Rental Assistance Demonstration

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This is RAD

Pre-Conversion Post-Conversion $-

$100

$200

$300

$400

$500

$600

$700

$800

$900

Tenant Payment $318 Tenant Payment $318

Capital Fund $144

Operating Fund $330 Housing Assistance Payment

$474

Sample Public Housing Conversion Per Unit Monthly

$792

ACC Section 8

At closing, funding is

converted to a Section 8

contract rent

What RAD Can DoTerms

15-20 year, renewable contracts with Use Agreement Predictable initial contract rent setting; annual

operating cost adjustments for inflation (OCAF) Established Replacement and Operating Reserves; RAD HAP funding begins at construction closing !! No limitations on use of project cash flow PHA Ownership/control similar to LIHTC practices Long term affordability ensured

Process Partial or Full AMP No SAC approval Subsidy layering review via RAD Simplified procurement Freed from PH Annual Plans, PHAS, Community Service,

PIC, etc.

Financing Access to FHA LIHTC Pilot processing Ability to tap 9% & 4% LIHTCs, including “short bond”

structures Ability to support transaction with public housing reserves

and capital funds, including Replacement Housing Factor funds

Access to HOME and CDBG for development budgets Available sales proceeds can support other affordable

housing purposes

Flexibility Transfer assistance from unworkable units prior to conversion Market accommodations in meeting 1-for-1 preservation

(e.g., convert efficiencies to 1 bdrms; long-term vacant units)

Combine RAD & agency PBVs or SAC TPVs>PBVs Flexibility to reduce densities, replace housing off-site,

produce mixed income communities Allows PHA to undertake renovations immediately or after

conversion, as warranted Demolition/New Construction allowed Ability to “bundle” project applications for flexibility with

initial contract rents

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New RAD Notice

FY 2012 rent (from HUD Tool) if apply by 12-31-2013Exempting those with CHAPs from occupancy criteria of

Performance Housing Assessment System (PHAS)

Bundling of multiple project rents

Commitments for multiple-phase projects

Allows Portfolio Awards

Option for distressed HOPE VI projects regardless of DOFA

Allowing MTW Agencies to use block grant in rent setting for 2 or more projects, subject to service level requirements & subsidy layering review

Comparison of PHA fees ACC vs RADAssume a 100 unit project, new const, at a cost of $120K per unit Per unit per month Current ACC RADProperty Mgmt Fee $ 45.00 $ 35.00 Bookkeeping $ 7.50 $ -IT $ 2.00 $ - Asset Mgmt Fee $ 10.00 $ - Capital Fund Fee $ 15.00 $ - Cash Flow (50% share) $ 37.00 Per Unit Per Month Total $ 79.50 $ 72.00 Annual Total $ 95,400.00 $ 86,400.00 Annual difference $ (9,000.00) Developer Fee (35% of $1.8M Fee) $ 630,000.00

Net unrestricted funds to the PHA $ 621,000.00

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Development objectivesPartnership with PHAs

– Modernize/ Substantially rehab aging rental properties

– Demolish/replace severely distressed/obsolete properties

– Thin densities/mix incomes via RAD HAPs and transfer authority

Place RAD HAP contracts in off-site, high-amenity locations

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Case Study: Hopewell, Virginia

Key Features

PHA in Partnership with Experienced Nonprofit Developer, Community Housing Partners9% Low Income Housing Tax CreditsResident Council Input

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Case Study: Hopewell, Virginia

Pre- ConversionPublic Housing

30 units

In need of major repair

Post-ConversionMixed Income Development

56 units

Demolition/ New Construction

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Case Study: Hopewell, Virginia

Pre- Conversion Post-Conversion

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Sources & UsesSources of Funds Amount Per UnitNew First Mortgage Loan $2,871,830 $44,872Public Housing Operating Reserves $0 $0Public Housing Capital Funds $0 $0Replacement Housing Factor $0 $0Low Income Housing Tax Credit Equity - 9% $5,455,975 $85,249Soft Sources $500,000 $7,813Developer Equity $105 $2Other $0 $0

Total Sources of Funds $8,827,910 $137,936 Uses of Funds Amount Per UnitAcquisition Costs $96,365 $1,506Construction Costs $6,388,848 $99,826Relocation Costs $65,000 $1,016Professional Fees $683,197 $10,675Loan Fees and Costs $400,000 $6,250Reserves $362,000 $5,656Developer Fees $832,500 $13,008

Total Uses of Funds $8,827,910 $137,936

Case Study: Hopewell, Virginia

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Income & Expenses:

Stabilized Cash Flow Pro Forma Total PUPAGross Potential Rents for RAD Units $243,624 $8,121Gross Potential Rents for Other Apartment Units $327,015 $9,618Gross Potential Rents for Commercial $0 N/AVacancy Loss and Bad Debt Loss ($43,215) -$675Other Income $8,400 $131

Effective Gross Income $535,824 $8,372 Total Operating Expenses ($286,550) ($9,552)Annual Deposit to Replacement Reserve ($19,200) ($640)

Net Operating Income $230,074 $6,767 First Mortgage Debt Service ($190,300) ($6,343)

Operating Cash Flow $39,774 $1,170

Case Study: Hopewell, Virginia

What advice would you give to PHAs?

“The writing is on the wall – we can’t sustain the public housing or the quality of life the way things have

been going. It became apparent that this old housing stock with diminishing capital funds was not going to

be sustainable. ”

-Steven Benham, Executive Director, Hopewell Redevelopment and Housing Authority

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