Rental Assistance
Demonstration (RAD) Update
Presented by
Thomas R. Davis
Office of Recapitalization, HUD
April 11, 2017
Background on RAD
The Problem
•
Deferred public housing capital repair needs. 2010 estimate in excess of $25.6B
across the portfolio (>$23k per unit) and rising
•
Public housing platform creates barriers to accessing private capital
•
10,000-15,000 public housing units lost each year
•
Multifamily “legacy” program properties also at risk
The Solution – Changing the Regulatory Platform
•
RAD created in FY2012, expanded in FY2015
•
Allows public housing to convert on a budget-neutral basis to long-term Section
8 Housing Assistance Payment (HAP) contracts
•
Also allows at-risk legacy assisted properties to convert to Section 8 HAP
contracts
•
Leverages private investment to address capital needs, improving conditions for
residents, creating jobs and stabilizing the assisted portfolio
Background
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RAD Public Housing Conversions – Status
RAD Program Status Report
4/10/2017
Construction Investment
in Closed Transactions
Status of units under RAD cap
185,000 units
Reserved Authority
for Multiphase or
Portoflio Projects
CHAP
Award
Pending
CHAP
Awarded
(>$67K per unit)
60,073
14,110
6,830
70,817
7,552
25,618
$3.9 Billion
RAD
Conversion
Committment
(RCC) Issued
Financing
Plan
Submitted
$3.98B
Closed
on the waiting list.
Pre-7/28/15
Tier1
Tier2
3,291
60,073 units
423
5,193
≈ 32,000 units
7,010
306
178
0
568
RAD Waiting List
in construction
investment in RAD
properties. This
doesn’t include items
such as acquisition,
soft costs, reserves &
developer fee
Total:
16,969
converted.
Tier3
Tier4
Tier5
No Priority
Priority Undet
Applications received prior to 7/28/15 will be awarded CHAPs on a first come first serve basis. All applications after that d ate are sorted into priority tiers in the
categories defined in the RAD Notice, with Tier 1 as the highest priority (deepest investment). Applications that have not yet been sorted into a tier are listed as
Public Housing Conversions
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PH Conversions – Program Growth
• Steady growth in conversions year
to year
• Major process changes improved
cross-silo coordination and sped
processing times
• Interim evaluation by
Econometrica, published
September 21, 2016, found:
– Proof of concept
– 9:1 leverage ratio
• Full evaluation in 2018 will
address additional issues including
residents’ experiences and
satisfaction
NOTE: FY2017 data from RAD 1 closed transactions only through March 17, 2017.
Public Housing Conversions
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PH Conversions – Investment & Financing
Closed Transactions by
Level of Investment
Closed Transactions by
Financing Type
NOTE: Percentages derived from RAD 1 closed transactions only through March 17, 2017.
Public Housing Conversions
5
PH Conversions – Relative Distribution
17%
RAD Pipeline as a Percentage of the Total
Public Housing Inventory by Region
16%
Participating PHA
Size in RAD Pipeline
Compared to PHA
Size in Total Public
Housing Inventory
RAD
Public Housing
Universe
Public Housing Conversions
8%*
*12% excluding NYC
23%
Note: This data reflects the regional breakdown of RAD public
housing applications (“projects”) received compared to the
number of existing public housing projects in each region.
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Legacy Program Conversions – Status
Conversions & Outstanding Pipeline
Rent Supp/RAP Transactions:
•
40 properties remaining in portfolio
•
26 active transactions in the
RAD 2 Pipeline
•
25 properties have contracts that
expire in 2017
•
We hope to wind down the Rent Supp
& RAP programs in the next few years
Mod Rehab Transactions:
•
8 active transactions in the
RAD 2 Pipeline
•
2 applications in process
•
Substantial opportunities for Mod
Rehab properties
NOTE: Data derived from RAD 2 closed transactions only through March 17, 2017.
Legacy Program Conversions
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2016 Notice Revisions
• RAD Fair Housing, Civil Rights & Relocation Notice
– No change in underlying fair housing rules from those established in the June, 2015,
Rev-2 of the RAD Notice; modest changes in timing of fair housing requirements
– Front-end fair housing review is a risk-based analysis
– Fair housing portions of the Notice provided clarity and transparency to FHEO review
– Substantial changes in the relocation requirements designed to facilitate relocation
implementation, to provide greater clarity and to enhance resident protections
• RAD Notice Revision 3 – Public Housing Conversions
– Conform with HOTMA (remove cap on the percentage of PBV units on a site)
– Modest changes to underwriting requirements (use of proceeds, developer fee
limitations, close-out expenses for full-portfolio conversions)
– Simplify eligibility and application procedures
– Clarify expectations around communication with residents, prohibition on rescreening for
existing residents, rent phase-in and waiting list transfer arrangements
• RAD Notice Revision 3 – Legacy Program Conversions
– Revise rent setting provisions
Public Housing Conversions
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2016 PD&R Interim Evaluation
• HUD’s Office of Policy Development & Research contracted Econometrica,
Inc. to evaluate RAD. Interim Report, published September 21, 2016,
finds:
• “Proof of concept” based on closings as of October, 2015.
• RAD transactions demonstrate a leverage ratio of $8.90 for every
$1.00 of public housing funds invested
• 20-year projections comparing RAD scenario with counter-factual scenario
absent the RAD conversion shows that all four case studies perform better
under RAD
• Full evaluation, planned for December, 2018, will address additional issues
including residents’ experiences and satisfaction. Interim report data did
not include a sufficient number of completed transactions to adequately
examine post-completion outcomes and impacts.
Interim Evaluation
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Office of Recap Structure
Director
Tom Davis
Program Administration Office
Will Lavy (Acting)
Branch 1
(RAD 1st
Component)
Alan Kaufmann
Senior Advisors
Affordable Housing Transaction Division
Greg Byrne
Branch 2
(RAD 2, 236s,
Mark-to-Market)
Minnie MonroeBaldwin
Branch 3
(RAD 1st
Component)
Harry West
Closing & Post-Closing Division
Bev Rudman
Branch 4
(RAD 1st
Component, PostMark-to-Market)
Kara Williams-Kief
In Coordination With:
Public and Indian
Housing (PIH)
•
Public Housing
•
Housing Choice Voucher
Fair Housing &
Equal Opportunity (FHEO)
•
Civil Rights and Fair
Housing
Community Planning and
Development (CPD)
•
Relocation
Office of General
Counsel (OGC)
•
Legal Review
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Thank You.
For evaluation materials, visit
www.huduser.gov/portal/RAD_Evaluation.html
For more information and case studies visit
www.hud.gov/rad
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