HUD Outlines Next Steps of First Component RAD Program

Rental Assistance Demonstration (RAD) is the centerpiece of HUD’s strategy to preserve at-risk public and assisted housing. The first component allows public housing and moderate rehabilitation properties to convert, under a competition limited to 60,000 units, to long-term Section 8 rental assistance contracts. And the second component allows Rent Supplement, Rental Assistance Payment, and Mod Rehab properties to convert tenant-based vouchers issued upon contract expiration or termination to project-based assistance.

On Feb. 20, Secretary Donovan issued a letter to PHAs and their partners about the current status of the first component of RAD for public and Mod Rehab housing and anticipated next steps with the demonstration. The letter noted that as of Dec. 31, 2013, HUD had received applications to convert over 176,000 units of public housing and Section 8 Mod Rehab housing to long-term, Section 8 project-based contracts.

If all of these applications were awarded authority to convert assistance under RAD, PHAs across the country would be able to undertake a projected $6 billion in needed improvements to their properties. This is an extraordinary response in just over a year of accepting applications for RAD, or triple the 60,000 unit cap under RAD’s current authority.

Unfortunately, RAD’s current cap wasn’t raised as part of the 2014 omnibus appropriations act. However, Secretary Donovan is hopeful that Congress will see this program as worthy of continued support. The following are the next steps HUD will undertake:

• For projects with initial approvals (or CHAPs) made under the current 60,000 unit cap, HUD will continue to fast-track and close projects as soon as they complete indicated milestones.
• Although HUD won’t be able to close deals in excess of the 60,000 RAD unit cap until the cap is raised by Congress, for those applications in the queue not able to be approved under the current unit threshold, the RAD team at HUD will fully review and provide contingent approval of applications meeting all applicable criteria in the current RAD Notice. Also, HUD intends to honor the standing of current applicants in the queue above the 60,000 unit threshold. Offering contingent approvals according to the current queue in this manner will enable the department to make CHAP awards quickly once the current cap is raised.
• Applications from PHAs that haven’t yet submitted an application will be placed in the current queue of applications, fully reviewed, and offered contingent approval if deemed viable. As with applications already in hand, new applications will be issued CHAPs according to their order in the queue relative to any increase in the RAD cap that Congress may provide.
• Upon an increase in the RAD cap in 2014, HUD will use the FY 2014 funding levels to set RAD rents for all pending, active applications above RAD’s current 60,000 unit threshold that are currently in hand or received in 2014. As FY 2014 public housing operating and capital funds were not constrained by sequestration as they were in 2013, current applicants will find that RAD rents set in this way are nearly equivalent to the levels used to establish RAD rents to date.