Knoxville’s Community Development Corporation

Rental Assistance Demonstration (RAD) Conversion

Affordable Housing Overview for Public Housing Agencies (PHAs)

• 80% of Public Housing was Placed in Service before 1980.

• Major systems have reached the end of their useful life and need replacement.

• PHA Tools to address Capital Needs limited

• Business as usual ~ Operating Subsidy and Capital Funds

• Capital Funds Financing Program ~ Borrowing against future Capital Funds

• Section 18 Demo/Dispo Mixed Finance Strategy ~ typically with Tax Credits

• Choice Neighborhoods Initiative Grants ~ Highly competitive, costly and only 3 or 4 per year

• RAD ~ Conversion of PH units to Section 8 platform (Project Based Rental Assistance or Project Based Vouchers) to support debt if needed (multitude of financing strategies)

• Most PHA Staff has very little/no development experience.

Rental Assistance Demonstration (RAD)…• What is RAD? Authorized in 2012, it is a HUD demonstration program that

combines public housing operating and capital subsidy into a Section 8 HAP contract, and is now authorized for the conversion of up to 225,000 units of public housing. Possible elimination of cap. Interest continues to grow…

• Why was RAD established? HUD’s public housing inventory of 1.2 million units is aging, becoming more obsolete, and has increasing backlog of unmet capital needs. $26 billion in backlog grows by net $1 billion per year. Capital Funding has declined 29% over the past decade. Capital grant funding is insufficient to meet the growing backlog of capital needs.

KCDC RAD Conversions Summary:• No debt ~ internally financed:

• Autumn Landing/Natures Cove (197 units)

• Mechanicsville (48 units)

• Valley Oaks (42 units)

• Five Points Family and Sr. Duplexes (37 units)

• 4% LIHTC/Bonds, Fannie Mae ROAR:

• The Residences at Lonsdale (260 units)

• North Ridge Crossing (268 units)

• The Vista (175 units)

• 9% LIHTC (Five Points) highlighted project:

• Taylor Homes / Lee Williams (317 units)

• HUD 223(f):

• Montgomery Village (380 units)

• Financing to be Determined:

• Austin Homes (129 units)

• Passport (81 units)

• Eastport School (25 units)

• The Residences at Eastport (60 units~ LIHTC)

Five Points Critical Factors Development Summary

• Project subdivided into “Four Phases”

• THDA QAP RAD set aside for 2016 and 2017 (extra point 2015 and 2018)

• Demolition and New Construction

• Site and Neighborhood Standards Approval requirement with New Construction

• Various Financing Strategies for each Phase

• Additional Infrastructure Improvements with City of Knoxville Funding Commitments

History…..

• Units constructed in 1960s

• High density

• Backlog of Capital needs

• Community support of

improvements

History of Investment

• City of Knoxville commitment of Funds

• 20 elderly duplex units

• The Residences at Eastport 85 units

• Demolition of 183 units

• 17 family units of infill housing

…THEN RAD…

Site Masterplan

Phase 1: The Residences at Five Points

• 2015 LIHTC Award for 90 units of elderly/disabled

• Extra point for RAD conversion

• KCDC internal Funds for gap financing

• Completed and fully leased in July 2017

Five Points Phase 2

• 2016 LIHTC Award for 84 units of family units

• LIHTC set-aside for RAD conversion

• Gap Financing

• Home Federal Community Investment Tax Credit with THDA

• KCDC Internal Funding

• In construction ~ completion and fully leased by August 2018

Five Points Phase 3

• 2017 LIHTC Award for 82 units of family units

• LIHTC set-aside for RAD conversion

• Gap Financing

• Home Federal Community Investment Tax Credit with THDA

• KCDC Internal Funding

• In closing process ~ completion and fully leased by July 2019

Five Points Phase 4

• 2018 LIHTC application for 82 units of family units (point for RAD) due March 1

• “Transfer of Assistance” for 43 Austin Homes units

• Gap Financing (TBD)

• Demolition of units involved

• 4 and 5 Bedroom units required

• Plan B Option ~ hopefully not needed

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H O U 8 N )OP P ORTUNIT

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QUESTIONS

Ben Bentley, Executive Director/CEO

bbentley@kcdc.org

Joyce Floyd, VP of Strategic Planning and Development

jfloyd@kcdc.org