- 1. TN Education Committee Association of Housing and
Redevelopment Authorities October 23, 2013Presenters: Judy Van Dyke
Holly Knight Dan Johnson Rob Hazleton
2. Core values 3. Core values 4. Core values 5. Core values 6.
Our mission 7. Our people Clockwise: Founder & Managing Partner
Assistant Development Coordinator Development Partner Partner &
Development Coordinator Vice President of Development 8. The
Bennett Group Consulting, LLC 9. Our track record Over a
four-decade period, our partners have developed 81 residential
communities created more than 4,000 units of market rate and
affordable housing developed 35 partnerships with non-profit
organizations generated $10 million in fees that were put back into
these organizations to further advance their mission. 10. Grace
Ridge Apartments Auburn, Ala. 56 Family Units New Construction
Funding LIHTC Home Private Equity Earthcraft Alabama Council on
Human Relations, CAP Agency 11. Gradys Walk Dothan, Ala. New
Construction 56-unit seniors , 55 + 2 Bdr/2Bth 1,070sf Organized
Community Action Partnerships, CAP Gazebo, Fitness Center, Computer
Center, Clubhouse Funding LIHTC Home Private Equity 12. Jubilee
Pell City, Al 72 Unit Family Homeownership Organized Community
Action Partnerships, CAP Earthcraft Funding Solar site lighting
LIHTC Private Equity3 & 4 Bd 1,300 Avg sf Splash Pad, Fitness
Center, Computer Center, Clubhouse 13. Solstice Opelika, Ala.
56-unit duplex, Senior 55+ Private, comfortable neighborhood feel
Funding LIHTC Home Private Equity2 bd/2bth 1,072 Avg sf Fitness
Center, Computer Center, Clubhouse 14. Our industry partners
WILLIAM J. PEEK Member of the American Institute of Architects 15.
Our industry partners WILLIAM J. PEEK Member of the American
Institute of Architects 16. Our industry partners 17. What is RAD
What is RAD? HUD demonstration program that combines public housing
operating and capital subsidy into payments under a Section 8 HAP
contractWhat kinds of developments are being done with RAD? Minor
rehab; major rehab; new construction; mixed income; offsite
replacement housingHow do I determine if I have a project/portfolio
that would be a good candidate for RAD conversion? Use the RAD
Inventory Assessment Tool in the Resources section of
www.hud.gov/rad How would RAD affect: Residents: No change; 30% of
income for rent Boards and PHAs: Still maintain identity PHA
Functions: Dependent on cash flow, fees, strong management; puts
them on the more secure Section 8 funding platform; Gives them the
affordable housing tools of other nonprofit developers 18. Who is
involved? 19. RAD Basics Contract Rents: Operating Fund (with
Operating Fund Allocation Adjustment) + Capital Fund + Tenant Rents
= RAD Contract Rent Can convert Public Housing to: ProjectBased
Rental Assistance (PBRA) or ProjectBased Vouchers (PBV) Can convert
at 2012 funding levels Operating Fund 2012 higher than 2013 at 82%
funding Capital Fund 2012 higher than 2013 at 95% funding WHY IS
THE SECTION 8 FUNDING MODEL MORE SECURE FOR A PHA? Tenant
Protections: Tenants have the absolute right to return
ChoiceMobility, with limited exemptions Extensive waiver authority
available to facilitate conversion RAD BASICS 20. RAD Details
Ownership Public or non-profit, except to facilitate tax credits
The authority can lease the land to the LIHTC Partnership A
Physical Condition Assessment (PCA) must be performed on RAD sites
to determine the improvements required The authority must comply
with the Uniform Relocation Act An existing PILOT agreement must be
renewed when ownership Changes Davis-Bacon wages must be paid
during rehabilitation 21. RAD Notice Changes Mixed Finance projects
Removes unit cap for Mixed Finance projects Allows financially
distressed HOPE VI projects to apply Exempts awarded projects from
the Public Housing Assessment System (PHAS) Extends Capital Fund
obligation and expenditure deadlines Clarifies conditions for rehab
assistance payments HUD will honor the FY 2012 RAD contract rents
for all applications received before end of CY 2013 (applies to
individual applications, portfolio awards, and multi-phase awards)
