HUD’s Office of Recapitalization, which administers the Rental Assistance Demonstration (RAD) formally announced the new “Faircloth-to-RAD” options for public housing agencies (PHAs) to create deeply affordable homes. Faircloth refers to a limit on the number of public housing units a PHA can own, assist, or operate. The Office of Recapitalization indicates that many PHAs operate fewer public housing units than their Faircloth limit, meaning that currently 220,000 units of public housing could be developed. The new Faircloth-to RAD option is designed to establish a long-term, reliable rental subsidy contract to help PHAs and their development partners more readily finance the construction of new deeply affordable units. The latest list of PHAs with available Faircloth units (as of November 30, 2020) is here. Recap will conduct a webinar about the Faircloth-to-RAD option on Monday, April 26 at 3 pm ET. Register here.
Congress established in 1998 a limit on the number of public housing units the federal government would support. The Faircloth Amendment to the Housing Act of 1937 prohibits HUD from funding the construction or operation of new public housing units with capital or operating funds if construction would result in a net increase in the number of public housing units a PHA owned, assisted, or operated as of October 1, 1999. This is referred to as the “Faircloth Limit,” named after Lauch Faircloth, a North Carolina senator who championed the limit.
One reason PHAs with available Faircloth units have not been unable to construct new public housing units is because there is no new federal funding for their initial construction. The new option is intended to enable PHAs with Faircloth unit availability to develop public housing units on a temporary basis using HUD’s public housing mixed-finance program with pre-approval to convert the property under RAD to a long-term Section 8 contract once construction is complete. By providing early-stage RAD conversion approvals, specifically the revenue certainty and the market-familiarity of a Section 8 contract that these RAD approvals represent, HUD gives lenders and investors the information they need to underwrite the construction of new public housing.
The Office of Recapitalization produced a Faircloth-to-RAD Fact Sheet that lists available Faircloth units by state, and more importantly, PHAs that have more than 1,000 available Faircloth units. Chicago has 19,497 units, New York City has 10,864 units, New Orleans has 10,347 units, Atlanta has 9,136 units, and Philadelphia has 7,024 units.
HUD’s Office of Recapitalization will conduct a webinar on Monday, April 26 at 3 pm ET. Register at: https://bit.ly/3mGUjqF
PHAs with available Faircloth units as of November 30, 2020 is at: https://bit.ly/3uubTB0
The Faircloth-to-RAD Fact Sheet is at: https://bit.ly/3fW7jHC
A detailed Faircloth-to-RAD guidance document for PHAs is at: https://bit.ly/3wB6BW6
Faircloth FAQs (June 2020) are at: https://bit.ly/2Qeryp1
Basic information about RAD is on page 4-39 of NLIHC’s 2020 Advocates’ Guide.