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Rental Assistance Demonstration (RAD) Program 2013 NJAHRA CONFERENCE Atlantic Club Hotel & Casino Atlantic City, NJ Presenters: William F. Snyder Louis.

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Presentation on theme: "Rental Assistance Demonstration (RAD) Program 2013 NJAHRA CONFERENCE Atlantic Club Hotel & Casino Atlantic City, NJ Presenters: William F. Snyder Louis."— Presentation transcript:

1 Rental Assistance Demonstration (RAD) Program 2013 NJAHRA CONFERENCE Atlantic Club Hotel & Casino Atlantic City, NJ Presenters: William F. Snyder Louis Riccio

2 What is RAD? It is the conversion from Section 9 Public Housing Assistance to Project Based Section 8 Assistance. You will be released from your Public Housing Annual Contributions Contract and the Declaration of Trust. You will have less administrative burden (HUD estimates about 15%). You will be relieved from the burdens imposed by REAC (PASS, FASS, MASS). RAD is the current administration’s attempt to recapitalize public housing through private debt & equity.

3 RAD-Should I or Should I not! What is the future of public housing? Will the PH program provide a stable funding source for operations & capital needs in the future? Do my properties have significant capital needs? Can my properties pass HUD’s physical condition assessment (PASS)?

4 HUD Funding for Public Housing What do we know about the stability and rate of funding for the Public Housing Program?

5 “Proration Factor” The Annual Contributions Contract (ACC) stipulates that your subsidy is subject to annual appropriations from Congress. There is currently an $800,000, gap in PHA Operating Fund eligibility and Congressional appropriations. PHAs must estimate what percentage Congress will approve in preparing their budget.

6 The “Proration Factor”

7 Operating Fund For 2012, the Congress accepted the Administration’s recommendation and funded the Public Housing Operating Fund at $3.982 billion, $1 billion below total subsidy eligibility. This funding level was paired with a $750 million offset against “excess” existing operating reserves held by Public Housing Authorities (PHAs).. A year-long CR at the 2012 level will provide only 83 percent of PHAs’ operating costs for calendar year This would be the deepest proration in the program’s history.

8 Capital Fund Status Estimated Need (Abt) $26 Billion Annual Accrual Rate $3.6 Billion 2013 Appropriation $1.78 Billion 25% Cut in CFP from

9 Capital Fund Program From 2001 to 2013 the Capital Fund has been cut by nearly 50%! 25% from 2010 to 1013 alone!

10 Capital Fund Program For 2012, the Public Housing Capital Fund was funded at $1.875 billion, the lowest funding level in the history of the program. Between 2010 and 2012, the Capital Fund experienced an unprecedented 25 percent reduction from what was already an inadequate funding level given the inventory’s annual accrual of capital needs. According to the Capital Needs Assessment recently completed by Abt Associates at HUD’s direction, the portfolio already has a modernization backlog in excess of $26 billion, with an annual accrual rate of approximately $3.4 billion.

11 Housing Choice Voucher Program Need/Eligibility $18 Billion Current HAP Funding 94% Admin Fee 69%

12 Housing Choice Voucher Program HUD’s FY 2013 budget proposed $1.575 billion for “administrative and other expenses of which up to $50 million “shall be available to…allocate to public housing agencies that need additional funds to administer their Section 8 programs” at pre-QHWRA rates, leaving at least $1.525 billion for ongoing administrative fees. Vouchers from incremental and special purpose programs such as HUD-Veterans Affairs Supportive Housing (HUD-VASH), Non-Elderly Disabled (NED), the Family Unification Program (FUP), tenant-protection vouchers, and opt- outs will be leased and therefore “roll into” the Section 8 tenant- based renewal account for FY 2013, HUD has previously estimated that the proposed funding level would provide an 81 percent pro-ration for The FY 2012 act provided just $1.3 billion for ongoing administrative fees, $97 million less than the FY 2011 enacted level. This results in proration of 69 percent, this represents the lowest pro-ration in the 37-year history of Section 8 tenant-based voucher programs.

13 Community Development Program From 2004 to 2013 the CDBG program has been reduced by 1.54 billion.

14 HOME Program The HOME Program has been utilized as a source of gap funding in developing new affordable housing. Over the last 10 years, the HOME program has been slashed by 50%!

