Under the Demonstration, applicants may apply to convert a single project, a PHA-defined portfolio of projects, a multi-phase project, or a set of projects that incorporate rent flexibilities such as rent bundling or MTW fungibility. The requirements for each type of application are listed below:
- General Requirements. All applicants must complete the Microsoft Excel-based RAD Application, which HUD will make available on the RAD website (www.hud.gov/rad), along with all other required submittals. The RAD Application will include certain pre-populated project data and will require the applicant to input proposed data related to the long-term physical and financial feasibility of the project and other conversion-related items. For an application to be complete, user inputs must meet any applicable thresholds embedded and described in the RAD Application.
Applications will be accepted on a project-by-project basis, except where otherwise noted in this Section. If a PHA desires to convert only a portion of a project (e.g., only the high-rise portion of a project that is currently combined with scattered sites) and maintain the remaining portion as public housing, the PHA should indicate as such in its application (i.e., the PHA will not need to request a change in configuration for the project in order to submit the application).
It is important for the applicant to keep environmental impacts in mind, and to begin assembling environmental reports, during the application submission process. Following application review and approval, the proposed construction plans and site selection will be evaluated during environmental review and will require modification if they do not meet environmental review requirements.56 Questions regarding environmental review requirements should be directed to the local Responsible Entity contact for conversions to PBV, or to the local HUD Field Environmental Officer57 for any project involving FHA financing and/or PBRA conversions.
Upon completion of required entries on the application, the PHA will be able to generate a number of key exhibits, including a financing pro-forma for the project. The purpose of the pro-forma is to ensure that the PHA has sufficiently considered the long-term preservation needs of the property and the means by which those needs will be financed. In completing the financing pro-forma, the PHA must identify likely sources of debt and/or equity financing.
The RAD Application contains a template of each of the followings documents, which must be submitted where applicable:
- A RAD Board Approval Form, which will include the proposed pro-forma and other key certifications, must be approved by the PHA’s Board and signed by the authorized representative of the PHA. This form will be required for all submitted applications.
- A Financing Letter of Interest/Intent from each lender or equity investor, indicating, among other conditions, that the proposed pro-forma is reasonable. This letter is required where third-party financing is indicated in the application pro-forma. (A Financing Letter of Interest/Intent is not required where the pro-forma indicates that no financing is required, e.g., where immediate and long-term project capital needs can be met through a Reserve for Replacements account, or where the PHA is providing the financing.) The Financing Letter of Interest/Intent does not promise or imply a commitment to make a loan or equity investment but does signify that the lender or investor has reviewed the pro-forma for the subject project and considers it reasonable to proceed with further analysis and due diligence.
- A Mixed-Finance Affidavit is required where the PHA is requesting to convert the public housing assistance in a mixed-finance project. This affidavit must be signed by both the PHA administering the public housing ACC and the Owner Entity of the project. Since only PHAs can apply under the Demonstration (see Section 1.3 of this Notice), the purpose of this affidavit is to ensure that both parties (the Owner Entity and the PHA) agree in principle to the conversion. Please note, however, that the HAP Contract for a mixed-finance conversion will be executed between the Contract Administrator and the mixed-finance Owner Entity, not the PHA administering the public housing ACC. (The PHA may be part of the ownership structure, however.)
- A Choice-Mobility Commitment Letter signed by: (a) the voucher agency that has committed to provide Choice-Mobility vouchers to the covered PBRA project of another PHA for the term of the initial HAP Contract; and (b) the agency that obtains a commitment from a voucher agency to support Choice-Mobility for a specified PBRA project. PHAs that are able to meet the Choice-Mobility requirement through turnover from their own voucher programs do not need to complete this letter.
