Rental Assistance Demonstration
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This is RAD
Pre-Conversion Post-Conversion $-
$100
$200
$300
$400
$500
$600
$700
$800
$900
Tenant Payment $318 Tenant Payment $318
Capital Fund $144
Operating Fund $330 Housing Assistance Payment
$474
Sample Public Housing Conversion Per Unit Monthly
$792
ACC Section 8
At closing, funding is
converted to a Section 8
contract rent
What RAD Can DoTerms
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; 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
Process Partial or Full AMP No SAC approval Subsidy layering review via RAD Simplified procurement Freed from PH Annual Plans, PHAS, Community Service,
PIC, etc.
Financing 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
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 off-site,
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
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New RAD Notice
FY 2012 rent (from HUD Tool) if apply by 12-31-2013Exempting those with CHAPs from occupancy criteria of
Performance Housing Assessment System (PHAS)
Bundling of multiple project rents
Commitments for multiple-phase projects
Allows Portfolio Awards
Option for distressed HOPE VI projects regardless of DOFA
Allowing MTW Agencies to use block grant in rent setting for 2 or more projects, subject to service level requirements & subsidy layering review
Comparison of PHA fees ACC vs RADAssume a 100 unit project, new const, at a cost of $120K per unit Per unit per month Current ACC RADProperty Mgmt Fee $ 45.00 $ 35.00 Bookkeeping $ 7.50 $ -IT $ 2.00 $ - Asset Mgmt Fee $ 10.00 $ - Capital Fund Fee $ 15.00 $ - Cash Flow (50% share) $ 37.00 Per Unit Per Month Total $ 79.50 $ 72.00 Annual Total $ 95,400.00 $ 86,400.00 Annual difference $ (9,000.00) Developer Fee (35% of $1.8M Fee) $ 630,000.00
Net unrestricted funds to the PHA $ 621,000.00
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Development objectivesPartnership with PHAs
– Modernize/ Substantially rehab aging rental properties
– Demolish/replace severely distressed/obsolete properties
– Thin densities/mix incomes via RAD HAPs and transfer authority
Place RAD HAP contracts in off-site, high-amenity locations
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Case Study: Hopewell, Virginia
Key Features
PHA in Partnership with Experienced Nonprofit Developer, Community Housing Partners9% Low Income Housing Tax CreditsResident Council Input
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Case Study: Hopewell, Virginia
Pre- ConversionPublic Housing
30 units
In need of major repair
Post-ConversionMixed Income Development
56 units
Demolition/ New Construction
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Case Study: Hopewell, Virginia
Pre- Conversion Post-Conversion
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Sources & UsesSources of Funds Amount Per UnitNew First Mortgage Loan $2,871,830 $44,872Public Housing Operating Reserves $0 $0Public Housing Capital Funds $0 $0Replacement Housing Factor $0 $0Low Income Housing Tax Credit Equity - 9% $5,455,975 $85,249Soft Sources $500,000 $7,813Developer Equity $105 $2Other $0 $0
Total Sources of Funds $8,827,910 $137,936 Uses of Funds Amount Per UnitAcquisition Costs $96,365 $1,506Construction Costs $6,388,848 $99,826Relocation Costs $65,000 $1,016Professional Fees $683,197 $10,675Loan Fees and Costs $400,000 $6,250Reserves $362,000 $5,656Developer Fees $832,500 $13,008
Total Uses of Funds $8,827,910 $137,936
Case Study: Hopewell, Virginia
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Income & Expenses:
Stabilized Cash Flow Pro Forma Total PUPAGross Potential Rents for RAD Units $243,624 $8,121Gross Potential Rents for Other Apartment Units $327,015 $9,618Gross Potential Rents for Commercial $0 N/AVacancy Loss and Bad Debt Loss ($43,215) -$675Other Income $8,400 $131
Effective Gross Income $535,824 $8,372 Total Operating Expenses ($286,550) ($9,552)Annual Deposit to Replacement Reserve ($19,200) ($640)
Net Operating Income $230,074 $6,767 First Mortgage Debt Service ($190,300) ($6,343)
Operating Cash Flow $39,774 $1,170
Case Study: Hopewell, Virginia
What advice would you give to PHAs?
“The writing is on the wall – we can’t sustain the public housing or the quality of life the way things have
been going. It became apparent that this old housing stock with diminishing capital funds was not going to
be sustainable. ”
-Steven Benham, Executive Director, Hopewell Redevelopment and Housing Authority