PHA may adjust Contract Rents across multiple projects as long as
aggregate subsidy does not exceed current funding (rent bundling)
22. Show us the Money The RAD options: Modest rehab with no debt
Modest rehab with no debt only Moderate rehab with debt and 4%
LIHTCs Major rehab or replacement with debt and 9% LIHTCs These are
funding sources that are not conveniently available to small PHAs A
conversion of all LIPH units eliminates the HUD requirements for:
Procurement Annual and Five Year Plans PHAS REAC (ifPBV) You Get to
Keep the Money no offsets, developer fees, seller take back
financing, cash flow options 23. Per HUD as of August 2013 24. Tax
Credits Leverage Funds 25. RAD Notice Changes Portfolio conversions
PHA defines portfolio of projects, either the entire PHA inventory
or some subset PHA must submit applications for at least half of
the projects in portfolio HUD will reserve award for remaining
units in portfolio PHA must submit application for remaining
projects in portfolio within 365 days Multiphase conversion Allows
PHAs to reserve conversion authority for projects with multiple
development phases with applicable contract rent for all phases PHA
has until July 1, 2015 to submit application for final phase PHA
required to fulfill all CHAP milestones for each CHAP awarded Upon
application acceptance, HUD will issue CHAP for initial phase and
multiphase award letter covering all phases of project Joint
RAD/CNI applicants 26. Backlog of Physical Needs $26 Billion in
repair needs nationally Apt study says average of $24,000 in need
per PHA unit 27. RAD versus HOPE VI In one year there are more PHAs
and more Public Housing Units committed to RAD than there were in
the first four years of the HOPE VI program. The RAD program has no
additional funding from Congress. Over 20 years Congress has spent
$5.6 Billion on HOPE VI. Opportunity for all PHAs to participate in
revitalization and leveraging private funds 28. RAD Authority42,000
Units to date have been submitted 29. Sample Public Housing
Conversion Per Unit Monthly (PUM) Same funding
$900$800$700Operating Fund $200 Operating Fund$600Housing
Assistance Payment Housing $300 Assistance$330Payment
$474$500$400$300$200Capital Fund Capital Fund $144 $100 Tenant
Payment $150 Tenant Payment$792 $450Tenant Payment $150 Tenant
Payment$318$318Pre-ConversionPost-Conversion$100$- 30. Sample
Public Housing Conversion Per Unit Monthly (PUM) Same funding
$900$800$700Operating Fund $200 Operating Fund$600$3302013 Funding
$164Payment $474$500$-Pre-Conversion$409$318 $100$792 $450Tenant
Payment $150 Tenant Payment $318Total$200Capital Fund Capital Fund
$144 $100 Tenant Payment $150 Tenant Payment$259$300Funding $952013
Cap and OP2013 $400Housing Assistance Payment Housing $300
AssistancePost-Conversion 31. How does the PHA Plan? Sequestration
(Public Law 112-25 Budget Control Act of 2011, August 2, 2011) Ten
year implementation Know your Funding Financial and Physical
Viability Diversify and Plan 32. Operating Subsidy Funding
$6,000,000,000.00$5,000,000,000.00$5,031,106,183$4,921,341,060
$4,594,294,060$4,611,918,201$4,149,983,999 $4,000,000,000.00
Operating Fund CY OFND Annual Amount (U.S.)$3,000,000,000.00Final
Proration$2,000,000,000.00$1,000,000,000.002013
$0.0082%201294.968%2011100%2010103%200988.42% 33. Capital Fund F
Capital Funding
Trends2500000000$2,341,258,000.00$2,365,835,000.00$1,910,035,000.00
$1,790,000,000.00
$1,696,372,000.0020000000001500000000100000000050000000020092010201120122013012345
34. HCV Funding 35. Typical PHA Revenue versus Expenses Total
Revenue over Total Expenses
$3,000,000$2,500,000Dollars$2,000,000$1,500,000Total RevenueTotal
Expenses $1,000,000$500,000$0 20092010201120122013 36. Typical PHA
Administrative Trends 37. Income/Expenses Oops in 2012 38. Typical
Expense Trends Total Maintenance $900,000 $800,000 $700,000
$600,000 $500,000 $400,000 $300,000 $200,000$100,000 $0 Total
MaintenanceFYE 2009 $594,383FYE 2010 $692,426FYE 2011 $711,099FYE
2012 $803,869 39. Financial Planning Short and Long Term What
discussions are you having? What plans are being made to address
financials? What are discretionary costs to be examined?
