HUD has finalized the rules proposed under RAD – the Rental Assistance Demonstration program. RAD allows public housing agencies and owners of certain at-risk, federally-assisted properties to convert their current assistance to long-term contracts.
Such contracts will better allow owners to leverage millions of dollars in debt and equity to address immediate capital needs and preserve these affordable housing units.
After extensive consultation over the past few years with key stakeholders, including public housing agencies, multifamily property owners, residents and the lending community, this innovative approach greatly enhances our ability to confront the decline of our public housing and older assisted housing stock, said HUD Secretary Shaun Donovan. RAD allows HUD to test the conversion of assistance as a means of preserving this scarce inventory of affordable housing and keep it on firm financial footing well into the future.
Last year, HUD released Capital Needs in the Public Housing Program, a Congressionally-funded study of capital needs in public housing. The study found that the nations 1.2 million public housing units need nearly $26 billion to keep these homes in safe and decent condition for families, a figure well in excess of the roughly $2 billion annually that the Congress appropriates for capital repairs. Beyond the public housing stock, the Moderate Rehabilitation (Mod Rehab), Rent Supplement (Rent Supp), and Rental Assistance Payment (RAP) programs either offer no option to renew and risk being lost from the affordable housing stock or cannot renew on terms that attract sufficient capital to preserve long-term affordability.
HUD estimates that the authority under RAD will enable owners to leverage financing to help reduce the severe backlog of capital repair needs. In the process, RAD will help create and support local construction jobs in communities across the country.
The initial application window for the competitive component of RAD (for public housing and owners of Mod Rehab projects) is scheduled to be open from September 24, 2012 to October 24, 2012. The non-competitive component of RAD (for owners of Mod Rehab, Rent Supp and RAP projects) is effective immediately.
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