15 Washington to the Rescue? Do you think that the current congress has an appetite form increasing HUD funding Public Housing? Do you think that housing programs a congressional priority?

16 National Debt Current Federal Budget$3.8 Trillion Current National Debt$16.8 Trillion Current annual budget deficit$973 Billion Proposed Budget Savings over the next 10 years $1.5 Trillion

17 National Debt-over the next 10 years Per year Savings (per sequestration)150 Billion Current Annual Deficit973 Billion Annual Difference823 Billion 10 years x10 10 Year deficit8.23 Trillion Current Deficit16.8 Trillion Total Projected Deficit at Trillion Entire federal budget is 3.8 Trillion The Deficit is going up-not down as a result of sequestration! As a nation, we are overspending. The United States just doesn’t not have the resources to continue to increase the federal budget. As such, it comes down to a matter of priorities (guns or butter). Currently, congress cannot agree on what priorities should be funded!

18 “Sequestration” What is sequestration? Sequestration is an across-the-board reduction in Federal budgetary resources in all budget accounts that have not been exempted by statute. Under the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, and other relevant legislation, across-the-board reductions of $85 billion in budgetary resources were required to be ordered by the President on March 1, Sequestration reduces each agency’s budgetary resources in non- exempt accounts for the remainder of the fiscal year (which runs through September 30, 2013). Automatic cuts come from domestic discretionary spending which make up about 30% of the federal budget. HUD spending is considered discretionary spending and is subject to sequestration.

19 “Sequestration” What will be the impact of sequestration on HUD? HUD will attempt to minimize the impact of sequestration to the extent permitted by law. However, HUD cannot choose which programs to exempt or what percentage cuts to apply. This will mean automatic and across-the-board budget cuts at HUD. The impact of sequestration on HUD programs will be dramatic. An approximate 5% across the board cut in HUD programs added to the already historic low proration factor!

20 “Sequester” The sequester was originally passed as part of the Budget Control Act of 2011 (BCA), better known as the debt ceiling compromise.originally passed It was intended to serve as incentive for the Joint Select Committee on Deficit Reduction (the “Supercommittee”) to come to a deal to cut $1.5 trillion over 10 years. If the committee had done so, and Congress had passed it by Dec. 23, 2011, then the sequester would have been averted. No compromised deal has been achieved. No compromise seems to be anywhere is sight!

21 U.S. Housing Authorities Approximately 3,300 PHAs 1.2 million public housing units 60% of residents are elderly or disabled 40% include families with children Average residency for non-elderly is approximately 4 years

22 Federal Budget 101 Where Does the Money Go? In fiscal year 2014, the federal government will spend around $3.8 trillion. These trillions of dollars make up a considerable chunk – around 22 percent – of the US. economy, as measured by Gross Domestic Product (GDP). That means that federal government spending makes up a sizable share of all money spent in the United States each year. So, where does all that money go?Gross Domestic Product

23 Federal Budget 101 Mandatory and Discretionary SpendingDiscretionary Spending The U.S. Treasury divides all spending into three groups: mandatory spending and discretionary spending and interest on debt. Interest on debt, which is much smaller than the other two categories, is the interest the government pays on its accumulated debt, minus interest income received by the government for assets it owns.mandatory spendingdebt Mandatory items: Medicare, Medicaid, Social Security, unemployment, SNAP, SSI, TARP.

24 Federal Budget 101

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27 Total Federal Budget $3.8 Trillion Annual HUD Budget $44.8 Billion Percent of Total Budget <2% Annual Federal Budget deficit $973 Billion Accumulated federal deficit 16.8 Trillion

28 Do you think that things will get better anytime in the near future? 2014 Operating Fund levels are being projected at the same levels as 2013 with sequestration. Congress does not appear to be anywhere close to a compromise on spending priorities.