Administrative Expenses Maintenance & Operations Expenses
Protective Services Tenant Services Make tough decisions 40.
Physical Needs What is your agency doing to address physical needs?
Are you fully UFAS compliant/ADA compliant? Do your units
physically meet or compare to other affordable units in the market?
41. PNA A Physical Needs Assessment (PNA) is systematic review all
of the major physical components of property to result in a
projection of future needs and costs to meet those needs. A PNA is
a strategic planning tool. It is not a budget but is an important
reference document for the development of annual budgets. A PNA can
serve as documentation for a long term grant or loan. Its the
beginning point for a number of other tools 42. Energy Audit An
Energy Audit (EA) is a systematic review of the energy use and
requirements for real estate that seeks to identify opportunities
for energy savings. While Energy Audits (EAs) and Physical Needs
Assessment (PNAs) often involve a review of the same building
systems, EAs have historically been completed independently of
PNAs. The broader real estate industry is moving aggressively to
integrate EAs and PNAs as has HUDs Mark to Market program. 43.
Physical Needs Assessments GPNARAD (RPCA)PCNAWhyRequired by
RulePublic Housing converting to Section 8HUD Insured Loan
RequirementFrequencyEvery 5 yearsTransaction DrivenAt
financingFormatAccess DatabaseExcel SheetsExcel SheetsTerm20 Year20
Year20 YearFunding SourcesHUD PHA FundsMultiple Funding SourcesHUD
MAP lender 44. Backlog of Capital Needs Capital repair needs of
$23,365 per unit Needs at your PHA Roof - $8,000 3 Bedroom 504
Compliance $25-35,000 ADA Site compliance $10-15,000 HVAC
replacement -$4,000 Water Heater - $350 Site Soil Erosion- $20,000
Appliances Range $450 / Fridge $550 45. What is RAD/Why go RAD?
Rental Assistance Demonstration Program is an opportunity to
convert your current form of housing assistance to long-term
Section 8 Housing Assistance Payments (HAP) Builds on a more stable
funding platform Lock in 2012 funding Leverage private capital to
address physical needs and preserve your units Provides a great
deal of regulatory and reporting relief 46. Public Housing Policies
Too Many Rules! Include but are not limited to: Capitalization
Community Service and Self-Sufficiency Criminal Record Management
Deconcentration of Poverty Dwelling Lease Drug Free Work Place EIV
Security Financial Management Grievance Procedure Housekeeping
Internal Control Investment Maintenance Non-Smoking References:
*24CFR 85.42, 902.79, 982.158, 990.325Personnel Pet Residential and
for Service Animals Procurement Property Disposition Reasonable
Accommodations Rent Collection Records Retention and Disclosure
Risk Management Section 3 Transfer Policy if not in ACOP Travel
Vehicle Operation Violence Against Women Act HUD Reporting multiple
systems49 47. What is best plan for residents? Diversify Borrow
funds for improvements New cutting edge programs Partner Reposition
RAD Compliance is not going away even if there is temporary relief
Need to over come funding and sequestration 48. Why RAD What Makes
RAD So Special? One simple application, not four long ones.(No SAC)
Not competitive, just get it right. Rapid turnaround by HUD. Less
procurement, fewer specialized consultants. High probability of
approval. RAD brings in new money. 49. RAD Highlights Applications
for demonstration must be in by December 31,2013 to lock in 2012
funding PHAs will remain PHAs and still run their housing Boards of
commissioners still remain PHAs may need to obtain financing to
address physical backlog May submit partial portfolio or phased
approach Under RAD a PHA chooses PBV (PHA) or PBRA (Project Based
Rental Assistance) HUD Multi Family Gives PHA secure funding for 15
30 years plus annual inflation factor increase 50. RAD process Open
