1. Rental Assistance Demonstration (RAD) Update
Presented by Tom Davis, Director Office of Recapitalization, HUD November 16, 2016

2. Public Housing Conversions – Status
$3.2 Billion (>$60K per unit) in construction investment in RAD properties. This doesn’t include items such as acquisition, soft costs, reserves & developer fee
47,611 units converted.
≈15,000 units on the waiting list.
Public Housing Conversions

3. PH Conversions – Program Growth
NOTE: FY2017 data from RAD 1 closed transactions only through November 15, 2016.
Public Housing Conversions

4. PD&R Interim Evaluation
HUD’s Office of Policy Development & Research contracted Econometrica, Inc. to evaluate RAD. Interim Report, published September 21, 2016, finds:
“Proof of concept” based on closings as of October, 2015.
RAD transactions demonstrate a leverage ratio of $8.90 for every $1.00 of public housing funds invested
20-year projections comparing RAD scenario with counter-factual scenario absent the RAD conversion shows that all four case studies perform better under RAD
Full evaluation, planned for December, 2018, will address additional issues including residents’ experiences and satisfaction. Interim report data did not include a sufficient number of completed transactions to adequately examine post-completion outcomes and impacts.
Interim Evaluation

5. New Data Available

6. Fair Housing & Civil Rights Highlights
No change in the underlying rules nor in the PHA’s responsibility for civil rights compliance
Focus on clarity and transparency
Explanation of requirements and factors that are considered
Examples and illustrations
Front-end review is a risk-based analysis
More detail on how HUD approaches the risk analysis
Presumptions
New submission framework – the Checklist
Realigned timing of some items – site submission, other front-end review items and AFHMP

7. Relocation Highlights
Focus on resident protection and a smoother implementation
Defines eligibility for protection more clearly
Specifies what satisfies the right of return
Requires written relocation plans for long-term relocation
Adds RAD Information Notice and Notification of Return
Allows earlier relocation (after RCC instead of after Closing)
Identifies minimum resident relocation data to maintain
Clarifies that PHAs may offer residents choice & alternative housing options with appropriate resident protections
Permits use of public housing units for temporary relocation

8. Office of Recap Structure
Director
Tom Davis
Deputy Director
Jeff Little
Affordable Housing Transaction Division
Greg Byrne
Closing & Post-Closing Division
Bev Rudman
Program Admin Office
Jeff Little (Acting)
Branch 2
(RAD 2, 236s, SPRAC)
M. Monroe-Baldwin
Branch 3
(RAD 1st Component)
H. West
Branch 1
G. Byrne (Acting)
Branch 4
(Mark-to-Market, Post-M2M)
P. Burke (Acting)
Senior Advisors
In Coordination With:
Public and Indian Housing (PIH)
Public Housing
Housing Choice Voucher
Fair Housing & Equal Opportunity (FHEO)
Civil Rights and Fair Housing
Community Planning and Development (CPD)
Relocation
Office of General Counsel (OGC)
Legal Review

9. Supplemental Materials

10. Background on RAD The Problem The Solution
Deferred public housing capital repair needs estimate in excess of $25.6B across the portfolio (>$23k per unit)
Public housing platform creates barriers to accessing private capital
10,000-15,000 public housing units lost each year
Multifamily “legacy” program properties also at risk
The Solution
RAD created in FY2012, expanded in FY2015
Allows public housing and at-risk legacy properties to convert to long-term Section 8 Housing Assistance Payment (HAP) contracts
Background

11. Public Housing Properties Convert at Cost-Neutral Rents
Pre-Conversion (Public Housing)
Post Conversion (Section 8 HAP Contract)
Background

12. PH Conversions – Investment & Financing
Closed Transactions by
Level of Investment
Closed Transactions by
Financing Type
NOTE: Percentages derived from RAD 1 closed transactions only through November 15, 2016.
Public Housing Conversions

13. RAD Participation by PHA Size
Public Housing Conversions

14. RAD Pipeline as a Percentage of Total Public Housing by Region
19%
19%
8%*
*13% excluding NYC
24%
Note: This data reflects the regional breakdown of RAD public housing applications (“projects”) received compared to the number of existing public housing projects in each region.
Public Housing Conversions

15. PH Conversions – Preferred Platform
PBRA vs PBV Trends Over Time
(Percentage of Total Units)
NOTE: Percentages derived from the entire RAD portfolio through November 15, (closed and “active” transactions to close in the future).
Public Housing Conversions

16. Legacy Programs Status
RAD 2nd Component Conversions
# of projects and units
Rent Supp/RAP Transactions:
40 active transactions in the RAD 2 Pipeline
49 properties in portfolio
22 properties (45%) expire in 2016
15 properties (31%) expire in 2017
12 properties (24%) expire after that
Mod Rehab Transactions:
23 active transactions
NOTE: Data derived from RAD 2 closed transactions only through November 12, 2016.
Legacy Program Conversions

17. Legacy Programs – Pipeline
Eligible Units in the Pipeline
Quite few Rent Supp/RAP units
Hope to sunset Rent Supp/RAP programs in the next few years
Substantial opportunities for Mod Rehab units
Legacy Program Conversions

18. RAD FY 17 Budget Requests
Eliminate the cap on the public housing units that can convert at no cost
Allow Section 202 Project Rental Assistance Contracts (PRACs) to convert under 2nd Component at no cost
$50 million for incremental subsidy for public housing and Section 202 PRAC conversions;
Authorize a tenant’s right to continued occupancy under the second component; and
Align ownership and control requirements in the event of foreclosure, bankruptcy, or default with the baseline standard used up-front.
FY2017 Budget Requests

19. Issues Surrounding the Cap
There is demand – Units are on the waiting list and others are on the sidelines
Transactions require significant lead time, typically months, from allocation to closing
High investment and transformative efforts require even more lead time – more than deadlines permit
Program structures designed to allocate a scarce resource create extra hurdles (inconsistent with local development processes, procedural steps, capacity disconnects, etc.)
FY2017 Budget Requests

20. Opportunity within the 202 PRAC Portfolio
120,000 units under year-to-year contracts
Projects are at an age (20+ years old) where they are in need of recapitalization
Limited ability to assemble new financing
Like public housing units, 202 PRACs that switch to the Section 8 platform would be able to access resources
RAD conversions would head-off a future crisis in this elderly housing portfolio and preserve services
FY2017 Budget Requests

21. Need for Incremental Funding
RAD has demonstrated tremendous results without any incremental funding – many properties will still convert on a cost-neutral basis
Some public housing and 202 PRAC properties cannot be recapitalized and preserved without additional revenue
Even a small appropriation for both public housing and 202 PRACs will allow HUD to begin developing and testing methods to fairly, and cost effectively, allocate any future incremental funding
FY2017 Budget Requests

22. Thank You. For Evaluation materials, visit www. huduser
Thank You. For Evaluation materials, visit For more information and case studies visit