If a PHA chooses to convert assistance to PBVs, the PHA must identify in the RAD Application the voucher agency that will administer the PBV HAP Contract. If another PHA is proposed as the contract administrator and the project is selected, the PHA will need to submit a signed letter from the voucher agency evidencing the agency’s willingness to administer the PBVs. The PHA may contact the local HUD Office of Public Housing to identify a list of voucher agencies that have appropriate legal jurisdiction to perform this role. If there is no voucher agency with overlapping legal jurisdiction that is willing to administer the PBV contract, the PHA may want to consider converting the project to PBRA. However, in so doing, the PHA would still be required to meet the Choice-Mobility requirement described above.
The RAD application shall also include supporting evidence if claiming priority status under Section 1.11.C.1(i).
Finally, the RAD application must include responses to comments received in connection with the required resident meetings on the proposed conversion.
- Applications Proposing to Use 9% LIHTCs. Applicants are encouraged to consider both 4% and 9% LIHTCs in their project financing. However, as the demand for the allocation of 9% LIHTCs is typically excessive, applicants proposing to use 9% LIHTCs shall provide either evidence that a reservation has already been secured or a self-scored LIHTC application under the Qualified Allocation Plan (QAP) in place at the time of application that demonstrates that the project would have been eligible and competitive for credits in the most recent round.
- Applications for Multi-phase Development. PHAs may submit applications involving the multi-phase redevelopment of projects. For purposes of the multi-phase award application, the project being converted can be either one contiguous site or a single AMP. PHAs may note that, for a single AMP, use of the multi-phase authority provides more time for completion of all phases than use of the portfolio authority. A PHA must submit a RAD Application that reflects the first phase as well an explanation of future phases, including a narrative summary of the proposed phasing, the proposed date of submission of each phase’s financing plan, the proposed date of each phase’s LIHTC application (if applicable), and the proposed date of any demolition or disposition associated with each phase (if applicable).58 Upon acceptance of the PHA’s application, HUD will issue a CHAP for the initial phase and a Multi-phase Award Letter covering all phases of the project. A Multi-phase Award allows a PHA to reserve conversion authority for a project with multiple distinct development phases and locks in the applicable contract rent for the entire project at the time of initial application.
For awards made pursuant to the original 60,000 unit cap, the PHA had until July 1, 2015 to submit an application for the final phase of the project covered by the Multi-phase Award, unless HUD provided, in its sole discretion, an extension. For all Multi-phase awards made pursuant to the increase in the cap to 185,000 units, the Application for the last phase of a Multi-phase awards will be due no later than July 1, 2018. Subsequent to authority to convert additional units, HUD will establish Multi-phase awards in its sole discretion. Recipients of Multi-phase Awards shall still be required to fulfill all CHAP milestones for each of the CHAPs awarded by HUD. If the PHA is unable to complete a phase of the conversion, HUD reserves the right to revoke the CHAPs covering that phase and all subsequent phases of the conversion.
HUD recognizes that in certain situations multi-phase development warrants the demolition of a greater number of units than may be replaced in a single phase. HUD will consider individual requests for demolition prior to the construction closing of a phase based on a site plan, the timing and sources & uses for each proposed phase, the capacity of the development team, the impact on residents, and the overall likelihood that units will be successfully redeveloped.
Applicants should keep in mind that the environmental documents submitted with the Financing Plan during the first phase (see Attachment 1A) must be submitted for the entire site, i.e., all of the phases of the multi-phase development, and that the environmental review conducted during the first phase will cover the entire site.
- Applications with Bundled Rents. When bundled rents are proposed, as described in Section 1.6.B.5 and Section 1.7.A.5, the PHA must include in each project’s application a reference to the other project(s) in the rent bundle and must also include with the application a calculation demonstrating that the total subsidy for the bundled projects will not exceed the aggregate funding for the Covered Projects.59 Upon CHAP award, failure of one project to meet the requirements set forth in this Notice shall result in the termination of the second project if that project is no longer feasible without the rent bundle. Further, the project that is donating subsidy (and converting at lower rents) must close before or simultaneous with the project(s) that are receiving subsidy (and converting at higher rents).