29 HUD Notice PIH Issued 7/26/12 Provide Instructions for the RAD program Eligibility Selection Criteria

30 RAD Goals Build on the proven Section 8 platform Leverage private capital to preserve assets Offer residents greater choice and mobility

31 Public Housing CHAP Unit Commitment Targets PHA Size NortheastMidwestSouthWestTotal <250 Units Small 1,3142,9855, , ,249 Medium 3,9523,2637,5661,51316,294 1,250+ Large 14,0994,77210,5422,54331,956 Total 19,36511,02023,5454,82058,750

32 RAD Authority Authorized in the Consolidated Further Continuing Appropriations Act of 2012 (Public Law ) Allows public housing & certain at-risk multifamily projects to convert to project based Section 8 Two Components: 1 st -Competitive: Public Housing & Mod Rehab 2 nd -Non-competitive: Mod Rehab, Rent Supplement & RAP On-going application period

33 1 st Component-Competitive Allow projects funded under public housing and Section 8 Moderate Rehabilitation to convert to project based Section 8 contracts. PHAs may choose between project based voucher (PBA) or project based rental assistance (PBRA) 60,000 units are authorized for conversion under the 2012 Appropriations Act.

34 2 nd Component-Non Competitive Rent Supplement, Rental Assistance Payment and Moderate Rehabilitation Programs may convert to Project Based Vouchers. No cap on the number of units and no requirement for competitive selection Subject to availability of vouchers

35 Public Housing Projects Applications had to be submitted during the application period (9/24-10/24/12) Approved projects will received a Commitment to enter into a Housing Assistance Payment (CHAP) The PHA must submit a financing plan for HUD review and approval. Approved projects will receive a long-term Section 8 HAP contract. We are currently in the “On-going Application” period! You can still apply since the initial interest was not what had been forecast.

36 Public Housing Awards as of May ,000 available units NortheastMidwestSouthWest Awarded PH Authority 9481,8077,7261,996 Remaining Authority 18,4179,21315,8192,824 TOTAL19,36511,02023,5458,820 There was a total of 130 projects that were issued CHAPs for 14,438 units

37 Scope of Rehabilitation Costs RAD Awards Per Unit Rehab/Construction Costs% of Awarded Units >$50,00026% $30-$50,00022% $10,000-$30,00026% <$10,00017% No Rehab/Construction11%

38 Initial RAD Rents HUD establishes the initial contract Rents for every public housing project based upon: 2012 Appropriated Operating Funds 2012 Appropriated Capital Funds NOTE: For applications submitted prior to 12/31/13

39 Selection of PBA or PBRA PBA Project Based Rental Assistance will be administered by the agency on whose Annual Contribution Contract the voucher were assigned (most cases will be the agency doing the conversion) Term-15 years (up to 20 with approval of administering voucher agency) PBV rents will be equal to current finding subject to a cap and will be adjusted annually PBA contract will also carry a concurrent renewable RAD User Agreement Must provide Choice Mobility Option to residents Maximum PBA assistance (20% of budget authority) will not count against the PHA’s maximum for covered projects

40 Cap on Number PBV Units in each project. The 25% limitation on the number of PBV assistance in a project is increased to 50%. 100% of the units may be PBV if the at least 50% of the units qualify as elderly, disabled or families receiving supportive services.

41 Selection of PBA or PBRA PBRA Project Based Rental Assistance-the project will be administered by HUD’s Office of Housing PBRA Contract rents will be equal to the project’s current funding, subject to a cap and will be adjusted annually Term-20 years PBRA Contract will also carry a concurrent 20 year renewable RAD User Agreement A Choice Mobility Option will be a condition of the conversion

42 Eligibility for Conversion to RAD Must have public housing units under ACC Be classified as a standard or high performer. If “troubled” must be able to demonstrate the capacity to carry out a successful conversion. Be classified as standard or high performer under SEMAP if administering the PBV contract. If “troubled” must be able to demonstrate the capacity to carry out a successful conversion. Be in substantial compliance with HUD reporting and programmatic requirements and/or be in compliance with an MOA. Not have debarments, suspension or LDPs lodged against the Executive Director. Board members or affiliates. Submit a completed application that complies with the RAD instructions Be in compliance with all fair housing and civil rights requirements

43 Rehabilitation & Financing Consideration HUD estimates that there is a need for approximately 25.6 billion in capital needs across the portfolio One of the main purposes of the RAD program is demonstrate how the conversion to Project Based Assistance can generate access to private debt and equity to address immediate and long-term capital needs through rehabilitation. Any and all viable forms of debt and equity financing will be considered to support the conversion.

