1. Rental Assistance Demonstration (RAD) Update
Presented by Thomas R. Davis Office of Recapitalization, HUD April 11, 2017

2. Background on RAD The Problem
Deferred public housing capital repair needs estimate in excess of $25.6B across the portfolio (>$23k per unit) and rising
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 – Changing the Regulatory Platform
RAD created in FY2012, expanded in FY2015
Allows public housing to convert on a budget-neutral basis to long-term Section 8 Housing Assistance Payment (HAP) contracts
Also allows at-risk legacy assisted properties to convert to Section 8 HAP contracts
Leverages private investment to address capital needs, improving conditions for residents, creating jobs and stabilizing the assisted portfolio
Background

3. RAD Public Housing Conversions – Status
60,073 units converted.
≈ 32,000 units on the waiting list.
$3.9 Billion (>$67K per unit)
in construction investment in RAD properties. This doesn’t include items such as acquisition, soft costs, reserves & developer fee
Public Housing Conversions

4. PH Conversions – Program Growth
Steady growth in conversions year to year
Major process changes improved cross-silo coordination and sped processing times
Interim evaluation by Econometrica, published September 21, 2016, found:
Proof of concept
9:1 leverage ratio
Full evaluation in 2018 will address additional issues including residents’ experiences and satisfaction
NOTE: FY2017 data from RAD 1 closed transactions only through March 17, 2017.
Public Housing Conversions

5. 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 March 17, 2017.
Public Housing Conversions

6. Public Housing Universe
PH Conversions – Relative Distribution
RAD Pipeline as a Percentage of the Total Public Housing Inventory by Region
17%
16%
Participating PHA Size in RAD Pipeline Compared to PHA Size in Total Public Housing Inventory
8%*
*12% excluding NYC
Public Housing Universe
RAD
23%
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

7. Legacy Program Conversions – Status
Conversions & Outstanding Pipeline
Rent Supp/RAP Transactions:
40 properties remaining in portfolio
26 active transactions in the RAD 2 Pipeline
25 properties have contracts that expire in 2017
We hope to wind down the Rent Supp & RAP programs in the next few years
Mod Rehab Transactions:
8 active transactions in the RAD 2 Pipeline
2 applications in process
Substantial opportunities for Mod Rehab properties
NOTE: Data derived from RAD 2 closed transactions only through March 17, 2017.
Legacy Program Conversions

8. 2016 Notice Revisions
RAD Fair Housing, Civil Rights & Relocation Notice
No change in underlying fair housing rules from those established in the June, 2015, Rev-2 of the RAD Notice; modest changes in timing of fair housing requirements
Front-end fair housing review is a risk-based analysis
Fair housing portions of the Notice provided clarity and transparency to FHEO review
Substantial changes in the relocation requirements designed to facilitate relocation implementation, to provide greater clarity and to enhance resident protections
RAD Notice Revision 3 – Public Housing Conversions
Conform with HOTMA (remove cap on the percentage of PBV units on a site)
Modest changes to underwriting requirements (use of proceeds, developer fee limitations, close-out expenses for full-portfolio conversions)
Simplify eligibility and application procedures
Clarify expectations around communication with residents, prohibition on rescreening for existing residents, rent phase-in and waiting list transfer arrangements
RAD Notice Revision 3 – Legacy Program Conversions
Revise rent setting provisions
Public Housing Conversions

9. 2016 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

10. Office of Recap Structure
Director
Tom Davis
Affordable Housing Transaction Division
Greg Byrne
Closing & Post-Closing Division
Bev Rudman
Program Administration Office
Will Lavy (Acting)
Branch 2
(RAD 2, 236s, Mark-to-Market)
Minnie Monroe-Baldwin
Branch 3
(RAD 1st Component)
Harry West
Branch 1
Alan Kaufmann
Branch 4
(RAD 1st Component, Post-Mark-to-Market)
Kara Williams-Kief
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

11. Thank You. For evaluation materials, visit www. huduser
Thank You. For evaluation materials, visit For more information and case studies visit