Rental Assistance Demonstration

Address the capital needs in the long run.

Once the conversion is done, the owners of the RAD PBV-assisted projects are supposed to make regular deposits to the reserve for replacement. For the traditional PBV program there are no such requirements. The RAD PBV contracts have to be renewed unless they are approved by the HUD.

Under the traditional PBV program, a contract can be either terminated or not extended once they expire. Moreover, traditional PBV programs also do not require one does not need to get approved by HUD. To remove a unit from the RAD PBV HAP contract, getting a prior HUD approval is imperative.

Let us learn some other significant differences between the PBV program and the RAD PBV program in the sections mentioned below.

Converting to PBV

The Public housing agency may project base assistance without a formal application process to HUD in the traditional PBV program. But RAD is different. For participating in RAD, the public housing agency has to apply first. The application and other requirements concerning the same are described below.

Application– Section 1.9 of the RAD notice comprises the RAD application requirements. Also, you can learn its application process by going through section 1.10.

Eligibility– The public housing agency looking forward to converting public housing assistance to RAD PBV should be eligible to participate in the RAD. Get to know eligibility requirements in depth by going through section 1.3 of the RAD Notice.

Conversion– As far as conversion is concerned, the RAD conversion requirements range from assessing a project’s capital needs to comply with the relocation requirements. Above all, these are clearly illustrated in section 1.4 of the RAD Notice.

Resident notification– A PHA must comply with the resident notification requirements discussed in section 1.8 of the RAD notice before applying and participating in RAD.

There is a specific criterion that HUD follows to evaluate the applications. Let’s have a quick overview of the steps that HUD follows for selecting an application.

• The foremost thing is that for converting a project, HUD issues a commitment to enter into a housing assistance payment and that includes HUD-approved terms and conditions for conversion.
• It is the responsibility of the public housing assistance to ensure that civil rights reviews and relocation activities are getting conducted. Later on, there’ll be a concept call with the HUD in which PHA will describe its conversion plan and then HUD will determine whether to invite PHA to the financing plan or not.
• Within 60 days of being invited by the HUD, the PHA submits the financing plan.
• Once you get the approval of the HUD for the financing plan, then HUD will issue you a RAD conversion commitment that describes the terms and conditions under which HUD will approve the conversion.
• The PHA will execute the RCC and return it to HUD within 30 days of the issue of RCC.
• Next, the preparations for closing will take place. During the closing, the project will be placed under the RAD PBV HAP contract and is deemed as a covered project.

RAD waivers and alternative requirements

The HUD has the authority to waive PBV-related statutes. In addition to this, it also specifies the alternate requirements for such provisions which are necessary for the effective conversion of assistance under the demonstration.

The special RAD requirements include project selection, contract terms, resident rights, participation, and other provisions.

Role of PHA and planning requirements

Usually what happens in the traditional PBV program is that PHA in the role of PBV housing assistance payments enters into the contract with the owner. RAD also has familiarity with the same concepts. RAD then establishes the unique planning requirements for the PHAs who wish to convert their public housing funding.

The PHA must meet both sets of the planning requirements. Also, PHA which is converting the public housing funding to RAD PBV assistance has to comply with the PHA plan.

PHA administering contract

The contract administrator refers to the voucher agency which is entrusted with the responsibility to execute a RAD PBV HAP contract with a project owner. Here’s an insight into who may be the contract administrator:

The contract administrator is the same PHA who is converting the public housing funding to RAD PBV assistance.

Other than the PHA, the contract administrator can also be the voucher agency converting the public housing funding. Whosoever may be the contract administrator, is obliged to meet the threshold and planning requirements described in the sections below.

Threshold requirements– For becoming eligible to administer this contract, the voucher agency must classify as a standard or high performer.

Planning requirements– Next comes the planning requirements. The voucher agency administering the contract is liable to establish the PBV program first as it involves certain amendments in its PHA plan and administrative plan. If the contract administrator does not take any steps to establish a PBV program, the local HUD office will flag the project on the RAD resource desk.

Post conversion ownership considerations and others

PHA-owned units– If the contract administrator is the project owner and the units owned by it meet the PHA-owned units, then some of its duties must be performed by the local government and HUD-approved independent entity. But in RAD PBV units, the functions to be performed by the independent entity are only conducting inspections and setting rents.

If the contract administrator feels that a project is failing in meeting the requirements of PHA-owned units, then he can provide the local HUD office certification from counsel. Upon reviewing the certification, the local HUD office will upload the certification.

Ownership: Ownership means that the covered project must be owned by the public. The ownership can also be transferred to a tax credit entity to enable the use of tax credits only.

Other considerations

There are some factors that PHA may take into consideration during the planning phase. Let’s have an overview of the same

Designated Housing: Designated housing refers to a housing designation that will not carry the project’s funding. A project which is designated for occupancy by elderly families, or the ones with disability have to go through RAD conversion to maintain its occupancy.

Reserve for replacement: When a project owner is required to establish and maintain the reserve for replacement in the interest-bearing account is known as a reserve for replacement. The reserve must be maintained by the HUD to meet the requirements.

Fair housing requirements: The PHA must consult the RAD relocation notice to be aware of their civil rights-related requirements for site selection, project construction, and submission of information to HUD.