44 Rehabilitation Needs Applications will be scored on a per- unit capital cost value system High Need Scoring: Family-$37,665 Elderly-$21,834

45 Green Physical Condition Assessment-PCA The PCA is at the center of the conversion process. It provides the 20 year capital needs for the property. It is not the same as your Physical Needs Assessment-PNA. It is very important to the overall project financing. All PCA capital needs must be supported through the upfront financing and an annual deposit to a reserve for replacement (R&R) or a combination of both. If this cannot be accomplished, the project is not feasible!

46 Rehabilitation Consideration Physical Condition Assessment (PCA) Projects selected for award will be required to perform a detailed physical inspection of the property to determine short-term rehabilitation needs and long term capital needs to be funded through a reserve for replacement. The PCA Statement of Work must be in the format utilized in HUD’s Mark to Market program and may accessed at: v/mhrpaes/training

47 Rehabilitation Considerations Green Building & Energy Efficiency All projects retrofitted under the RAD conversion must replace appliances and systems with Energy Star, WaterSense or Federal Energy Management (FEMP) designated product and appliances.

48 Rehabilitation Consideration Temporary Relocation-Any temporary relocation must comply with the Uniform Relocation Assistance and real Property Acquisition Act of 1970 (see 49 CFR Part 24)

49 Rehabilitation Consideration Accessibility Requirements-When a project’s rehabilitation meets the definition of substantial rehabilitation under 24 CFR Part 8.23, the PHA must comply with all applicable accessibility features under 504 of the Rehabilitation Act of 1973.

50 Construction Considerations Site Selection & Neighborhood Standards-where a PHA is planning to convert assistance under RAD in conjunction with new construction on an alternate site, the PHA must comply with all applicable site selection criteria per the Fair Housing Act and Title VI of the Civil Rights Act of 1964

51 Financing Consideration RAD projects are eligible for financing from private and public lending sources (see application proforma). Loans are secured according to the RAD User Agreement that will be filed in first position. Debt Service Coverage must be at least 1.20 or the lender's requirements HOME funds can be use in RAD projects

52 Financing Considerations PHAs may use Operating reserves (Per PIH Notice ) and unobligated Capital Funds to support conversion (up to $100, for planning) PHAs must disclose the amounts of any indebtedness, including Energy Performance Contract, Capital Fund Financing, etc. The PHA can refinance these items as part of the conversion. Conversion does not relieve the PHA from these obligations. A lender may require that the debt be paid off or subordinated.

53 Financing Considerations Low-Income Housing Tax Credits- Applicants are encouraged to use LIHTCs to support recapitalization of the project (9% & 4%). Applicants should indicate in their application that they intend to use LIHTCs. There is no requirement that the credit be secured prior to submitting an application. The 9% credit have special application requirements.

54 9% LIHTC Considerations (Competitive per QAP) Must submit a letter from credit issuing agency (HMFA) addressing: Whether then property and proposed transaction appear eligible Whether the applicants PHA or owner entity have acceptable experience to proceed The timing of the application and LIHTC award Whether a typical reservation of credits is sufficient to address the expected need of the first or only phase of the project If you cannot secure this letter you must include evidence that you diligently attempted to secure such a letter and a self-scored LIHTC application under the Qualified Allocation Plan

55 Amendment to Annual & Five Year Plan (Should be done immediately!) See PIH Attachment 1D for the specific requirements. Conversion to the RAD Program is considered a “significant amendment” to the PHA’s Five Year Plan for both qualified and non-qualified PHA. RAD Conversion is subject to the Consolidated Plan requirements and public notice and Resident Advisory Board consultation requirement per 24 CFR Part 903. Policy changes must be submitted to HUD within 60 days of CHAP delivery. Public notice and at least one public hearing

56 Plan Amendments Must include the following: A description of the units to be converted, including type of units (family, elderly, etc.) and bedroom distribution. Any change in the number of units, including the de minimis unit reduction (5% or 5 units). Any change in bedroom distribution Any change in policy governing admission, eligibility, selection and occupancy after conversion (including waiting list preferences). Transfer of assistance where the converted units will be moved to another location HUD will review all amendments for civil right, executive order and regulatory compliance.