applications through 9/15 Initial review/approvals in 30-45 days;
RAD transaction manager assigned upon initial approval Ability to
review prospective deals with RAD Team prior to application Submit
full or partial AMP No SAC approval Subsidy layering review via RAD
Simplified procurement Freed from PH Annual Plans, PHAS, Community
Service, EPIC reporting, Section 3, etc. 51. RAD financing
Availability of FHA 223(f) & 221(d)(3) insurance, with priority
processing Access to FHA LIHTC Pilot processing Ability to tap 9%
& 4% LIHTCs, including short bond structures Ability to support
transaction with public housing reserves and capital funds,
including Replacement Housing Factor funds Access to HOME and CDBG
for development budgets Available sales proceeds can support other
affordable housing purposes 52. RAD flexibility Transfer assistance
from unworkable units prior to conversion Market accommodations in
meeting 1-for-1 preservation (e.g., convert efficiencies to 1
bdrms; long-term vacant units) Combine RAD & agency PBVs or SAC
TPVs>PBVs Flexibility to reduce densities, replace housing
offsite, 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 53. Next
Steps Initial RAD assessment Board Resolution to apply for RAD Two
resident meetings Finalize application to be submitted before
December 31, 2013 54. What can RAD do now? 15-20 year, renewable
contracts with use agreement Predictable initial contract rent
setting; annual operating cost adjustments for inflation (OCAF)
Established replacement and operating reserves; standard industry
underwriting requirements RAD HAP funding begins at construction
closing No limitations on use of project cash flow PHA
ownership/control similar to LIHTC practices Long-term
affordability ensured 55. Operating Costs Adjustment Factor (OCAF)
RAD versus no RAD in PH$350 HAP Contract x 100 units=$35,000
$35,000 x 12 months=$420,000 $420,000x 2.0 OCAF= $428,400 $428,400x
2.0 OCAF=$436,968 $436,968x 2.0 OCAF=$445,707 $445,707x 2.0
OCAF=$454,621 $454,621x 2.0 OCAF=$463,713Total HAP Funding 5 years=
$2,229,409PH 2012 Op Sub $250 Cap Fund $100 TP $150 TP = Total=
$500PH 2013 $220 $95 $150 $465$315x100units=$31,500 x 12=$378,000
$378,000 $378,000 $378,000 $378,000 Total PH Cap and OP Funding to
property 5 Years= $1,890,000 56. Road to Application Simple, start
with basic assessment tool and pro forma www.hud.gov/rad
Application Two resident meetings Board meeting and approval
Financing letters Lender Investor If 9% credit, letter from HFA or
selfscoring Choice Mobility: Letter for PBRA; ability to administer
for PBV (Waiver request as needed) If converting a project that is
currently mixedfinance, need signatures of all parties Fix Fatal
Error issues CHAP Award 57. PBV versus PBRA RENTAL ASSISTANCE
DEMONSTRATION (RAD) Various Considerations in Choosing PBRA vs. PBV
Item1. Baseline Funding Levels 2. Initial Contract Term3. Contract
Renewals4. Rent CapsPBRA Based on 2012 levels, with Operating Fund
Offset restored 20 yearsPBV Same15 years (up to 20 at option of
voucher agency); voucher agency may also automatically extend for
another 15 years At end of contract term, Secretary Same must
offer, and PHA must, accept renewal Current funding cannot exceed
Current funding cannot exceed 120% of the FMR, unless the the lower
of (1) reasonable rent current funding is less than or (2) 110% of
FMR. market, in which case the current funding cannot exceed 150%
of FMR. 58. 5. Annual Inflation AdjustmentBased on Operating Cost
Adjustment Factor (OCAF), i.e., the method used to adjust rents for
Multifamily projects renewed under the Multifamily Assisted Housing
Reform and Affordability Act (MAHRAA).Same6. Choice
MobilityResident may request next available Resident may request
next available voucher after two years; however, voucher after one
year, with no voucher agency may limit to not more limitations.