- MTW Fungibility. An MTW agency may submit an application proposing to use its MTW block grant authority to set initial contract rents pursuant to Section 1.6.B.5 and Section The application must indicate the additional proposed subsidy dedicated to the Converting Project(s).
- Portfolio Awards. A PHA may apply for a Portfolio Award, which allows a PHA to reserve RAD conversion authority for a set of projects and locks in the applicable contract rent in the year of application. In order to apply for a Portfolio Award, a PHA must submit:
- A list of all projects proposed for a Portfolio Award, that includes, for each project, the project’s name, PIC Development Number, units to be converted, total estimated capital needs, and the major anticipated financing sources, where applicable; and
- RAD Applications for at least 50% of the projects identified in the portfolio.
Upon approval of the application submission listed above, HUD will issue, in addition to the provision of CHAPs for the applications submitted, a Portfolio Award Letter covering the remaining projects within the portfolio proposed by the applicant. The Portfolio Award Letter reserves RAD conversion authority for the remaining units in the portfolio and locks in the applicable contract rent for the year of the application submission for the projects covered by the Portfolio Award. The PHA will have 365 days from issuance of the Portfolio Award Letter (or in the case of Portfolio Awards issued between January 1, 2015 and July 15, 2015, 365 days from July 15, 2015) to submit acceptable RAD Applications for the remaining projects included in the Portfolio Award, which will result in the issuance of a CHAP for each project.60 Recipients of Portfolio Awards shall still be required to fulfill all milestones for each CHAP issued by HUD. If at any time HUD determines that a PHA has failed to make sufficient progress towards the submitted conversion of the proposed portfolio, HUD may revoke RAD conversion authority provided under the Portfolio Award for all projects where a CHAP has yet to be issued. With HUD consent, PHAs may substitute projects in the portfolio award, and switch projects between the active and pending portions of the portfolio, provided that the newly substituted projects are subject to all of the requirements of this Notice and will be subject to the same deadlines as the projects which they replaced within the portfolio.
Further, PHAs that have received CHAPs for multiple projects, but that did not request a Portfolio Award, may convert their awards into a Portfolio Award as long as no more than half of the converting projects are covered under the Portfolio Award.
- Joint Application under a Choice Neighborhoods Initiative (CNI) Implementation Notice of Funding Availability (CNI NOFA). A CNI Implementation NOFA applicant wishing to submit a joint RAD/CNI Implementation NOFA application must designate in the Housing Strategy section of their CNI NOFA application that their application is a joint RAD/CNI application, as well as provide a letter affirmatively requesting the housing project(s) name and PIC Development Number and the number of standing public housing units that the PHA wishes to convert under RAD. In such cases, the CNI NOFA Application date shall be considered the date of application for RAD. Subject to a review of the criteria in Section 1.3 of this Notice and collection of additional information as needed, Joint applications will be issued a CHAP or, if RAD authority is unavailable, will be placed on the waiting list, for each project identified in their joint application and will lock in the applicable contract rents in the year of the application submission for projects covered by the Application, whether or not they are awarded the CNI implementation grant. Recipients of Joint RAD/CNI Awards shall still be required to fulfill all milestones for each CHAP, unless HUD issues extensions for good cause. CNI applicants may submit a separate RAD application for a project ahead of the CNI NOFA Application date, in order to secure a CHAP under the RAD cap. If a RAD application is sent by a CNI applicant ahead of their CNI application, pending the CNI award, milestones will be adjusted to match the CNI timeline.