57 Resident Provisions (Attachment 1B.2) Residents must be notified and have an ability to comment on the conversion in writing. Resident comments must be responded to At least 2 Resident meetings must be held prior to submitting an application and 1 additional meeting after selection and prior to execution of the HAP contract. Similar to Demo/Dispo process

58 Initial Contract Rent Setting (Attachment 1C-Pages 79-81) Rent cannot exceed current funding Initial contract rents cannot exceed the lower of: Current funding (adjusted for bedroom size) The reasonable rent Up to 110% of the applicable FMR, minus any utility allowance The rent requested by the owner

59 Calculation of HAP Contract Rents Step One-Determine Current Funding Step One-Determine Current Funding PUM Subsidy at full occupancy The amount of the PHA’s Capital Fund Grant PUM adjusted formula income (Rent) Example: $ PUM Operating Subsidy $ PUM Capital Fund $ PUM Adjusted Formula Income $ PUM Current Funding

60 Calculation of HAP Contract Rents Step Two-Apply Bedroom Adjustment Factor Bedroom Size1 Bdr2 Bdr3 BdrTotal PIC Units FMR$650$775$900 FMR Bdr. Adjustment Bdr. Adjustment Rent $646$770$894$783 The weighted current funding is adjusted by a bedroom adjustment factor to arrive at a bedroom specific rent schedule.

61 Calculation of HAP Contract Rents Step Three-Apply Rent Caps PBRA Bedroom Size1 Bdr2 Bdr3 Bdr Current Funding (Step 2)$646$770$ % of FMR$780$930$1,080 -Utility Allowance$50$60$70 FMR Rent Cap$730$870$1,010 Market Rent$640$740$830 *PBRA Contract Rent$646$770$894 HUD will compare the Current Funning Rents from Step 2 with the rent caps to determine the HAP Contract Rent. *Contract shall be the lower of the Current Funding or the 120% FMR cap. In this example the current funding is less than the 120% of FMR.

62 Calculation of HAP Contract Rents Step Three-Apply Rent Caps PBV Bedroom Size1 Bdr2 Bdr3 Bdr Current Funding Rents (Step 2) $646$770$894 Reasonable Rent$640$740$ % of FMR$715$853$990 -Utility Allowance$50$60$70 FMR Cap$665$793$920 *PBV Contract Rent$640$740$830 When converting to PBV, the contract rent is the lower of the current rent, 110% of FMR (minus utilities) or reasonable rent. In this example the Reasonable Rent is the lower amount.

63 Rent Setting PBRA Rent Cap Lower of: Current Funding or 120% of FMR (less utility allowance) Except where current rent funding is below market, wherein rent is limited to 150% of FMR PBV Rent Cap Lower of: Current Rent 110% of FMR (less Utility Allowance) Reasonable Rent

64 Rent Calculation Once you convert to RAD, you will no longer receive Operating or Capital Fund subsidies. HUD will post presumptive contract rent calculations for every public housing project at

65 RAD Application Due by: On-going application period Ranking/Scoring Capital Needs Green Building Choice Mobility Priority Project All applicants must complete the Microsoft Excel- based RAD Application which will be available on the RAD website (www.hud.gov/rad). The application will contain certain pre-populated project data.www.hud.gov/rad Applications will be accepted on a project by a project basis

66 RAD Application Filed at: RAD Board Approval Form-includes the proposed pro-forma and other key certifications and must be approved by the Board of Commissioners and signed by the authorized representative. Financing Letter of Interest/Intent-from each lender or equity investor indicating that the proposed pro-forma is reasonable. This is not necessary where the long-term capital needs are being met from a reserve for replacement. Mixed Finance Affidavit-is required where the PHA is requesting to convert public housing to a mixed finance project. Choice Mobility Letter-signed by the voucher agency that has committed to provide Choice Mobility vouchers. This is not necessary where the PHA is meeting this requirement through turnover in their own voucher program. Designation of PBV Administering agency-the PHA must identify the agency that will be administering the PBV contract (signed letter from the administering agency) Resident consultation-include responses to comments received in connection with the resident meetings on the proposed conversion to RAD All required materials (Including attachments) must be submitted electronically using the Excel-based RAD application. Attachments must be included as PDF files. NO PAPER OR FAX SUBMISSIONS AREV PERMITTED. There is no cap on the number of applications that a PHA can file.

