HUD’s Rental Assistance Demonstration (RAD) Program

JESSIE CASSELLA

STAFF ATTORNEY,

NATIONAL HOUSING LAW PROJECT

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Where is RAD happening?

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www.RAD-watch.org

Where is RAD happening?

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www.RAD-watch.org

Where is RAD happening?

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www.RAD-watch.org

What is RAD and why does it exist?

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Why was RAD enacted?

• Public housing units nationwide have been underfunded by Congress for decades
• 1.1 million public housing units need > $49 billion in repairs
• 10,000 public housing units are lost each year because of unsafe housing conditions
• Potential additional cuts to public housing funding in FY 18
• No new public housing units since mid-1990s
• Need other financial resources to repair affordable housing properties, ensure long-term affordability

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What is RAD?

• Voluntary, permanent conversion of certain affordable housing programs to project-based Section 8 program
• Converting to Section 8 can attract other types of funding (i.e. LIHTC)
• PHAs can choose between converting to either project-based vouchers (PBVs) or to project-based rental assistance (PBRA)

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Two Components of the RAD Program

Component 1

Component 2

• Conversion of public housing units
• Currently capped at 225,000* units nationwide
• Competitive selection process
• Can convert to either PBV or PBRA

• Conversion of Mod Rehab, Rent Supp, RAP units
• No nationwide unit cap
• No competitive selection process
• Can be prospective conversion (to PBV or PBRA) or retroactive conversion (to PBV only)

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RAD= best of both worlds?

Public Housing

Section 8

• Long-term affordability of units for low-income households
• Significant tenant protections
• Examples: grievance procedure, rent capped at 30% of income
• Public oversight of the property

• Financing flexibility, including leveraging public and private debt and equity
• Allows for public-private partnerships
• Private property management
• Choice mobility

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So What Does This Mean?

• RAD is changing the future of public housing, Mod Rehab, Rent Supp, and RAP properties
• Privatizing public housing
• Still subject to annual federal funding provided by Congress
• RAD only works if there is significant tenant involvement, coordination among tenant advocates, and ongoing discussions with HUD about ways to improve the RAD program

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RAD Component 1

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RAD Component 1 Conversion Timeline

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Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6

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Public housing residents cannot be involuntarily displaced at the time of the RAD conversion, except for “transfers of assistance.” In transfers of assistance, tenants have the right to live at the property where the assistance is being transferred.

#1: No Permanent Displacement

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Public housing tenants living at the property before the RAD conversion have the right to remain at the property. If tenants are required to temporarily relocate because of construction work at the property, they have the right to return to the property after the repairs are done.

#2: Right to Remain/Return

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Residents cannot be rescreened with more restrictive requirements at the time of the RAD conversion or when they return to their property.

#3: No Rescreening

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When public housing properties are demolished and then rebuilt (or substantially rehabilitated) because of RAD, the property owner cannot reduce the number of units at the property (“one-for-one unit replacement”) - with some exceptions.

#4: 1-for-1 Unit Replacement

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When public housing developments convert to PBV or PBRA, HUD and the owner must sign Housing Assistance Payment (HAP) contract that initially runs for 15 or 20 years. As long as there is federal funding, the HAP contract must always be renewed so that units will always be affordable.

#5: Long-Term Affordability

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If the PHA plans to use federal tax credits to repair the property, they may select a new private landlord to manage the property, with some restrictions. If there will be a private property manager instead of the PHA after the RAD conversion, the PHA must maintain an interest in the property.

#6: Change in Ownership

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After the RAD conversion, most residents will continue to pay 30% of their income for rent and utilities. However, for some residents who pay flat rents, they may see a rent increase. If that rent increases by more than 10% of the original rent or $25, whichever is greater, the rent increase must be phased in over 3 or 5 years.

#7: Rent

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Owners of RAD-converted properties must renew a resident's lease, unless there is “good cause” not to, such as if tenants seriously or repeatedly break the rules in their lease.

#8: Evictions for Good Cause Only

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Residents must continue to have the same protections provided under federal public housing laws (Section 6 of the U.S. Housing Act of 1937), which include public housing grievance procedures and termination protections.

#9: Grievance and Terminations

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All properties that convert under RAD, whether converting to PBV or PBRA, will continue to receive $25 per occupied unit for resident participation activities. Just like in public housing, at least $15 of the $25 must be provided to resident councils.

#10: Resident Participation Funding

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After a RAD conversion, residents still have the right to establish and operate a resident organization to address issues related to the living environment, such as the physical conditions of the property.

#11: Resident Participation Rights

RAD Component 1 Challenges

• Transparency for RAD conversions and access to documents in local jurisdictions
• Extent of tenant participation in developing RAD conversion plans
• Ongoing local and federal oversight after RAD conversion
• Tenant temporary relocation plans
• Emergency transfers during and after RAD conversions

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• Debts owed by tenants to PHAs upon conversion (EIV)
• Fair housing RAD concerns
• RAD-MTW overlap
• RAD as a demonstration program + potential expansion
• Long-term affordability if contract default or foreclosure
• Exclusion of third party beneficiary rights in HAP contract

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RAD Component 2

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Where is RAD Component 2 happening?

