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1 Rental Assistance Demonstration “RAD” Program Homes Within Reach November18, 2014 Martin Walsh Reno & Cavanaugh, PLLC.

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Presentation on theme: "1 Rental Assistance Demonstration “RAD” Program Homes Within Reach November18, 2014 Martin Walsh Reno & Cavanaugh, PLLC."— Presentation transcript:

1 1 Rental Assistance Demonstration “RAD” Program Homes Within Reach November18, 2014 Martin Walsh Reno & Cavanaugh, PLLC

2 RAD Overview Goal: Preserve vulnerable federally-assisted projects by converting existing subsidies to long-term Section 8 to leverage debt/equity Premise: Converting Public Housing Units to RAD (HAP) contract (PBRA or PBV)– allowing PHA to finance property without Mixed Finance Process Authority: (1) FY 2012 HUD Appropriations Act (2) Notice PIH , REV-1 (July 2, 2013) 1 st Component: Public Housing & Mod Rehab: 60,000 Unit Cap No cost conversions (but 2012 rents for some) 2 nd Component: Mod Rehab, Rent Supp & RAP: Non-Competitive No Unit Cap, but subject to availability of Tenant Protection Vouchers (TPVs ) 2

3 Deal Structure Options 3

4 RAD Deal Prototypes 4 1.Conversion/No Rehab (includes conversion-only HUD mixed-finance transactions) 2.FHA/No LIHTC; Basic Rehab/Conversion 3.4% LIHTC/Bond/FHA; Substantial Rehab/Conversion 4.4% LIHTC/Bond/Private Financing; Substantial Rehab/Conversion 5.9% LIHTC/FHA or Private; Substantial Rehab/Conversion or New Construction

5 5 Sample Deals

6 9% LIHTC/Conventional Debt 6 CHAP on 100-unit public housing development; divided redevelopment into two phases Demolished existing project On-site New construction; de minimis reduction in unit count Phase 1: 55 unit development, of which 44 are RAD units and remaining market rate Funding: LIHTC equity, construction loan, private perm debt, and PHA subordinate loan PHA could increase rents with MTW authority Phase 2: 51 unit development (all RAD units)

7 9% LIHTC/No Perm Debt 7 CHAP on 50-unit public housing development Converted to 40 RAD units with de minimis unit reduction and reconfiguration of units (fewer larger units) Gut rehab of existing project Funding: LIHTC equity, construction loan, no perm debt, and FHLB AHP

8 FHA/RAD/4% LIHTC 8 Substantial Rehab of 100- Unit Family Development Self-Developed by Housing Authority Financing: Tax Exempt Bonds with FHA 221(d)(4) Mortgage Insurance, 4% LIHTC equity, HA Capital and RHF Funds, HOME Funds Challenging to coordinate FHA and RAD processes – although this was an early RAD deal and HUD now has a streamlined process (FHA submission includes RAD docs)

9 RAD In Practice –Issues RAD requirements can conflict with LIHTC program income limits (e.g. existing PH resident > 60% AMI) Creative Financing Plans - mortgagees for RAD properties must be paid from project income Relocation – pairing URA with RAD relocation req’ts See RAD Relocation Notice PIH (H ), July 14, 2014 Prior to Closing – Must be HUD approved Demolition/Disposition 1:1 replacement requirements Asking HUD for flexibility to allow de minimis reductions Demolition prior to closing – difficult to obtain HUD approval Duel Tracking – pursuing redevelopment while on the RAD waiting list Concerns with losing LIHTC allocations Mixed Finance as a pathway to RAD – being discussed for RAD waitlisted deals that have 9% LIHTC allocations but not formalized yet 9


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