67 Ranking Factors Four Categories High Capital Need Projects (0-50 pts) Applications that propose to meet or exceed the established thresholds for high capital needs will receive the maximum 50 points. Occupancy Type High Need Family$37,665 Elderly$21,834

68 Ranking Factors Four Categories Choice-Mobility Commitment (20 pts.) Evidence must be provided documenting that at least 15% of the assisted residents have the annual mobility option. It must be demonstrated that there are sufficient turnover vouchers available to cover this option.

69 Choice Mobility If the PHAS does not have a Voucher Program, another agency may donate vouchers to cover the project. Both agencies will earn the 20 mobility points. Both agencies must complete and execute a Choice Mobility Letter as part of the application. The donating agency will have 60 days from the issuance of the commitment letter (CHAP) to submit a significant amendment to its annual plan to HUD for approval. If it is not received the CHAP will be revoked. HUD may issue exemptions to the Choice Mobility Component for PBRA for up to 10% of the awards under the demonstration. The good-cause exemption must be listed in the application. The PHA may amend its application, during the application period, to indicate that it will meet the Choice Mobility requirements.

70 Ranking Factors Four Categories Green Building & Energy Efficiency (10 pts) The PHA must commit to pursue industry-recognized standards and certification for green building (Enterprise Green Communities Criteria, LEED, Energy Star, etc). A certification must be submitted after completion of the renovations providing evidence that the green standards have been achieved.

71 Ranking Factors Four Categories PHA Priority Project (20 pts) A PHA may designate only one project for which it submits a RAD application as a “priority project” except for small PHAs which may designate all projects as priority project. The project will automatically earn 20 ranking points

72 Ranking Factors Summary of Ranking FactorsPoints High Capital Need0-50 Choice Mobility Factor20 Green Building & Energy Efficiency 10 PHA Priority20 TOTAL100

73 CHAP Milestones (Commitment to Enter into a Housing Assistance Payment Contract) All PHAs will be notified of their selection via issuance of an award letter, signed by HUD. Attached to the award letter will be a Commitment to Enter into a Housing Assistance Payment (CHAP) which will indicate HUD-approved terms and conditions for the conversion. CHAPs are not subject to negotiation by the PHA or a third party. The PHA has 15 days in which to notify HUD that they are refusing to terms of the CHAP.

74 CHAP Milestones (Commitment to Enter into a Housing Assistance Payment Contract) The CHAP may be revoked: Upon HUD Determination of financial infeasibility PHA failure to meet required deadlines PHA Non-cooperation Violation of program rules & restrictions, including fraud PHA failure to submit an approved significant amendment to HUD If HUD determine that the conversion would be inconsistent with fair housing, civil rights laws, fair housing or civil rights court orders, settlement agreement or voluntary compliance agreements

75 CHAP Milestones-30 Days (Commitment to Enter into a Housing Assistance Payment Contract)Pages Within 30 days following CHAP issuance the PHA must submit to HUD: Accepted Lender Engagement or Commitment letter (if applicable) Statement of Development Team Capacity PHA’s decision whether the project will convert its assistance to PBV or PBRA.

76 CHAP Milestones-90 Days (Commitment to Enter into a Housing Assistance Payment Contract) Within 90 days following chap issuance, the PHA must submit to HUD a certification from the PHA that all industry-standard due diligence has been performed for and received by the lender and/or financing source. It must include the Physical Condition Assessment (PCA), appropriate environmental reports, an appraisal, survey and title insurance. Projects without financing must submit a copy of the PCA

77 CHAP Milestones-150 Days (Commitment to Enter into a Housing Assistance Payment Contract) Within 150 days following CHAP issuance, the PHA must submit a certification that it has applied for form commitments of all financing. FHA insurance must be in the form of the Firm Commitment Application to FHA.

