Rental Assistance Demonstration
This is RAD
$900
Sample Public Housing Conversion
Per Unit Monthly
$800
$700
$600
Operating Fund
$330
Housing
Assistance
Payment
$474
$500
$400
Capital Fund
$144
$792
$300
$200
$100
Tenant
Payment $318
Tenant
Payment $318
Pre-Conversion
Post-Conversion
ACC
Section 8
At closing,
funding is
converted to a
Section 8
contract rent
$2
What RAD Can Do
Terms
Financing
 15-20 year, renewable contracts with Use Agreement
 Access to FHA LIHTC Pilot processing
 Predictable initial contract rent setting; annual
operating cost adjustments for inflation (OCAF)
 Ability to tap 9% & 4% LIHTCs, including “short bond”
structures
 Established Replacement and Operating Reserves;
 Ability to support transaction with public housing reserves
and capital funds, including Replacement Housing Factor
funds
 RAD HAP funding begins at construction closing !!
 No limitations on use of project cash flow
 PHA Ownership/control similar to LIHTC practices
 Access to HOME and CDBG for development budgets
 Long term affordability ensured
 Available sales proceeds can support other affordable
housing purposes
Process
Flexibility
 Partial or Full AMP
 Transfer assistance from unworkable units prior to conversion
 No SAC approval
 Market accommodations in meeting 1-for-1 preservation
(e.g., convert efficiencies to 1 bdrms; long-term vacant
units)
 Subsidy layering review via RAD
 Simplified procurement
 Freed from PH Annual Plans, PHAS, Community Service,
PIC, etc.
 Combine RAD & agency PBVs or SAC TPVs>PBVs
 Flexibility to reduce densities, replace housing off-site,
produce mixed income communities
 Allows PHA to undertake renovations immediately or after
conversion, as warranted
 Demolition/New Construction allowed
 Ability to “bundle” project applications for flexibility with
initial contract rents
New RAD Notice
FY 2012 rent (from HUD Tool) if apply by 12-31-2013
Exempting those with CHAPs from occupancy criteria of
Performance Housing Assessment System (PHAS)
Bundling of multiple project rents
Commitments for multiple-phase projects
Allows Portfolio Awards
Option for distressed HOPE VI projects regardless of DOFA
Allowing MTW Agencies to use block grant in rent setting for
2 or more projects, subject to service level requirements &
subsidy layering review
4
Comparison of PHA fees ACC vs RAD
Assume a 100 unit project, new const,
at a cost of $120K per unit
Per unit per month
Property Mgmt Fee
Bookkeeping
IT
Asset Mgmt Fee
Capital Fund Fee
Cash Flow (50% share)
Per Unit Per Month Total
Annual Total
Annual difference
$
$
$
$
$
Current ACC
45.00
7.50
2.00
10.00
15.00
$
$
$
$
$
$
$
$
$
RAD
35.00
37.00
72.00
86,400.00
(9,000.00)
$
$
79.50
95,400.00
Developer Fee (35% of $1.8M Fee)
$
630,000.00
Net unrestricted funds to the PHA
$
621,000.00
Development objectives
Partnership with PHAs
– Modernize/ Substantially rehab aging rental
properties
– Demolish/replace severely distressed/obsolete
properties
– Thin densities/mix incomes via RAD HAPs and
transfer authority
Place RAD HAP contracts in off-site, high-amenity
locations
6
Case Study: Hopewell, Virginia
Key Features
PHA in Partnership with Experienced Nonprofit
Developer, Community Housing Partners
9% Low Income Housing Tax Credits
Resident Council Input
7
Case Study: Hopewell, Virginia
Pre- Conversion
Post-Conversion
Public Housing
Mixed Income Development
30 units
56 units
In need of major repair
Demolition/ New Construction
8
Case Study: Hopewell, Virginia
Pre- Conversion
Post-Conversion
9
Case Study: Hopewell, Virginia
Sources & Uses
Sources of Funds
New First Mortgage Loan
Public Housing Operating Reserves
Public Housing Capital Funds
Replacement Housing Factor
Low Income Housing Tax Credit Equity - 9%
Soft Sources
Developer Equity
Other
Total Sources of Funds
Amount
$2,871,830
$0
$0
$0
$5,455,975
$500,000
$105
$0
$8,827,910
Per Unit
$44,872
$0
$0
$0
$85,249
$7,813
$2
$0
$137,936
Uses of Funds
Acquisition Costs
Construction Costs
Relocation Costs
Professional Fees
Loan Fees and Costs
Reserves
Developer Fees
Total Uses of Funds
Amount
$96,365
$6,388,848
$65,000
$683,197
$400,000
$362,000
$832,500
$8,827,910
Per Unit
$1,506
$99,826
$1,016
$10,675
$6,250
$5,656
$13,008
$137,936
10
Case Study: Hopewell, Virginia
Income & Expenses:
Stabilized Cash Flow Pro Forma
Gross Potential Rents for RAD Units
Gross Potential Rents for Other Apartment Units
Gross Potential Rents for Commercial
Vacancy Loss and Bad Debt Loss
Other Income
Effective Gross Income
Total Operating Expenses
Annual Deposit to Replacement Reserve
Net Operating Income
First Mortgage Debt Service
Operating Cash Flow
Total
$243,624
$327,015
$0
($43,215)
$8,400
PUPA
$8,121
$9,618
N/A
-$675
$131
$535,824
$8,372
($286,550)
($19,200)
($9,552)
($640)
$230,074
$6,767
($190,300)
($6,343)
$39,774
$1,170
11
What advice would you give to PHAs?
“The writing is on the wall – we can’t sustain the public
housing or the quality of life the way things have
been going. It became apparent that this old
housing stock with diminishing capital funds was not
going to be sustainable. ”
-Steven Benham, Executive Director, Hopewell
Redevelopment and Housing Authority
Visit our website:
www.communityhousingpartners.org
13