Rental Assistance Demonstration (RAD) Program

Transcription

1 Rental Assistance Demonstration (RAD) Program July 2013

2 RAD Program HUD Rental Assistance Demonstration (RAD) Program The State of Illinois through the Department of Commerce and Economic Opportunity (DCEO) has been working to promote responsible energy programs that increase energy efficiency in affordable housing units statewide. DCEO offers grants for energy efficient building practices in the upgrading and/or rehabing of existing buildings or in the construction of new affordable housing units. The two programs are: The Energy Efficiency Affordable Housing Construction Program offers grants to Illinois based non-profit and for-profit housing developers to include energy efficient measures in the gut rehab or new construction of affordable housing units. This grant helps offset the incremental cost of going from typical construction to energy-efficient construction. Funding is only available for residential units. Applicants must implement all energy cost reduction measures listed in the program guidelines and application. Applicants have up to two years to implement all measures. The grant term and performance period is determined on a project specific basis. For more information, please visit: for more information. The Public Housing Authority (PHA) Efficient Living Low-Income Program offers grants to PHAs in Illinois and their residents for the implementation of energy efficiency measures in existing buildings. Only PHAs are eligible to be applicants and may select measures to implement according to criteria listed in the program guidelines and application. Funding is available for both residential units and common areas. Applicants have the current program year to implement all measures. The program year runs June 1 to May 31. For more information, please visit: for more information. EFFICIENT LIVING Illinois PHA Energy Program

3 The following is a listing of frequently asked questions (FAQ) to determine which of the two DCEO Affordable Housing Low-Income Energy Efficiency Programs fits with your RAD Project. What is the RAD Program? RAD is a voluntary program where Public Housing Authorities (PHAs) may apply and be selected to convert public housing units to long-term Section 8 Project Based Vouchers (PBV) or Project Based Rental Assistance (PBRA) units. During this transformation, Low Income Housing Tax Credits (LIHTCs) and/or private financing may be used to provide the funding necessary to modernize these units. The goals of the program are to Improve and preserve public housing units, provide more stable funding to public housing authorities, and offer residents greater choice & mobility in where they live. What type of RAD Projects are eligible for the program? PHAs may apply the following types of projects to the RAD program: Minor rehabs Major rehabs New construction Mixed income Mixed use When 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 Housing Assistance Payments (HAP) contract, which is the first of the month following closing. Under the RAD program can we do New Development? A RAD conversion involves removing a specified number of units from your Annual Contribution Contract (ACC) and replacing them with the same number of units under a PBRA or PBV contract. That is, RAD does not result in an increase in the total number of units with ACC / PBRA / PBV rental assistance. Accordingly, in RAD, new construction would typically be limited to situations in which the PHA wants to create new units to replace existing ACC units. Can a RAD project take on an Energy Performance Contract (EPC) after RAD closing? After the RAD closing, the project will no longer be public housing, and the public housing EPC program would not be applicable. However, many PHAs are finding that RAD allows them, essentially, to create their own EPC. By locking in the current funding under RAD, the PHA will benefit from utility savings.

4 After a RAD conversion, is it correct that utility savings would accrue to the new ownership entity? If so, can those savings be used to support new first mortgage debt? What information is required in order to document expected utility savings? Yes, utility savings accrue to the project owner. Yes, utility savings can be used to support new mortgage debt (assuming your lender agrees). For FHA financing, the RAD PCA will be sufficient to meet the lender s requirements for documenting the expected utility savings. If you plan to utilize non-fha financing, check with your lender (and LIHTC investor, if applicable) regarding the level of documentation that the lender (or investor) will need. My RAD transaction is expected to generate $500,000 of excess proceeds, which the PHA understands must be used to further its mission. Will any additional HUD requirements apply to these funds (e.g., would these funds have to be considered PHA Reserve funds)? No additional HUD requirements would apply. As indicated, those funds must be used for purposes consistent with the PHA s mission, state-enabling legislation, and any local laws, if applicable. Can PHAs put RAD Developments up for sale? If so, what will be some of the requirements? A RAD converted development must remain under public or non-profit ownership, except in rare cases of foreclosure or bankruptcy, or when tax credits are used. However, even when tax credits are used, the PHA must maintain sufficient interest in the project as defined in PIH Notice REV 1. The RAD Use Agreement requires HUD permission for the PHA to transfer the project. EFFICIENT LIVING Illinois PHA Energy Program

5 Project Assessment Form Project Assessment Form To decide which program best meets your RAD project needs, please provide the following information: What type of RAD Project are you applying for? Minor rehab Major rehab New construction Mixed income Mixed use Which organization will manage the property? Local PHA Private Developer Non-profit Private Contractor Partnership When do you anticipate to begin the project? What is the total number of Assisted Housing Units Planned? If planning a mixed-income project, please provide the number of units for each category breakdown: total units for Market-rate housing total units for 80% below area median income total units for 50% below area median income total units for 30% below area median income Will the project include Mixed-Use buildings? Yes No Is this a multi-phase conversion project? Yes No What percentage of the project will be focused on non-living areas? (ex. Common areas, laundry facilities, lobby) How long do you anticipate the project to take? (Reverse)

6 Project Assessment Form Is this a Low Income Housing Tax-Credit Project (LIHTCs)? Yes names of the tax credit partners? No If yes, what are the If a LIHTC, what entity maintains control of the land and buildings (PHA or partner)? Is this conversion to private financing without LIHTC? Yes No If yes, what is the source of the private financing? What entity owns and maintains control of land and buildings? If applying for the PHA Efficient Living Program, can you successfully implement all measures within the program one year timeframe? Yes No If applying for the Energy Efficiency Affordable Housing Construction Program, can you successfully implement all required measures within the program s two year timeframe? Yes No Questions? Contact Kate Brown at cbrown4@illinois.edu or call (217) Completed forms may be ed or faxed to (217) EFFICIENT LIVING Illinois PHA Energy Program