- Additional Design Considerations. Applicants are also strongly encouraged to demonstrate contemporary best practices in rehabilitation and construction, utilizing a long-term and holistic view of costs and benefits and a decision-making process which includes current and future stakeholders. Planning and design should include building lifecycle costs, energy and water-efficiency, social inclusion and connectivity, occupant health and welfare, basic environmental stewardship, and climate change resilience.12
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Completion of Critical RepairsWhat is the process for clearing critical repairs that have been completed?
The RAD Conversion Commitment contains an exhibit (Ex. G) for all critical repairs associated with the RAD conversion and states that they must be completed prior to closng. The Owner must provide a written certification that all critical repairs listed in Exhibit G of the RCC have been completed prior to closing. This certification can be made via the Consolidated Owner Certification template which is available on www.radresourc.net > Contracts & Closing Documents. [Updated 5.30.14]
Davis Bacon and Section 3 ApplicabilityWhat is the trigger for Davis-Bacon and Section 3 under a RAD conversion?
Davis-Bacon and Section 3 are triggered by any any rehabilitation or new construction performed as part of the “Year One” repair schedule defined by the RPCA, Financing Plan and Rad Conversion Commitment. In addition, and substantial repairs undertaken prior to conversion (i.e., pre-conversion rehabilitation with Capital Funds).
Completion of Capital ImprovementsOnce awarded, what is the time frame to complete capital improvements?
The Financing Plan and RCC must include a reasonable timeline for completion of all rehabilitation items acceptable to HUD, generally 12 to 18 months from the date of closing the conversion and any financing, depending on the scope of rehabilitation funded. (Notice PIH-2012-32 REV-1 page 79).
Completing Repairs prior to RAD ClosingI am a PHA with a CHAP and would like to complete some repairs prior to the closing of the RAD conversion. Is this allowed?
All repairs identified as "critical" in the RAD PCA must be completed prior to closing. If the PHA wishes to complete additional repairs to the property prior to closing, it is permitted to do so but must follow all applicable Public Housing rules. It is important to remember that until the RAD conversion has closed, the property is still considered Public Housing and is subject to Public Housing rules. The PHA must also make sure the Financing Plan and RAD PCA are updated to reflect the changes to the repair schedule and scope of work. Please note that RAD conversions pursuing FHA financing should discuss the completion of additional repairs with their Transaction Manager as additional approvals may be necessary.
Treatment of Vacant Units Prior to RAD Conversion for Operating Subsidy PuA PHA receives a CHAP award and, because of the scope of repairs, chooses not to re-fill vacancies, waiting instead until conversion to make repairs. How would these units be treated under the Operating Fund Program for the period prior to conversion?
Units vacant for RAD can be considered as “Under Vacant for Modernization” per the 990 regulation. For 2014, the RAD conversion would have to be in the PHA Plan. The months in 2013 during the reporting period when the unit was vacant for RAD purposes must be reflected in PIC as a unit status change. Additionally, if it is intended that the unit receive funding in 2014 as “Unit Vacant undergoing Modernization” but the current eligibility in the HUD-52723 indicates the unit as simply vacant then a revision will need to be submitted. The revision deadline for 2014 is June 27th. The PHA can also reference the Notice PIH 2011-7 Guidance IMS/PIC Development
Rehab Assistance PaymentsHow can I forecast the income my project is eligible to receive in Rehab Assistance Payments?
Rehab Assistance Payments are provided under the HAP contract to provide subsidy payments to the property during the period of rehab. Units are only eligible for Rehab Assistance Payments if they were eligible for Operating Subsidy prior to conversion (i.e., included in “Eligible Unit Months” in the Form 52723 for the Calendar Year of conversion) and are uninhabitable during the period of rehab or construction. Rehab Assistance Payments are sized by HUD based on the Operating Fund and Capital Fund subsidy that formed the basis of a property’s RAD rent. For example, a property has a RAD rent of $500 PUM, which was based on Operating and Capital subsidy of $300 and tenant rents of $200. The HAP contract would include a Rehab Assistance Payment of $300 (adjusted by the OCAF, if the rents were due an OCAF adjustment). The PHA can find these amounts in the validation tab of the original RAD application.
Applicability of Davis Bacon to 2nd Component RAD ConversionsI am pursing a 2nd component conversion. Under the wording of the new PBV Final Rule, I am unclear if the transaction will be subject to Davis Bacon wage rates. Can you please confirm?
In the June 25, 2014 final rule, HUD clarified the reference to statutory labor standards provisions that are applicable to assistance under the PBV program. The Final Rule states that when the nature of the work planned to be performed prior to execution of a Housing Assistance Payments (HAP) contract, or after HAP contract execution within such post-execution period as may be specified by HUD, constitutes development of the project, statutory Davis-Bacon requirements may apply to existing housing (which is not subject to an agreement to enter into a housing assistance payments contract, or AHAP). The Department is preparing additional guidance to clarify when Davis Bacon requirements apply to existing PBV housing, including 2nd Component RAD transactions. In the meantime, we offer the following general rule of thumb: if the project will undergo rehabilitation in connection with the RAD conversion (either pre or post HAP contract execution), the development team should budget assuming Davis Bacon wage rates will apply.