- Submission of Letter of Interest When a Waiting List Has Formed. Commencing 30 days following publication of this Notice and thereafter during any period when HUD is maintaining a waiting list pursuant to Section 1.10, in lieu of a RAD Application, a PHA may submit a letter of interest signed by the PHA’s Executive Director to RADapplications@hud.gov that identifies all of the properties (PIC # and name) and associated ACC units that the PHA is proposing for conversion. Such a submission would reserve the PHA’s spot on the waiting list under the lowest priority category described in Section 1.11 in the order in which the letter was received. In anticipation of HUD’s ability to make additional awards, HUD will notify the PHA that it must submit a complete RAD Application, Portfolio Award, or Multi-phase award, and comply with all the application provisions of this Notice, within 60 days of such notification or forfeit its position on the waiting list. PHAs may consider submitting complete RAD Applications separately for properties in its conversion portfolio that would fall under a higher priority category so as to achieve a higher position on the waiting list.
HUD recognizes that in order to secure and administer debt and equity sources, and oversee the successful completion of significant rehabilitation, the PHA or Project Owner will have to either dedicate experienced staff, if such experience currently exists on staff, or hire or contract for the expertise necessary to successfully complete rehabilitation on schedule and on budget. The Development Budget included in the Financing Plan may include a developer fee to address these costs according to the following requirements:
This Section explains the alternative processing requirements that certain very small PHAs may voluntarily adopt.
- Milestones and Financing Plan. For every project that receives a CHAP, the PHA must submit a Financing Plan. See Attachment 1A for Financing Plan Requirements. For all CHAP awards made prior to January 1, 2015, the Financing Plan is due according to the existing agreement between the PHA and HUD as reflected in the RAD Resource Desk. For CHAP awards issued after January 1, 2015, the Financing Plan is due according to the instructions below and for purposes of Financing Plan Milestones, the term “CHAP issuance date” refers to the later of the issuance of the CHAP or July 15, 2015. The Financing Plan must be submitted prior to the following milestone deadlines (all days are expressed in calendar days):
- For non-LIHTC, FHA transactions, the Application for Firm Commitment, in lieu of the Financing plan, is due 180 days following the CHAP issuance date.
- In all other non-LIHTC transactions, the Financing Plan is due 180 days following the CHAP issuance date.
- For 4% LIHTC transactions the PHA must submit evidence that it has applied for LIHTC and completed the required components of the CAN (see Section 1.4.A.1) no later than 180 days following CHAP issuance date. HUD may provide additional time for projects in states without rolling 4% LIHTC awards. The Financing Plan (or FHA Application for Firm Commitment) is then due within 90 days of the 4% award.
- For 9% LIHTC transactions, the PHA must submit evidence that it has applied for 9% LIHTC within 30 days following the application submission deadline for the first available 9% LIHTC round in their state to occur after a 90 day grace period after the CHAP issuance date.63 Following notification of its 9% LIHTC award, the Financing Plan (or FHA Application for Firm Commitment) is then due within 180 days following the 9% LIHTC award. If the PHA’s applications for 9% tax credits is unsuccessful, the CHAP will be terminated unless, within 30 days of notification, the PHA:
- Demonstrates that it diligently pursued 9% tax credits, as evidenced by the score and ranking in the unsuccessful 9% application or by other means at HUD’s discretion and
- Proposes a financing strategy that does not rely on 9% tax credits and that is feasible in HUD’s sole discretion. HUD will re-establish a Financing Plan due date based on the proposed financing.
- For any transaction that involves a transfer of assistance, the PHA has 90 days to identify the site to which assistance will be transferred and must submit to HUD documentation demonstrating that the site meets the criteria for transfers of assistance set forth in this Notice. The Financing Plan due date will be adjusted accordingly to permit time to identify the site.
The above timeframes reflect the additional complexity and due diligence requirements associated with tax credit transactions, which often also involve multiple financing sources.
At the same time, these timeframes recognize the fact of limited RAD authority and the desire of the Department to demonstrate early results. Once the credits are awarded, the design of the LIHTC program, and the motivation of the different development partners, encourages the project to move expeditiously to closing.
The Financing Plan due date for each transaction will be established by HUD after CHAP award and recorded in the RAD Resource Desk. Approval of extensions is at HUD’s sole discretion. Extensions will not be approved if the delays resulted from factors that are within the PHA’s control.
