- Section 18 Applications24 and RAD. In connection with RAD conversions, Section 18 applies only in the following situations:
- The disposition of excess land, as detailed in Paragraph N of Attachment 1A;
- If a PHA proposed to reduce the number of assisted units by more than a de minimis amount, as defined in Section 1.4.A.3; or
- In certain scenarios where assistance is transferred from the Converting Project and HUD has not approved the future use of the Converting Project site or sales proceeds as part of the RAD conversion.
Otherwise, a PHA cannot have both a CHAP and an approval of a Section 18 Application for the same public housing units. While a PHA may submit applications for both a RAD conversion and a Section 18 action covering the same units and may receive initial approval for both programs, it must make a decision as to which program to pursue for each unit within ninety (90) business days of receipt of the second approval. The PHA must inform its local HUD Office of Public Housing, SACTA@hud.gov, and its RAD Transaction Manager of its decision in writing that it will surrender its CHAP (provided it is eligible to pursue RAD in accordance with the following section) or request that HUD suspend its Section 18 approval. The CHAP shall be considered issued as of the date of this decision. In addition:
- Units for which a PHA has received a Section 18 approval are ineligible for RAD if it has taken any of the following actions to implement the Section 18 approval:
- executed a demolition contract;
- completed a disposition (i.e., transferring title and/or executing a ground lease);
- received TPVs from HUD as a result of a Section 18 approval;25 or
- Taken any steps to implement relocation under the Section 18 approval (i.e., issuing the 90-day notice to residents).
If a PHA has already submitted a RAD application or has a CHAP and has taken one of these actions, it must submit a request to withdraw the RAD application or surrender the CHAP. Otherwise, HUD will disapprove the RAD application or revoke the CHAP.
- If a PHA has received a CHAP for units for which it has also submitted a Section 18 application but not yet received a determination on that Section 18 application, it must (i) submit a request to the SAC to withdrawal its Section 18 application; or (ii) submit a request to its local HUD Office of Public Housing to “hold” its CHAP while HUD completes its review of the Section 18 application. If a PHA decides to pursue RAD for eligible units that have been approved under a Section 18 application, SAC will conditionally rescind its Section 18 approval contingent on the successful completion of the RAD transaction and will modify IMS/PIC accordingly.
- Demolition. Conversion plans may include the partial or complete demolition of the Covered Project and replacement of assistance on-site or off-site. Unless approved in writing by HUD, a PHA may not demolish and/or dispose of units until after the closing of construction financing for the Covered Project.13 Both the demolition action and new construction or rehabilitation (either on-site or off-site) are considered as part of a single Environmental Review.
Demolished Project Eligibility under RADA PHA is considering applying for RAD for a project that has already been demolished. Is this project still eligible for RAD?
No. Only projects with units under ACC and in PIC are eligible for RAD.
RAD Conversion of Demolished ACC UnitsCan a housing authority that has demolished units counted in their ACC rebuild and covert to RAD for the new building with the same unit count?
RAD is a "current funding" program. Therefore if you have units that have been demolished but are still in PIC and being funded by operating and capital funds, you can convert those units to RAD. The RAD rents will be set by the amounts currently funded in the operating and capital funds. Thus, if there has been a phase down of funding, the RAD rents will be set at the lower (current) levels. If the demolished units are not still in PIC, they are not eligible for RAD conversion. For the most part, units that are being built back under "Faircloth" must first be brought into the public housing program under either the traditional development method or the mixed-finance method, and then they would be eligible for RAD. Some PHAs have inquired as to whether there could be a "joint" or "simultaneous" closing. The Department is looking into that possibility.
Demo/Dispo, Transfer of Assistance and RPCA RequirementIf a HA is proposing to do a RAD conversion of Public Housing that involves demolishing an existing project and rebuilding an equal or greater number of units on the same site, is this treated in essentially the same way as for a RAD conversion with rehab? Is it unnecessary to do a transfer of assistance as long as the units are being rebuilt on the same site? Where and how does the RAD PCA fit into this scenario?
In the situation you describe, a transfer of assistance would not be needed, because the RAD project would be located on the same site as the current public housing. In demolition-and-reconstruction projects, a RAD PCA is not required. See Notice PIH-2012-32, page 26, footnote 6; and Attachment 1A.1 paragraph B. [Updated 7.29.13]
De-minimis ReductionsCan a PHA apply the de-minimis standard for replacement across properties?
A PHA may apply the de-minimis standard for any group of properties that are undergoing conversion. For example, if the PHA has two CHAPs, each consisting of 100 units, and the PHA has six units at the first project that have rehab costs that would be exorbitant, the PHA could apply the de-minimis standard across both properties. Thus, because the PHA would, combined, be able to reduce 10 units (5%), the PHA would be permitted to reduce the 6 units at the first property (provided it does not reduce more than 4 units at the second property). However, the project utilizing the greatest reductions has to be the latest to convert (or converts simultaneously).
FHEO Review for Unit ReductionIf I am using both the de minimus reduction and the 75%/25% RAD/Section 18 blend provisions on a RAD transaction, do I need to submit the FHEO Change in Unit Configuration review? All reduced units will be replaced by other PBV units and Tenant Protection Vouchers (TPV), so the number of low-income dwelling units is the same.
If all of the reduced units are being replaced with project-based assistance, an FHEO Change in Unit Configuration review is not needed.