HUD Posts FAQs about Increased Rent Payments for RAD Projects in Opportunity Zones

HUD will provide extra rent revenue of up to $100 per unit per month to a public housing project located in an Opportunity Zone that converts to Section 8 project-based rental assistance (PBRA) through the Rental Assistance Demonstration (RAD), provided the project needs extra revenue to be financially viable. This new feature was introduced on September 5 in Notice H-2019-09/PIH-2019-23, the updated RAD operating guidance informally referred to as REV-4 (see Memo, 9/9). HUD posted on November 4 a set of frequently asked questions (FAQs) that explain the eligibility criteria for receiving the extra rent revenue.

To receive up to an additional $100 per unit per month, subject to the availability of funds, the RAD project must be located in a designated Opportunity Zone (see Memo, 10/22) and must plan to convert public housing units to PBRA (not Project-Based Vouchers, PBV), entail either new construction or substantial rehabilitation, and demonstrate that the extra revenue is necessary to achieve financial viability. HUD will approve requests on a first-come-first-served basis. The FAQ defines “substantial rehabilitation” and describes how HUD will determine whether an infusion of additional rent revenue is necessary.

Congress created RAD in FY12 as a demonstration to test whether public housing agencies (PHAs) could leverage Section 8 rental assistance contracts to raise private debt and equity to make public housing capital improvements and thereby preserve low-income housing. RAD has two components. The first initially allowed up to 60,000 public housing units to be converted from public housing capital and operating assistance to Section 8 project-based vouchers (PBVs) or to Section 8 project-based rental assistance (PBRA). Congress has increased the unit cap three times despite the absence of an evaluation of the impact of the demonstration on residents. The cap was raised in FY18 to 455,000 units. The second component allows private properties assisted through the Rent Supplement (Rent Supp), Rental Assistance Program (RAP), Moderate Rehabilitation (Mod Rehab), Mod Rehab Single Room Occupancy (SRO), and Section 202 PRAC programs to convert an unlimited number of Tenant Protection Vouchers (TPVs) to PBRA, and as of the FY15 appropriations act, to PBVs.

Basic information about RAD is on NLIHC’s Public Housing webpage, and basic information about RAD prior to the new Notice is at page 4-33 of NLIHC’s 2019 Advocates’ Guide.