HUD will expedite the processing of all awards made pursuant to the first four Priority Categories listed in Section 1.11.C.1.
A Financing Plan must be substantially complete in order for HUD to consider the submission timely.64 A PHA that fails to submit a complete Financing Plan within the above time-frames may have its CHAP revoked.
HUD’s decisions regarding the acceptance of the Financing Plan will be made in HUD’s sole discretion. If HUD determines that a Financing Plan is not feasible and/or that the requirements of the Financing Plan as set forth in Attachment 1A have not been met, the PHA will have 30 days to make corrections that satisfactorily address HUD’s concerns. If a Financing Plan is not accepted, HUD’s letter of disapproval will contain recommendations, if any, that may result in an acceptable Financing Plan.
A PHA will be notified of HUD’s acceptance of the Financing Plan by the issuance of an RCC, conditioned upon firm commitment of financing from the lender on substantially the same terms as those presented with the Financing Plan.65 The RCC will outline the key components of the planned RAD conversion and the conditions that need to be satisfied in order to close the conversion. The RCC will be a template document not subject to negotiation.
The PHA will have 30 calendar days from the date of issuance of the RCC to execute the RCC and return it to HUD. If the RCC is not returned in this time period, it will expire.
Once the RCC is executed, HUD expects that the RAD conversion will close in a timely manner. The RCC will allow 90 calendar days (from the date the RCC is issued to the PHA) in which to close.
The RCC sets out the requirements of the transaction that will ultimately be concluded at Closing. These requirements include such items as: the number of affordable housing units being converted, the HAP Contract rents, the choice of PBRA or PBV HAP Contract, financing terms and Sources and Uses, and special conditions that must be cleared before closing. The terms of the RCC survive Closing.
- For non-LIHTC transactions, the developer fee may be up to 10 percent of the total development budget (all hard costs and reasonable soft costs), less developer fee and reserves and less any acquisition costs in non-arms-length acquisitions, e.g., transfers of property title to related or wholly-owned entities for the purpose of meeting single asset entity ownership requirements. The release of the developer fee will be made on the schedule proposed by the PHA and accepted by HUD in the Financing Plan.
Development cost overruns that exceed funded contingencies may be drawn from any unearned and unreleased portion of the developer fee, and may therefore reduce the ultimate fee paid.
- In LIHTC transactions (with or without private debt), the developer fee will be subject to the LIHTC allocating agency’s limitations on developer fees. The undeferred portion of such developer fee (as documented in the LIHTC cost certification) may not, without HUD approval, exceed the greater of:
- 15 percent of the total development costs less acquisition payments made to the PHA, developer fee and reserves.
- The lesser of $1,000,000 or 15 percent of the total development costs without offset for acquisition payments made to the PHA, developer fee and reserves.
The limits on developer fee in effect prior to the issuance of this Notice shall apply to all transactions with an RCC issued prior to sixty (60) days after the date of this Notice which also close prior to the later of sixty (60) days after the date of this Notice or sixty (60) days after the date of the RCC.
- Where the Contract Administrator agrees to adopt an admissions preference for a) homeless applicants referred to the property by the local Continuum of Care (CoC) and/or b) applicants exiting permanent supportive housing, which preference shall apply to at least 25% of the property’s units, HUD will permit a 25% increase in the allowable development fee limits described above. The fee will remain subject to the LIHTC allocating agency’s limitations, as applicable. The PHA or Project Owner must provide evidence of an agreement to participate in coordinated entry operated by the local Continuum of Care (CoC) and must produce a letter from the CoC affirming, based on current data and local need, that there is expected to be need for affordable housing for these populations for the term of the HAP contract. In such cases, HUD will require a special provision in the HAP contract governing the continued existence of this preference through the term of the HAP contract.
The preference must apply to applicants that fall within the definition of Homeless established by section 103 of the McKinney-Vento Homeless Assistance Act and implemented in the Continuum of Care Program Rule at 24 CFR § 578.3, unless the local CoC provides a letter of support to cover a homeless population not included in that definition.