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www.RAD-watch.org

What is RAD Component 2?

• Allows owners of Rent Supplement (Rent Supp), Rental Assistance Payment (RAP), and Moderate Rehabilitation (Mod Rehab) projects to convert to PBVs or PBRA
• Conversions may be prospective or retroactive
• No nationwide cap or competitive selection process

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Moderate Rehabilitation (Mod Rehab)

• PHAs entered into contracts w/ owners to provide project-based rental assistance to low-income families residing in developments that received financial assistance to undertake moderate levels of rehabilitation
• Moderate rehabilitation = work > $1,000/unit to upgrade/ repair

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HUD

PHAs

Owners

15-year ACC, $$

Contract (req. mod rehab)

Rent Supplement (Rent Supp)

• HUD made rent supplement payments to private nonprofit or limited-profit landlords on behalf of low-income tenants in newly constructed or substantially rehabilitated housing
• 1^st rental assistance program for privately owned properties (1965-1973)
• At its peak, Rent Supp assisted 179,908 units

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HUD

Owners

Rent Supp contract

Rental Assistance Payment (RAP) Program

• Rental assistance difference between “basic rent” and 30% of income for a certain percentage of units in a project
• Basic rent: amount needed to operate the project w/ subsidized 1% mortgage interest rate (from Section 236 program)

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HUD

Owners

RAP contract

Prospective v. Retroactive Conversions

Prospective

Retroactive

• If property is currently receiving assistance through Mod Rehab, Rent Supp, or RAP contract
• Eligible to convert to PBV (15-year initial term) or PBRA (20-year initial term)
• Need a PHA to agree to administer PBVs
• Tenants will receive PBVs instead of TPVs

• If property previously had a Mod Rehab, Rent Supp, or RAP contract that expired or terminated (on or after October 1, 2006) OR TPVs have been requested and processed for residents
• Need a PHA to agree to administer PBVs
• Only units whose TPV residents consent will be converted to PBVs
• Only eligible to convert to PBV (15-year initial term)

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RAD Component 2 Conversion Timeline

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Key Component 2 Tenant Protections

• Right to remain or return
• No permanent involuntary displacement
• Limitations on resident rescreening (statutory mandatory screening requirements only)
• Relocation rights via Uniform Relocation Act
• Accessibility requirements (Section 504 of the Rehabilitation Act of 1973, Americans with Disabilities Act)
• Fair housing laws (Fair Housing Act, Title VI of the Civil Rights Act of 1964)
• Under-occupied units
• Davis-Bacon labor requirements
• Eligible for contract renewal after initial term
• HQS/REAC inspections
• Choice mobility rights

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RAD Component 2 Challenges

• Some rescreening allowed at time of RAD conversion
• No mandatory HAP Contract renewal (optional)
• Shorter conversion timeline
• Minimal tenant education
• Ownership changes
• Buildings scattered, harder to organize tenants
• No additional funding to support needed repairs
• Minimal oversight by HUD
• Determining necessary scope of work
• Tenant relocation/ rehab challenges
• Possible expansion without evaluation

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So what can I do?

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Where should I start?

1. Where is RAD happening in my community? Is it Component 1 (public housing) or Component 2 (Mod Rehab, Rent Supp, RAP)?
2. What are the RAD conversion plans? Will there be a new property owner?
3. What stage of the RAD conversion is the property currently in? What is the timeline for conversion?
4. How much and what do tenants at the affected properties know? Is more tenant education and engagement needed?
5. What are tenants’ and advocates’ concerns about the RAD conversion proposal?
6. Who is in charge of managing and overseeing the property after the RAD conversion?

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RAD Guiding Legal Authorities

• RAD authorization statute:
• Consolidated and Further Continuing Appropriations Act of 2012 (amended by Section 234 of the FY 15 Appropriations Act)
• RAD implementation and oversight details:
• RAD Notice: HUD Notice 2012-32 (REV-3)
• RAD Fair Housing, Civil Rights, and Relocation Notice: HUD PIH Notice 2016-17
• RAD HAP Contracts
• RAD Use Agreement
• Strong tenant-supportive legislative history:
• Congress intended to “ensure that the demonstration does not adversely impact tenants, and stipulates that all residents living in converted properties will maintain their existing rights”

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RAD Resources

• NHLP Resources:
• Don’t Get RAD-dled mini-training series
• NHLP RAD webpage: http://nhlp.org/RAD
• Housing Justice Network National RAD Working Group
• RAD-watch.org
• Email RAD@nhlp.org

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• HUD Resources:
• HUD.gov/RAD
• RAD authorization statute:
• Consolidated and Further Continuing Appropriations Act of 2012 (amended by Section 234 of the FY 15 Appropriations Act)
• RAD Notice: HUD Notice 2012-32 (REV-3)
• RAD Fair Housing, Civil Rights, and Relocation Notice: HUD PIH Notice 2016-17
• RAD HAP Contracts
• RAD Use Agreement

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Questions?

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If you have any questions, please contact:

Jessie Cassella, jcassella@nhlp.org, 415-546-7000 x. 3116

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