pursuing redevelopment while on the
RAD waiting list
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Concerns with losing LIHTC allocations
Mixed Finance as a pathway to RAD – being discussed for RAD waitlisted
deals that have 9% LIHTC allocations but not formalized yet
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