The developer fee shall be payable on the schedule allowed by the allocating agency and/or equity investor. Earned developer fees are not subject to any federal restrictions. Development cost overruns that exceed funded contingencies may be drawn from any unearned and unreleased portion of the developer fee, and may therefore reduce the ultimate fee paid.
- Eligibility for Streamlined Project Conversion. In addition to the eligibility requirements outlined in Section 1.3, of the RAD Notice, a PHA must meet the following criteria to participate in a streamlined RAD conversion as verified by HUD in its existing systems and records. Unless otherwise approved by HUD, a PHA must:
- Have 50 or fewer units remaining in its public housing inventory and demonstrate that through RAD or other means (e.g., Section 18 Demolition or Disposition) it will remove all of the public housing units under its ACC;
- Have an overall PHAS (Public Housing Assessment System) score of 75 or higher; have a PASS (Physical Assessment Sub-System) score of 30 or higher; and not have a PHAS substandard designation or a PHAS Capital Fund troubled designation;
- Not propose as part of the conversion to perform any construction or rehabilitation on the property, to undertake relocation, or to transfer the assistance.
- For PBV conversions, select a Contract Administrator that has at least 100 units under its HCV ACC.
- Streamlined Project Conversion Requirements. The following describes the requirements of the RAD Notice that are modified or do not apply to streamlined RAD conversion.
- Application Requirements. Requirements set forth in Section 1.9 of the RAD Notice are modified for Streamlined RAD conversions (and other classes of conversions as HUD determines) eliminating the need for information on financing, a financing letter of interest, and, for public housing-only PHAs, identification of a partnering voucher agency. To ensure appropriate processing, the subject line of the email submission to RADapplications@hud.gov should include “Small PHA”.
- Capital Needs Assessment (CNA). Requirements set forth in the RAD Notice, Section 1.4.A.1 shall not apply. In lieu of a CNA, see below the required certification that must be included with the “Financing Plan.” The requirements set forth in Notice H 2016-17, PIH 2016-17 (HA), Rental Assistance Demonstration (RAD) Notice Regarding Fair Housing and Civil Rights Requirements and Relocation Requirements Applicable to RAD First Component – Public continue to apply. Notwithstanding this exemption from the requirement to conduct a CNA, the PHA should have certified in its PHA Plan, Significant Amendment to the PHA Plan, or MTW Plan that it conducted a site review/inspection of the project with respect to accessibility for persons with disabilities and that the site is consistent with applicable accessibility standards under the Fair Housing Act, Section 504 of the Rehabilitation Act, and the Americans with Disabilities Act, as required by Section 5.2 of Notice H 2016-17, PIH 2016-17 (HA), Rental Assistance Demonstration (RAD) Notice Regarding Fair Housing and Civil Rights Requirements and Relocation Requirements Applicable to RAD First Component.
- Environmental Review. For Environmental Reviews conducted under 24 CFR Part 50 for Streamlined RAD conversions without any repair, rehabilitation, construction, or demolition, HUD will conduct a tiered review, in which HUD will make program-wide compliance determinations for most of the applicable environmental laws and authorities and complete only a site-specific compliance review of the remaining laws and authorities for the streamlined conversion. PHAs will be required to submit documentation to facilitate HUD’s site-specific review. Forthcoming guidance on the tiered environmental review will be provided by HUD. For Environmental Reviews under 24 CFR Part 58, PHA/Owners should reach out to the responsible entity. HUD encourages responsible entities to consider a tiered approach.
