- Agreement Waiver and RAD Rehab Assistance Payments. For public housing conversions to PBV there will be no Agreement to Enter into a Housing Assistance Payments (AHAP) contract. Therefore, all regulatory references to the AHAP, including regulations under 24 CFR part 983 subpart D are waived. Instead, the PHA and Project Owner typically will enter into a HAP Contract before construction begins. Until the work is complete, standard HAP Contract funding procedures will be used for occupied units. Units that are not occupied at any point during the period of work identified in the approved Financing Plan and RAD Conversion Commitment may be eligible, subject to the conditions below, for Rehab Assistance Payments equal to the Public Housing Operating Fund and the Capital Fund amounts that formed the basis for the calculation of initial contract rents (see Attachment 1C). During the period of rehabilitation or construction as identified in the RCC and the HAP Contract, the maximum number of units for which a Project Owner can receive RAD Rehab Assistance Payments is limited to the number of units eligible for Operating Fund or Capital Fund subsidy prior to conversion. As a result, some units in the Covered Project may not be eligible for Rehab Assistance Payments.
Following the earlier of the end of the construction period identified in the HUD- approved Financing Plan or actual construction, the PHA will no longer be eligible to receive RAD Rehab Assistance Payments, and all units under contract will be eligible for payment only for occupied units or for vacancy payments, as applicable. MTW agencies may not alter this requirement.
- When Total Tenant Payment Exceeds Gross Rent. Under the PBRA program, assisted families typically pay 30% of adjusted gross income toward rent and utilities, referred to as TTP. Under normal PBRA rules, a Project Owner must process a termination of assistance pursuant to section 8-5 C. of Housing Handbook 4350.3, REV-1 when the family’s TTP has risen to a level that is equal to or greater than the contract rent, plus any utility allowance, for the unit (i.e., the Gross Rent)). In addition, section 8-6 A.1 provides that, when terminating a tenant’s assistance, the owner is to increase the tenant rent to the contract rent (assuming that the tenant does not receive the benefit of any other type of subsidy).
For residents living in the Converting Project on the date of conversion and all new admissions to the Covered Project thereafter, when TTP equals or exceeds the contract rent plus any utility allowance, the Project Owner must charge a tenant rent equal to the lesser of (a) TTP (which is not capped at gross rent), less the utility allowance in the contract, or (b) any applicable maximum rent allowable under LIHTC regulations.49 To this end, HUD is waiving sections 8-5 C. and 8-6 A. 1. of Housing Handbook 4350.3, REV-1. In such cases, the tenant will still be considered a Section 8 tenant and will still have the rights and be subject to the requirements of Section 8 tenants. Tenants will retain all of the rights under the Model Lease, including the right to occupy the unit, as well as those provided through this Notice, and tenants will still be subject to the requirements for Section 8 tenants, including the requirements concerning reexamination of family income and composition found in 24 CFR §§ 5.657 and 880.603(c). When TTP equals or exceeds Gross Rent, the excess rent collected by the owner is considered project funds and must be used for project purposes. Assistance may subsequently be reinstated if the Tenant becomes eligible for assistance. In the event that the tenant moves out, the Project Owner must select an applicant from the waiting list who meets the applicable income limits for the project.
The Project Owner is not required to process these individuals through Multifamily Housing’s Tenant Rental Assistance Certification System (TRACS) but may be required to do so in the future when a future revision of the TRACS can accept such certifications. All normal actions for the contract rent shall continue for these units, including application of the OCAF adjustment to the contract rent indicated in the HAP Contract—since the OCAF adjusted rent will still be in effect whenever the unit is occupied by a family eligible for rental assistance.
What will be the effective date of the post-RAD HAPs?What will be the effective date of the RAD HAP contract?
The first day of the first month following. The Notice details the steps that must take place prior to closing.
Effective Date of RAD ConversionOn what date does a RAD project cease being a public housing project?
The project ceases to be a public housing project at the effective date of the HAP contract, which is the first of the month following closing.
RAD PRACHow does the switch to a RAD HAP Contract affect the PHA's Admissions and Continued Occupancy Policy?
A project that converts under RAD will no longer be under the public housing program. Therefore, the ACOP will not apply. The owner must establish admissions and occupancy policy consistent with the program to which the project is applying. For conversions to PBV, these policies can be found in CFR 24 Part 983. For conversions to PBRA, these policies can be found in Handbook 4350.3
Surplus Cash under the HAP ContractThe template PBRA HAP Contract for former Mod Rehab properties that is on the RAD website includes a provision that surplus cash can only be distributed once a year. Can this requirement be waived or modified for projects that do not have FHA financing?
No. The RAD template legal documents must be used without alteration. The restriction on cash flow only after closing of financial statements is true regardless of financing source.
AFS Audit Requirement in HAP Contract for PBRA ConversionsIn the sample RAD PBRA HAP contract for former Mod Rehab properties, it appears an AFS Audit will be required. Is this correct?
Yes, after the RAD closing the converted PBRA project would be subject to the REAC-FASS annual financial statement requirements. This is not applicable to PBV conversions.
Administrative Fees for PBV ConversionsWill PHA's converting to Project Based Vouchers receive an extra one time "special housing fee" of $200 per unit when they convert to PBVs? Does the answer depend on the type of RAD PBV conversion?