Transfers of assistance: The traditional PBV program does not allow the contact to be transferred from one property to another. But RAD allows the transfer of assistance under three scenarios: as part of the conversion, post-conversion, and if HUD terminates the contract at one project.

PHA partnerships: If any PHA is interested in taking advantage of this option, then it requires significant requirement planning.

RAD PBV HAP contract

The RAD PBV HAP contract consists of contracts and closing documents that are quite different from those used in the traditional PBV program. The Units are the ones that are placed under one PBV HAP contract that meets the definition of a PBV project.

A project is defined as a structure or group of structures that are managed as a single financial asset under RAD. The HUD takes into consideration the types of buildings, location, occupancy, financing structure, market influences, and other things while determining if multiple structures constitute the project or not.

Eligible units: The units receiving public housing operating funds including the vacant units are eligible for conversion. In the transfer of assistance conversion case, the assistance is associated with such units which will be transferred to other units placed under the RAD PBV HAP contract.

Floating units: The traditional PBV program does not allow assistance to float among the units within the project. Instead of this, the unit number and the area of each contract unit must be there in the HAP contract.

Initial Contract rents

The initial rents are based on the project’s funding under the public housing program. It is the HUD that calculates the current funding amount. The initial RAD PBV contract rents should not exceed the current funding amount, PHA determined amount, reasonable rent, and amount requested by the owner.

Contract renewal

The mandatory contract renewal is required for the RAD PBV-assisted units. The contract administrator makes an offer to the project owner for the renewal of a RAD PBV HAP contract.

Contract administration duties

The contract administrator is held responsible for complying with the requirements either directly or through an independent entity.

Admission and initial tenant rents: The conversion shall not be made on the basis of termination of assistance or eviction of any family in RAD. The contract administrator has to establish their initial rents irrespective of the income.

First regular or Interim recertification: The contract administrator must conduct a reexamination of family income and composition annually in the traditional PBV program. He will calculate the family’s TTP and apply the applicable utility allowance to determine the tenant’s rent.

Contract rent adjustments: The contract administrator must perform annual rent adjustments along with establishing initial contract rents.

Assurance of tenant protections and rights: Tenant protections and rights are regarded as the important aspects of RAD. Both the RAD notice and RAD relocation notice have mentioned them. The RAD relocation notice also makes clear that the tenants who need to be relocated from the units will undergo construction.

Waiting list administration: The applicants who have made it to the current public housing waiting list must be shifted to the next waiting list. The contract administrator must be clear on how it will handle the applicants on the waiting list who are ineligible for admission to the unit.

Choice mobility vouchers: The contract administrator has to make an offer of assistance under the voucher program or other tenant-based rental assistance. The same applies to the RAD PBV program. The contract administrator also has the voucher inventory turnover cap which has more than 20 percent of the authorized ACC units. But the contract administrator does not have the authority to apply a voucher inventory turnover cap to families residing in PBV units.

Subsidy administration

When the contract administrator and owner enter into the HAP contract, the owner receives the subsidy for the eligible units. The contract administrator in turn receives the fees on the basis of the number of units in HAP.

Project funding: The units under the RAD PBV HAP contract have different funding criteria. Firstly, the units are added to the contract administrator’s consolidated ACC and FMC gives $1 to the contract administrator.

During the first full year, HUD will assign the funds and determine the expiry rate based on the amount of funds received.

Ongoing subsidy administration: After the normal voucher renewal calculations, the contract administrators will receive the funding. A PHA’s renewal funding is not related to the actual expenses concerning the HAP project. The contract administrator’s renewal funding can expect only a 1.5% increase and that too is based on the AAF.

Owner’s responsibilities

The owners of units under the RAD PBV HAP contract must maintain the commercial property and insurance at all times. In addition to this, the owners should also receive the approval of HUD before refinancing permanent debt.

The owner must maintain a reserve for a replacement account. If its financing has been insured by the federal housing administration, then it is vital to maintain the replacement reserves.

Access to surplus cash: As such, HUD places no restrictions on surplus cash which is shown in the year-end financial statements. But due to the state and local laws, the use of this cash is limited to some purposes only.

Lease requirements: The lease happening between an owner and tenant residing in a RAD unit must include RAD resident procedural rights. The leases should also have an effective date which should be the same as mentioned on the RAD PBV HAP contract. In addition to this, the lease should specify what will happen next if the family remains in the unit after a noticeable increase in its income.

Security deposits: An owner is asked to collect the security deposit in both traditional PBV and RAD PBV programs. The amount provided by the tenant at the time of conversion is regarded as a security deposit.

Status of public housing program features

Some requirements will discontinue for the covered projects. Those are mentioned below:

• PHA planning process
• Planning and reporting of capital fund 
• Special conditions for admissions and continued occupancy

The covered projects are covered by subpart H requiring paint risk assessment due to the lead-safe housing rule. Such projects are not allowed to receive funding from competitive grant programs such as self-sufficiency programs, resident opportunities, jobs plus, and other things.

Besides this, there are several means by which, PHA may remove all its public housing units via several means such as RAD, RAD combined with SAC, or via SAC administered tool.