- Financing Plan Requirements for Streamlined RAD Conversion. The following table describes the applicability of the Financing Plan submission requirements set forth in Attachment 1A of the RAD Notice for Streamlined Conversion for small PHAs. 71
|Financing Plan Requirements for Streamlined RAD Conversion for Small PHAs||Applies||Does Not Apply||Modified|
|A. Type of Conversion. The PHA must identify whether the project will covert to PBV or PBRA as described in Attachment 1A of the RAD Notice.|
|B. Capital Needs Assessment (CNA). Section 1.4.A.1 of the RAD Notice is waived for Streamlined Conversions. However, the PHA must provide a certification from its Board that:
|C. Scope of Work. Does not apply.|
|D. Environmental Review. Section 1.4.A.3. and Attachment 1A of the RAD Notice are modified for Environmental Reviews required under 24 CFR Part 50 to allow for a tiered Environmental Review. See Section 1.15.B.iii. above.|
|E. RAD Fair Housing, Accessibility & Relocation Checklist. As applicable to the proposed conversion plans, the PHA must complete and submit the checklist as described in Attachment 1A of the RAD Notice.|
|F. Sources & Uses. Requirements set forth in Attachment 1A of the RAD Notice do not apply except that all of the PHA’s remaining public housing funds must be reflected in a Sources and Uses statement (e.g. used to cover any conversion-related cost or placed into an initial deposit to the replacement reserve), with the exception of any funds needed to address the public housing closeout in accordance with PIH 2016-23. Any public housing funds that are retained under public housing and not used to cover the cost of administrative activities required to terminate the ACC as described in PIH 2016-23 will be remitted to HUD.|
|G. Development Team. Does not apply.|
|H. Proposed Financing. Does not apply.|
|I. Operating Pro-Forma. The PHA must submit an operating pro-forma that meets all existing requirements except that annual replacement reserve deposits must equal or exceed $500 per unit, unless otherwise approved by HUD and justified by a third-party assessment report.|
|J. Market Study. Does not apply.|
|K. Approval of Significant Amendment to PHA Plan. All Requirements for RAD Specific PHA Plan and/or Significant Amendment Submission set forth in Attachment 1D of the RAD Notice shall apply.|
|L. Pre-Approval of Specific Activities. Requirements set forth in Attachment 1A of the RAD Notice shall apply.|
|M. Approval of Non-Dwelling Real Property. Does not apply. In order to facilitate the complete conversion of the PHA, all non-dwelling property and land possessed by the PHA will be removed from the DOT or DORC and from the ACC and shall be encumbered by the RAD Use Agreement or released under 2 CFR 200.311(c).|
|N. Approved Amendment to Attachment A of the MTW Agreement. See Footnote in Section 1.15.B.iv|
|O. Affirmative Fair Housing Marketing Plan (AFHMP). Applies only for PBRA conversions, as set forth in Attachment 1A of the RAD Notice.|
|P. Estimated public housing funds available for HAP subsidy. Submission requirements set forth in Attachment 1A of the RAD Notice shall apply.|
|Q. Transfer of Assistance. See Footnote 2.|
|R. Resident Comments. Submission requirements set forth in Attachment 1A of the RAD Notice shall apply. Furthermore, All Resident Participation and Funding requirements set forth in Attachment 1B of the RAD Notice shall apply.|
|S. Title Report. Submission requirements set forth in Attachment 1A of the RAD Notice shall apply.|
- Low-Income Housing Tax Credits (LIHTCs). Applicants are encouraged to use LIHTCs and, if eligible, historic preservation tax credits, to support recapitalization. Covered Projects may be eligible for HUD’s Multifamily Low Income Housing Tax Credit Pilot Program (Notice H 2012-1), which offers a distinct application platform and a separate processing track under the FHA Section 223(f) program described above.20 RAD does not prohibit excess equity proceeds from being used to support other Affordable Housing Purposes.
Many states face excessive demand on an annual basis for allocations of 9% LIHTCs and routinely do not fully allocate their supply of 4% as-of-right credits coupled with tax-exempt bond financing allowed under their annual Private Activity Bond Volume Cap. Applicants are encouraged to assess local demand and supply considerations if proposing to utilize LIHTCs and to discuss their interest in applying for LIHTCs as soon as possible with state or local tax credit issuing agencies to obtain guidance on how to compete for awards most effectively.
