A March 8 Federal Register notice announced the availability of PIH Notice-2012-18, which provides detailed eligibility and selection criteria for applicants interested in participating in the Rental Assistance Demonstration (RAD). The FY12 Appropriations Act allows HUD to convert assistance provided for public housing and three smaller private HUD-assisted housing programs to long-term, renewable, project-based Section 8 rental assistance or to project-based vouchers (see Memo, 11/18/11). The three smaller programs are Rent Supplement (Rent Supp), the Rental Assistance Program (RAP), and the Moderate Rehabilitation program (Mod Rehab).
Although the notice seeks public comment on the entire notice, its sections regarding conversion of Rent Supp and RAP will be effective immediately. After receipt and consideration of comments, which are due April 9, HUD will issue a Final Notice, which may include revisions to each of the program conversion types under RAD.
The RAD demonstration has two objectives:
- To test whether such conversions can help preserve and improve low income housing by enabling public housing agencies (PHAs) and owners of private, HUD-assisted housing to use the flow of Section 8 assistance contracts to raise private capital for improvements.
- To test the extent to which residents have greater housing choice after conversion.
The Appropriations Act created two RAD components:
- The main component allows PHAs and other owners of up to 60,000 units of public housing and Mod Rehab to compete for permission to convert existing federal assistance to project-based Housing Choice Vouchers or to Project-based Section 8 rental assistance (PBRA). HUD proposes to limit the number of Mod Rehab units converted under this component to 1,250 units.
- The second component allows Mod Rehab, Rent Supp, and RAP projects to convert their tenant protection vouchers to project-based vouchers if a property’s contract expired or terminated due to mortgage prepayment after October 1, 2006, or will expire or terminate due to prepayment before September 30, 2013. There is no limit to the number of units that may be converted under this component, and there is no competitive selection process.
Summary of Key Features
- There is no new, incremental funding for the first component conversions. Only the amount currently available for the converting public housing or Mod Rehab units is available for the converted project-based voucher or PBRA units.
- Initial project-based voucher contracts will be for 15 years and PBRA contracts will be for 20 years.
- When initial PHA-converted project-based voucher and PBRA contracts expire, HUD must offer and PHAs must accept a renewal contract.
- Converted public housing projects will also have a concurrent renewable RAD Use Agreement that must require the owner to preserve unit affordability and maintain the number of units converted.
- Ownership and control of converted public housing must be by public or nonprofit entities. However if there is a foreclosure or termination of assistance (due to severe violations), HUD will require ownership or control of converted units first to a capable public entity, and if none exists, to a capable private entity. HUD may allow ownership to a for-profit entity to facilitate use of tax credits, if the PHA preserves its interest in the property.
- Normally, PHAs cannot project-base more than 20% of their Housing Choice Voucher formula allocation. RAD conversions will not count against the 20% cap.
- Normally PHAs cannot project-base more than 25% of the units in a development (with exceptions for elderly and disabled housing). RAD will allow up to 50% of the units in a converted development to be assisted with project-based vouchers.
- PHAs applying to convert to PBRA are required to provide a choice-mobility option to residents of public housing and component #1 Mod Rehab projects, as detailed in the Notice. For project-based voucher conversions, existing project-based voucher rules apply. “HUD’s goal is to have 100% of the residents in the Demonstration offered a choice-mobility option within a reasonable time after conversion,” the Notice states. The statute does not require this component of RAD, but it is important to residents, advocates, and HUD.
- The statute prohibits re-screening of existing residents.
- Any residents temporarily relocated during rehabilitation have a right to return.
- If a public housing tenant’s monthly income increases by more than the greater of 10% or $25 solely as a result of conversion, the rent increase will be phased in over three years, which a PHA may extend to five years.
- When PHAs convert to project-based vouchers, they are required to recognize legitimate resident organizations, which the notice describes in a way that reflects Section 964 of the regulations. When PHAs convert to PBRA, PHAs are required to recognize legitimate tenant organizations in accordance with Section 245 of the regulations.
- When PHAs convert to either project-based vouchers or PBRA, they must provide $25 per occupied unit annually for resident participation, at least $15 of which must be provided to the legitimate resident organization for resident organizing, education, and training.
- When PHAs convert to project-based vouchers or PBRA, the statute requires owners to adhere to existing resident procedural rights (Section 6 rights). The notice lists grievance procedures that require residents:
- Be advised of the specific grounds for any adverse owner action and be able to examine documents.
- Have a hearing before an impartial party, be represented by someone, and ask questions of witnesses they chose.
- Prior to a PHA submitting an application to convert to either project-based vouchers or PBRA, they must conduct at least two meetings with residents and provide written responses to resident comments. If a PHA is selected it must have at least one more meeting with residents before executing a contract with HUD. Once a contract is signed, PHAs must notify each affected household and explain any impact, including specific rehab plans.
- Owners of Mod Rehab, Rent Supp, and RAP properties intending to convert must notify residents and conduct a resident meeting, providing them an opportunity to comment.
- For PHAs, conversions constitute a “significant amendment” to the PHA Plan, triggering Resident Advisory Board and public hearing and comment obligations.
- In establishing a waiting list for a converted project under component #1, a PHA or Mod Rehab owner must honor any waiting list that existed at the time of the conversion.
The Federal Register notice invites public comment regarding the detailed eligibility and selection criteria proposed in Notice PIH-2012-18. In particular, HUD requests comments on 12 topics, including:
- Under both components, PHAs and owners are required to notify and consult with tenants about the intent to apply for conversion. Tenants must also have an opportunity to comment, and PHAs and owners must address resident comments. HUD seeks feedback regarding whether the detailed resident notification and consultation provisions in Notice PIH-2012-18 provide for meaningful participation, and balance RAD’s goals of preserving housing while maximizing residents’ housing choices.
- In both RAD components, residents have a right to remain in their converted homes or to move after a set period with a regular Housing Choice Voucher. HUD requests feedback regarding ranking factors intended to encourage applicants to form partnerships to secure turnover vouchers to support the mobility.
HUD will be holding a series of webcasts, accessible through www.hud.gov/webcasts.
- RAD Notice Overview - March 12, 2012 2pm EST
- RAD Section I Public Housing - March 15, 2012 3pm EST
- RAD Section II Mod Rehab - March 16, 2012 2pm EST
- RAD Section III Rent Supp and RAP - March 16, 2012 3pm EST
HUD invites RAD questions via email at email@example.com.
PIH Notice-2012-18 is available on HUD’s RAD page as “HUD Notice Rental Assistance Demonstration - Partial implementation and Request for Comments.”
Comments are due April 9, 2012.
A slightly more detailed NLIHC “Overview of Major RAD Provisions” is attached to this article