than 15% of project in any year and not more than 33% of voucher
turnover due to RAD.7. Voucher Admin FeeN/APHA earns Section 8
voucher admin fee for all units converted to PBV Note: for agencies
that do not administer a voucher program, and that convert to PBVs,
the voucher agency will be responsible for administration of the
waiting list, eligibility, reexaminations, leading to substantial
deregulation for the converting agency.8. REAC/UPCS
InspectionsYesNo (unless project receives FHA insurance) 59. 9.
REAC/FASS-MF Annual Financial Statements 10. Management and
Occupancy Reviews (MORs) 11. Cash Flow 12. Appropriations13. Rehab
Requirements14. FHEO Site/Neighborhood Standards 15. Income
MixingYesNo (unless project receives FHA insurance) Yes No (unless
project receives FHA insurance) Unrestricted Same Annual funding
subject to Annual funding subject to appropriations; however, the
appropriations. Because of the RAD Congress has never failed to
renew a Use Agreement, if Congress provides PBRA contract less than
full funding for the Voucher program (i.e., proration), the PHA
administering the voucher program may will likely need to absorb
the cuts from its non-RAD voucher units. There is no required level
of rehab Same under RAD (or requirement to leverage debt). The PHA
must simply ensure that whatever needs are identified are
addressed. Standard FHEO requirements not Same waived under RAD.
N/A Under normal PBV rules, not more than 25% of units in a project
can be assisted, unless the units are elderly or disable, scattered
site, or receiving supportive services. RAD increased the threshold
to 50%, with 60. LEEDS HOUSING AUTHORITY PBV v
PBRA326129PBVHCVRADOtherY1326129160,39263,468223,860Y2326106160,39252,275Y332685160,392Y432664Y5326Y6326Y7326Y8UnitsAdmin
FeeNo RADNo
RAD144,15616279,704212,667136,94815475,71941,642202,034130,10114671,933160,39231,540191,932123,59613968,33645160,39221,943182,335117,41613264,91926160,39212,827173,219111,54512561,6738160,3924,166164,558105,96811958,590326160,3920160,392104,73211355,660Y9326160,3920160,392107,51510752,877Y10326160,3920160,392110,15910250,233Y11326160,3920160,392112,6709747,722Y12326160,3920160,392115,0569245,336Y13326160,3920160,392117,3238843,069Y14326160,3920160,392119,4778340,915Y15326160,3920160,392121,5227938,870Y16326160,3920160,392123,4667536,926Y17326160,3920160,392125,3127135,080Y18326160,3920160,392127,0666833,326Y19326160,3920160,392128,7326431,6603,047,448227,860PBV
NO PBVPBV Admin Fees3,275,308 992,548Other Admin FeesThis is
happeninganywayDIFFERENCE2,282,760Total Admin FeesExtra Admin
Fee2,282,760ANNUAL AVG ANNUAL AVG992,548NO PBV PBV52,239 172,385
61. Additional thoughts FDS different for PBV and PBRA
Simplification of programs to learn Pay for vendor software Will
more developers be supporting HCV due to PBV What will HCV funding
do? How likely are severe cuts to zero out the program? HQS versus
REAC Multi family reorganization 62. Change Take the first step in
faith. You dont have to see the whole staircase, just take the
first step. -Martin Luther King, Jr.