While the applicant must indicate in its application if it intends to use tax credits, there is no requirement to have secured these credits prior to submitting an application. Note that, for 9% credits, there are special application requirements that are described in Section 1.9 of this Notice.
Your search did not return any document references on Tax Credits.
HUD 2530s for LIHTC InvestorsCan you clarify who needs to provide HUD 2530s in regards to a low income housing tax credit investor?
The RAD applicant is responsible for providing all 2530/APPS submissions. Note that LIHTC investors may qualify for 'passive investor' status in APPS. See http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/apps/appsmfhm. Passive investors can make a limited submission in APPS.
Lender and Investor Concerns Regarding ForeclosureHow is RAD responding to concerns of commercial lenders and Low-Income Housing Tax Credit (LIHTC) investors with regard to foreclosure matters and continued rental assistance?
HUD has posted a standard rider to the public housing conversion RAD HAP contracts to address the concerns LIHTC investors have raised while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. These riders document and set forth conditions for: providing notice to LIHTC investors; accepting the investor’s offer to cure on behalf of a defaulted owner; providing HUD consent to the transfer of the investor’s interest in the ownership; and pre-approving replacement of the general partner or managing member with the special limited partner or similar entity for a limited period of time in order to facilitate an acceptable permanent replacement. To access these riders, go to www.radresource.net > Contracts & Closing Documents. HUD is also in the process of drafting standard riders to the Use Agreement and the public housing conversion RAD HAP contracts to clarify that HUD will not assert an interest to prohibit a lender from foreclosing when there is cause, but that the Use Agreement -- which establishes affordability requirements -- survives foreclosure by its terms and that continuation of HAP assistance requires HUD consent. It is also HUD’s goal through these riders to provide for a limited continuation of HAP assistance if the lender or its designee comes into ownership of the project in accordance with its rights under the loan documents. When final, these riders will be published on the RAD website. Until these riders are finalized, HUD has developed several provisions that can be provided by the RAD Closing Coordinator to assist with transactions currently moving into the closing phase. These provisions address lender concerns while also protecting the long term affordability of properties converting under RAD, and adhering to the statutory provisions for ownership and control. Importantly, neither rider changes RAD statutory and RAD notice requirements around ownership and control. The RAD Use agreement and RAD HAP contract – two means through which long-term affordability for residents are secured – survive foreclosure, leaving current and future residents protected.
Subsidy Layering Review formI'm working on a LIHTC transaction. The HFA has agreed to do the subsidy layering review. Is there a form that HUD would prefer the HFA use?
No. HUD does not have a subsidy layering form for external parties to use. The HFA should perform the subsidy layering review in accordance with their existing internal process.
LIHTC GuaranteesCan a Housing Authority provide the guarantees in a LIHTC deal.
The RAD program neither requires nor prohibits a PHA from providing these guarantees.
Next Steps for Project Not Awarded 9% Tax CreditsWhat are the specifics of HUD’s decision to issue a new Financing Plan due date if the project is not awarded credits in current round and needs more than 30 days to established a financing strategy that does not include 9% credits? Notice states that the decision is based on score and rank. What does "score and rank" refer to?
If the PHA’s applications for 9% tax credits is unsuccessful in the first tax credit round that begins 90 days after CHAP issuance, the CHAP will be terminated unless, within 30 days of notification, the PHA demonstrates that it diligently pursued 9% tax credits, as evidenced by the score and ranking in the unsuccessful 9% application OR proposes a financing strategy that does not rely on 9% tax credits and that is feasible. “Score and ranking” refers to the QAP score and rank within the LIHTC application round. Typically projects are rated and ranked based upon how well the project met the priorities and criteria set forth in the state’s QAP and the top scoring applicants are awarded LIHTCs. The PHA would need to submit evidence showing that their project received a high QAP score and ranking but still did not receive the credits due to the competiveness of the round.