Completing Accessibility Repairs Identified in the RPCAIf a PHA has accessibility improvements identified in the PCA, can it perform that work post-closing as part of the scope of immediate repairs?
Critical repairs are repairs that must be done on an accelerated schedule, including health and safety issues (such as an improperly vented gas appliance). Note that identified accessibility modifications that pose imminent health and safety risks, may be considered critical repairs. All critical repairs must be completed prior to the RAD closing. If your property has a critical repair that you believe cannot be completed prior to RAD closing due to time constraints, please discuss this with your RAD Transaction Manager who may permit the repair to be moved into rehab as long as it can be demonstrated that doing so does not present an immediate health or safety hazard to residents. Rehab items also must be done, but the schedule is governed by the rehab provisions of the RAD Conversion Commitment. Year One items typically reflect systems or components that were functioning at the time of the inspection and are anticipated to require replacement in the first year. Whether and when these are done will be up to the property owner. A typical example would be a 20 year roof that is not leaking but that either has reached 20 years of age or will reach 20 years of age within the first year after the closing. The Reserve for Replacement would contain sufficient funds to pay for the roof replacement, and the timing of the roof replacement would be up to the owner.
Accessbility RequirementsMy PHA previously met the standard for accessibility across the public housing portfolio. However, now that we are converting to RAD, there are individual projects that exceed the standard and some that do not meet the standard (but, again, overall we are in compliance). When we convert to RAD, will we be “grandfathered” in, or will we have to have all projects meet the accessibility standards on their own?
Each project covered under a HAP contract must meet the 5%/2% accessibility standards under Section 504 if the project is undergoing substantial alterations.
Submission of Certified Payrolls for Davis BaconFor RAD transactions subject to Davis Bacon, where should the PHA/owner submit certified payrolls?
Certified payrolls should be submitted to the HUD Labor Relations Specialist with jurisdiction for the applicable region. Please see HUD Handbook 1344.1 Rev 2 Chapter 4, which establishes the requirement for submission of the certified payrolls (Link: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/sech/13441)
Vacant Units Due to Preparation for Modernization as Part of RADUnder what circumstances can units covered by a CHAP Award be considered "Units Undergoing Modernization"?
Units in a project with CHAP approval, which the PHA plans to modernize, that are vacant because a PHA has not reoccupied them in preparation for modernization pursuant to a for RAD conversion, can be considered as “Units Undergoing Modernization,” provided they comply with 24 CFR 990.145 (excerpted below). To be eligible, such vacant units must need to be vacated for the modernization work to occur. Such vacant units may be categorized as undergoing modernization for a maximum of two years (24 months) prior to the RAD conversion (HAP Effective Date). The units must be approved by the Field Office, and the unit status correctly reflected in PIC. The RAD conversion and planned modernization must be in: 1) A HUD approved PHA Annual Plan for non-qualified PHAs (24 CFR 903); 2) A HUD approved 5-Year Plan for qualified PHAs (24 CFR Part 903) (if no Capital Funds are being used as part of the modernization, a narrative description of the work, including the projected start and completion date, should be included in the Capital Improvements section of the Plan); or 3) a HUD approved Capital Fund Plan (24 CFR 905.300) if Capital Funds are also being used for modernization Units converting to RAD that will not be modernized are not eligible to be categorized as Units Undergoing Modernization. § 990.145 Dwelling units with ap¬proved vacancies. (a) A PHA is eligible to receive oper¬ating subsidy for vacant public housing units for each unit month the units are under an ACC and meet one of the fol¬lowing HUD-approved vacancies: (1) Units undergoing modernization. Vacancies resulting from project mod-ernization or unit modernization (such as work necessary to reoccupy vacant units) provided that one of the fol¬lowing conditions is met: (i) The unit is undergoing moderniza¬tion (i.e., the modernization contract has been awarded or force account work has started) and must be vacant to perform the work, and the construc¬tion is on schedule according to a HUD-approved PHA Annual Plan; or (ii) The unit must be vacant to per¬form the work and the treatment of the vacant unit is included in a HUD-approved PHA Annual Plan, but the time period for placing the vacant unit under construction has not yet expired. The PHA shall place the vacant unit under construction within two federal fiscal years (FFYs) after the FFY in which the capital funds are approved.
Units Eligible for Rehab Assistance PaymentsHow can a PHA determine how many units under HAP contract are eligible for Rehab Assistance Payments?
During the period of rehabilitation or construction as identified in 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 subsidy prior to conversion. The number of units eligible for Operating Fund subsidy prior to conversion is equal to the number of Total Eligible Unit Months (EUMs) on the project’s Form-52723 submission (Section 2, Column B, Row 15.) divided by twelve and rounded down to the nearest whole number. For conversions where only a portion of a PIC Development has converted, the number of EUMs associated with the converted portion can be derived from the Initial Year Funding Tool (See “2a. Operating Fund” worksheet, cell R28).
Reporting Rehab Assistance Payments in VMS (PBV Conversion)We converted to PBV and units were vacated due to rehab and thus we are eligible to receive Rehab Assistance Payments (RAP). How do we report the use of the RAP funds in VMS?
The VMS Users Manual instructs PHAs to report Rehab Assistance Payments in the RAD 1 HAP Expense field in VMS. PHAs should not report the units as leased.