HUD Releases Supplemental RAD Notice

Today, the U.S. Department of Housing and Urban Development (HUD) released its highly anticipated Supplement to the RAD Notice (Supplement), which makes a number of changes to the current Rental Assistance Demonstration (RAD) notice that are anticipated to improve certain components of the RAD conversion process, particularly the Faircloth-to-RAD and Section 18 Blend conversions. Faircloth-to-RAD involves the creation of new public housing units under a housing authority’s “Faircloth limit” and subsequent conversion to RAD. A Section 18 Blend involves the use of both RAD project-based vouchers (PBVs) and non-RAD PBVs, combining RAD and HUD public housing dispositions at the same site. Highlights of the Supplement are below.

Faircloth-to-RAD Modifications:

• Resident notification and engagement procedures are updated.
• HAP reserves may be used to augment RAD rents when certain conditions are present.
• RAD conversion authority may be reserved by housing authorities outside of a portfolio award.

RAD Section 18 Blend Modifications:

• Revises the definition of “high-cost areas” for purposes of determining the percentage of Section 18 units that may be included in a RAD Section 18 Blend.
• For Blends implemented by small PHAs with less than 250 PBVs, authorizes local field offices to approve those small PHAs to administer the PBV contracts.
• Exempts non-RAD PBV units at a Blend project from being counted towards a PHA’s PBV program cap when used in conjunction with a RAD transfer of assistance.
• Exempts both RAD and non-RAD PBV units in a Blend from the PBV competitive selection requirements. This exemption is in addition to other existing exemptions authorized under statute and the HOTMA Implementation Notice.
• Revisions are made to apply the same HQS inspection protocol to both the RAD and the Section 18 units in a RAD Section 18 Blend.

Other Modifications:

• A number of RAD projects have had issues regarding the proper amount to charge a family when that family’s total tenant payment would exceed the gross HAP rent. The supplement provides modifications to try to resolve such issues by creating alternate rents for these so-called “Zero-HAP” families.
• New energy efficiency and climate resilience requirements are added, effective for transactions that have not submitted a complete RAD Financing Plan within 30 days of the effective date of the Supplement.
• Makes funds available for contract rent increases for 202 PRAC conversions to RAD.

The Supplement is effective immediately upon publication in the Federal Register. HUD will also accept comments at RAD@hud.gov for 30 days after publication.

Ballard Spahr is a national leader working at the forefront of the legal and business elements of affordable housing and community development, including affordable housing development and preservation. Our attorneys ensure that clients get the most benefit from transactions and help navigate shifts in the market, regulatory obligations, and government incentive programs. Please reach out if you have questions, or visit us at our Affordable Housing and Community Development web page.

Copyright © 2024 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.