78 CHAP Milestones-180 Days (Commitment to Enter into a Housing Assistance Payment Contract) Within 180 days following CHAP issuance, the PHA must submit a Financing Plan (See attachment 1A.1) HUD will have 60 calendar days from the date of submission to approve. Reject, or request additional information. The PHA may make corrections that satisfy HUD or appeal HUD’s decision within 30 days of notification. PHAs will be notified of HUD approval of the Financing Plan via issuance of a RAD Conversion Commitment (RCC), conditioned upon firm commitment of financing from a lender (see 1A.2- Contents of RAD Commitment) The PHA has 30 days of issuance of the RCC to execute and return to HUD. Failure to return will result in the forfeiture of the award. Once the RCC is executed, HUD expects the RAD conversion to close quickly. The RCC will allow 90 days from issuance to closer the transaction. The RCC will be an attachment to the RAD Use Agreement

79 CHAP Milestones-320 Days (Commitment to Enter into a Housing Assistance Payment Contract) Within 320 Days following issuance of the CHAP (not later than 40 days following closing), the PHA must submit evidence of firm commitment of financing or evidence of equivalent milestone in securing all sources of financing required to the close the deal.

80 CHAP Milestones-360 Days (Commitment to Enter into a Housing Assistance Payment Contract) Within 360 days following CHAP issuance, the PHA must reach closing. The Financing and RCC must include a reasonable timeline for completion of all rehabilitation items acceptable to HUD, generally 12 to 18 months from the date of the closing.

81 Closing within 360 days of CHAP issuance The closing will include the following: Release of the Declaration of Trust Removal from the public housing ACC Execution of the new PBRA or PBV HAP contract and RAD Use agreement Recordation of the RAD Use Agreement Closing of any bridge, construction or permanent debt or equity financing. Closing of the Terms and Conditions of the RCC

82 Timeline “CHAP Milestones” On-going application period Opens 10/24 (First-Come, First Serve) Award letter-must accept or refuse terms of the CHAP within 15 days Lender Engagement letter/Development Team statement-within 30 days of CHAP Annual & 5 year Plan Amendment and PBV/PBRA decision-60 days after CHAP Certification regarding due diligence-within 90 days of CHAP Application for firm financing commitments completed-within 150 days of CHAP Financing Plan-within 180 days of CHAP Evidence of firm financing commitments-within 320 of CHAP Closing-within 360 of CHAP NOTE: Failure to meet CHAP milestones can cause the CHAP to be revoked.

83 Does it Make Sense for you to consider RAD Conversion? This is a decision that rest with each individual PHA at each individual project. There are many factors to consider!

84 Factors to Consider Do you think that funding for the public housing program will stabilize in the future? Once you receive your CHAP, all covered units shall not be issued REAC scores for the fiscal year in which the CHAP was issued, nor any subsequent year until the time of conversion. Asset Management will be eliminated for the projects that are converted and may also place you under the 400 unit threshold for project based accounting and management. After conversion, units shall be subject to the Section 8 requirements. If you file an application by 12/31/13 you will be locked into the 2012 Operating fund level as a component of your rent. What are your capital needs. The 4% LIHTC program is providing about $35,000-$45,000 per unit in rehabilitation. Can you afford the planning expenses? Once you convert, you will no longer receive Operating or Capital Funds.

85 Factors to Consider The cost of preparing the application is not that great. You can withdraw your application at anytime up to the point of closing.

86 If I decide to move ahead, what should I do next? Determine if you have in-house capability to prepare the RAD application or you need to hire a consultant. Estimate your Capital Needs from your existing Physical Needs Assessments-PNA. Prepare a vision of what you want to accomplish through the RAD conversion Determine RAD feasibility for your units. Determine if you have sufficient HCV turnover to support Choice Mobility Determine whether you will be converting the PBV or PBRA. Verify that the number of units that is included in your application equals the total of units listed in the PIC system. Amend your Annual & Five year plan to include RAD. Meet with your residents (twice) before submitting your application. Prepare a “draft application” Obtain the Financing Letter of Interest/Intent Prepare RFPs and start assembling your development team (Technical Consultant, Investment Banking Services, Tax Credit Consultant, PCA architect/engineer, design architect). You will also eventually need a property appraisal and a market study.

87 Question & Answers Thank-you for attending


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