The answer depends on the type of PBV conversion. Generally, the special housing fee is allowable only if the PHA is not already administering rental assistance for the project: 1. The special housing fee is not applicable to conversions of public housing to PBVs. 2. The special housing fee is not applicable to conversions of Mod Rehab to PBV, whether the conversion occurs under the 1st or 2nd component of RAD. 3. The special housing fee is applicable to prospective conversions of RAP and Rent Supplement under the 2nd component of RAD. 4. The special housing fee is not applicable to retroactive conversions under the 2nd component of RAD.
PHA Administering PBV Contract and Section 8 Administrative PlanThis is for the 2nd component of RAD. If a PHA agreed to administer a PBV Contract, would the PHA be required to amend its Section 8 Administrative Plan even if the Section 8 Admin Plan includes verbiage on project-basing vouchers that complies with 24 CFR 983?
So long as the PHA's administrative plan already provides for project-basing vouchers and already includes the appropriate policies regarding project-based vouchers (e.g., appropriate policies for tenant selection), no further amendment to the administrative plan is required in order to administer PBVs under the 2nd component of RAD.
PBV Contract AdministrationIf a PHA agreed to administer a PBV Contract, would the PHA be required to amend its Annual Plan and go through the 45 day comment period before it could take any of the required actions for the conversion?
Yes, if the PHA administrative plan does not already include project-basing of vouchers and the required PBV policies. If the PHA administrative plan already includes those provisions, no further amendment is required.
Timing of RAD Unit ConversionWill the units converting to RAD be considered PBV units at the time of closing or after the rehabilitation is done?
The PBV HAP contract goes into effect at the RAD closing, so the units would become Section 8 PBVs at the beginning of the following month. For example, if the closing is on March 15, the effective date of the HAP contract would be April 1. Please note that, for most conversions, the HAP is executed prior to construction taking place.
Combining Scattered Sites into a Single CHAP & HAP ContractMy current public housing project consists of scattered sites on multiple parcels and I am considering a conversion to PBV under RAD. Under what conditions will I be allowed to combine these units under one CHAP (and one HAP)?
In the PBV program, multiple single-family buildings may be on the same HAP Contract (i.e. scattered-site single family buildings). However, if the scattered sites are not single-family buildings, each project must have its own HAP contract. A project can be defined as a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. HUD interprets project to apply to all these structures (i.e., single building, multiple contiguous buildings, etc.), and a PHA must consider the entire definition and apply this definition to proposed PBV units. For purposes of RAD application, the PHA will need to submit an application for each AMP (or each portion of an AMP). If the scattered-sites are eligible to be under one HAP, as described above, and are already under one AMP, one CHAP will be issued. If the scattered-sites are eligible to be under one HAP as described above, but are not currently under one AMP, separate applications should still be submitted using the “Many-to-One” application instructions found here: http://portal.hud.gov/huddoc/manyto1_appinstr.docx.
Identifying PBV Units in the HAP ContractAre PBV units separately identified under the HAP Contract (e.g., unit 101 and 102) and, if so, can they be changed?
Yes, all PBV units are separately identified in the HAP Contract. After the signing of the HAP, the PHA may substitute units, but only in accordance with 24 CFR §983.206.
Eligible Units for PBV HAP SubsidyUnder public housing, some of our ACC units are offline for Resident Council/Social Service activities however we still receive subsidy for them. After the RAD conversion, will we still receive subsidy for these units and, if so, at what amount?
For conversions where the PHA is proposing a de minimis reduction in dwelling units, but certain units will be designated for special purpose uses or units are being reconfigured through rehab to improve marketability (e.g. combining efficiencies), these units will not be included in the HAP contract and will not receive subsidy. However, HUD will increase the contract rents for the dwelling units by a share of the foregone subsidy (i.e., the Operating Fund and Capital Fund portion of the weighted Contract Rent) attributable to the deminimis units that meet this criteria.
PBV HAP Contract AdministrationHow can a PHA own a property covered under a PBV contract that it will administer?
Under the PBV program, the Contract Administrator and the Owner listed on the contract cannot be the same legal entity (i.e., the PHA cannot execute a contract with itself). To avoid this situation, the PHA may either: 1) Transfer the ownership of the project to a non-profit affiliate or instrumentality of the PHA (including to a “single-purpose entity” that owns nothing other than the property, which will typically be a requirement of a lender or investor) or 2) The PHA can form a related entity that is responsible for management and leasing and can serve as the owner for purposes of the Section 8 HAP contract; in this scenario, the HAP is then executed between the PHA (as the Contract Administrator) and the PHA’s related entity (as the Owner for HAP contract purposes). Note that in the second scenario, both the PHA and the entity serving as the Owner for HAP contract purposes will be required to sign the RAD Use Agreement. Additionally, where the PHA owns a property covered under the PBV contract, the PHA must utilize an independent entity, approved by HUD, to perform the HQS inspections and rent reasonableness (24 CFR 983.59). The independent entity that performs these tasks can be the unit of general local government for the PHA jurisdiction (unless the PHA it itself the unit of general local government or an agency of such government), or any other HUD-approved public or private independent entity.