HUD’s Office of Recapitalization posted the fourth update of the document implementing the Rental Assistance Demonstration (RAD), Notice H-2019-9/PIH-2019-23 (informally referred to as REV 4). In the preamble, HUD highlights 11 changes to the public housing conversion provisions (“first component”) that took effect immediately on September 5. There are also two public housing changes and eight “second component” changes (for example, Section 202 PRAC and Mod Rehab programs) subject to a 30-day notice and comment period.
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), and Mod Rehab Single Room Occupancy (SRO) programs to convert an unlimited number of Tenant Protection Vouchers (TPVs) to PBRA, and as of the FY15 appropriations act, to PBVs. The FY18 appropriations act added Section 202 Supportive Housing for the Elderly with Project Rental Assistance Contract (PRAC) to the second component. The new Notice sets out procedures for private owners of projects assisted with the Section 202 PRAC program to apply for RAD conversion.
Notice H-2019-9/PIH-2019-23 replaces Notice PIH-2012-32/H-2017-3 REV-3, and Notice PIH 2018-11/H 2018-5.
This Memo article offers a preliminary summary of the changes most relevant to residents and advocates. Page references are to a version of the new Notice that indicates changes in purple text.
Resident Notification and Meeting Changes (page 115 of purple-line version)
Before a Concept Call
One additional meeting with residents is required. The “Resident Notification” section (Section 1.8) adds a paragraph and a new feature. After a PHA’s RAD application has received preliminary HUD approval (called a “CHAP”), but before the PHA requests a “Concept Call” with HUD, the PHA must have at least one meeting with residents to discuss updated conversion plans and solicit feedback regarding proposed property improvements. The PHA must prepare comprehensive written responses to comments made by residents at this meeting.
The Concept Call is the new feature, requiring a PHA to request such a call with HUD before submitting a Financing Plan, a document demonstrating that the project can be physically and financially sustained for the term of the Housing Assistance Payment (HAP) contract.
Before Submitting a Financing Plan
The previous Notice required a PHA to have one more meeting with residents after a CHAP was granted. The new Notice slightly modifies the provision to state that this resident meeting must take place after the Concept Call and before submitting a Financing Plan. This meeting must discuss updated conversion plans and the anticipated Financing Plan. The PHA must prepare comprehensive written responses to comments made by residents at this meeting.
The paragraph describing resident notification after HUD has issued a RAD Conversion Commitment (RCC) is modified to add that the notification must indicate: the anticipated timing of the conversion, the anticipated duration of the rehabilitation or new construction, the revised terms of the lease and house rules, any anticipated relocation, and opportunities and procedures for residents to exercise the RAD “choice-mobility” option (the option to move with tenant-based vouchers after one year if the project converts to PBVs, or to move after two years if the project converts to PBRA).
Rights of Residents with PBVs in RAD Projects Clarified (page 58 of purple-line version)
HUD introduced a provision in 2018 allowing a PHA seeking to convert a property through RAD to also submit a Section 18 Disposition application for up to 25% of the property’s units. Those Section 18 units could receive Tenant Protection Vouchers that would be converted to PBVs. The new RAD Notice imports word-for-word the provisions of Notice PIH-2018-11/h-2018-5 stressing that the “Section 18” residents have all of the relocation rights as the “regular” RAD residents. Those relocation rights include the same resident notice and meeting requirements, the right to return, and relocation assistance and payments.
All of the RAD resident provisions, as summarized at Attachment 1B.1 are to apply to the Section 18 residents (page 163 of the purple-line version). Section 18 resident grievance and lease termination rights are specifically identified (page 85 of the purple-line version) as are the right to establish and operate a resident organization with the “regular” RAD residents and to be counted toward the $25 per-unit for resident-participation funds (page 85 of the purple-line version and page 168 in Attachment 1B.2).
Section 3 Provisions (page 48 of purple-line version)
Section 3 preferences for resident training, employment, and contracting opportunities have always been required until a public housing development had completed RAD conversion. The new Notice elaborates on the earlier Notices. Pre-development conversion costs remain subject to regular Section 3 public housing provisions.
New with the Notice is that after a RAD Closing (which takes place before final conversion), any housing rehabilitation or new construction not funded by a HUD program is subject to the Section 3 provisions pertaining to housing and community development activities – except that first priority for employment and other economic opportunities must be given to residents of public housing or Section 8-assisted housing.
NLIHC is not clear about the practical implications of these provisions, other than the welcome Section 3 priority for residents after RAD Closing if there is any rehab or new construction not funded by a HUD program. NLIHC will seek clarification from HUD. At a minimum, it seems that RAD continues to avoid extending RAD employment opportunities after conversion for PHA staff who had performed various tasks at the public housing development, such a central office employees, painters, grounds crews etc.
Projects Needing Significant Renovations No Longer Prioritized (page 127 of purple-line version)
The new Notice deletes the priority categories for approving RAD applications. Instead HUD will accept applications on a first-come, first-served basis. This formalizes actual HUD practice in which HUD approved RAD applications that entailed little or no rehabilitation for 27% of completed RAD conversions and 36% of projects undergoing rehab, according to the Government Accountability Office.
The original intent of RAD was to address Congress’ underfunding of public housing capital needs that resulted in accelerated deterioration of properties. The appropriations act establishing RAD stated that the purpose is to “preserve and improve” public housing. The initial RAD Notice and each subsequent revision reiterated this intent and added that the goal is to “address immediate and long-term capital needs.”
Section 202 Elderly Housing with Project Rental Assistance Contract (PRAC)
The new Notice implements provisions of the FY18 appropriations act allowing owners of projects for the elderly assisted by the Section 202 PRAC program to convert to PBVs or PBRA. Extensive provisions are in a new Part IV (starting on page 283 of the purple-line version).
HUD will provide webinars covering various aspects of the new Notice:
- Public housing conversions, September 19, 2019 2:00 p.m. ET. Register here.
- Section 202 PRAC conversions, September 26, 2019 2:00 p.m. ET. Register here.
- Mod Rehab conversions, October 3, 2019 2:00 p.m. ET. Register here.
- Resident rights in public housing conversions, October 10, 2019 2:00 p.m. ET. Register here.
- Resident rights in Section 202 PRAC and Mod Rehab conversions October 17, 2019 2:00 p.m. ET. Register here
The purple-line version of the new Notice is at: https://bit.ly/2kwwExy
The official version of the new Notice is at: https://bit.ly/2m3OAA4
More basic information about RAD prior to the new Notice is at page 4-33 of NLIHC’s 2019 Advocates’ Guide.