On July 27, 2023, HUD’s Office of Multifamily Housing Programs sent out the following information:

Today, HUD published a Supplement to the RAD Notice, which makes discrete changes to the RAD Notice. Among other changes, this Supplement implements additional budget authority and additional flexibilities to augment initial contracts rents for Section 202 PRAC conversions; strengthens and expands resident engagement requirements; establishes new energy efficiency and climate resilience standards and requirements; and makes it easier for PHAs to use “RAD & Section 18 Blends” or the new “Faircloth-to-RAD” process to transform and expand their affordable housing stock. HUD has also created a blackline version of the RAD Notice for users’ convenience. See the press release here.

See below for a summary of key changes made in the Supplement and information on the upcoming live webinar where we will provide a deeper presentation of the changes and answer your questions.

Key Changes

  • Contract Rent Flexibilities for 202 PRAC Conversions.
    • Makes available funds provided through the FY 22 and FY 23 Appropriation acts in order to provide contract rent increases that will support greater financing to enhance climate resilience, energy and water efficiency, and housing design that will allow the elderly to age-in-place.
    • Implements waiver authority to ensure the continuation of resident services previously provided at Section 202 PRAC properties converting through RAD and to avoid reductions in rental subsidy.
    • Creates an incentive for owners to make efficiency improvements for utilities paid by tenants by extending the tenant-paid utility savings provision used in public housing conversions to PRAC conversions.
  • Expanding “Faircloth-to-RAD” Tools To Unlock New Affordable Housing.
    • For properties that meet certain conditions, allows PHAs to utilize HAP reserves to augment RAD rents at conversion or to use other flexibilities such as the Opportunity Zone Rent Boost
    • Sets forth alternative resident notification and engagement procedures for PHAs utilizing Faircloth-to-RAD
    • Allows PHAs utilizing Faircloth-to-RAD to reserve RAD conversion authority without the use of a Portfolio Award
  • Strengthening Resident Engagement Requirements: Learning from best practices used by PHAs across the country and supported by residents and advocacy groups, the Supplement expands the resident engagement requirements for public housing conversions to ensure residents are better informed and engaged throughout the RAD conversion process through meetings and notices. Additionally, the Supplement provides additional tools for HUD to monitor resident engagement through, for example, additional submission requirements.
  • Housing Quality Standards (HQS): For public housing conversions to PBV, clarifies applicability of HQS during the RAD Scope of Work rehab period for occupied units and adds a certification requirement regarding the condition of the unit prior to placing units and making payment under the HAP Contract. The Supplement also extends these requirements to non-RAD PBV units at the same project.
  • “Zero HAP” Residents: Amends the treatment of households whose total tenant payment (TTP) exceeds the Gross Rent on the RAD HAP Contract, including public housing families present at the time of conversion and families newly admitted to converted properties after conversion.
  • Energy Efficiency and Climate Resiliency:
    • Raises minimum energy efficiency standards applicable to new construction activities by reference to updated energy codes incorporating higher, cost-effective standards.
    • Requires ownership teams to address climate risks in their scope of work and to create a property-wide disaster response plan.
    • Requires new construction buildings to be designed consistent with the Federal Flood Risk Management Standard addressing mechanicals, residential units, and non-resident space.
  • Harmonizing radon policies for All RAD conversions. This Notice eliminates previously available exemptions, subjecting all RAD converting projects (PBRA and PBV) to radon testing requirements.
  • Removing Barriers to Utilizing RAD & Section 18 Blends:
    • Creates an additional definition of “high-cost areas” used to set eligibility for one of the RAD & Section 18 Construction Blends.
    • For RAD & Section 18 Small PHA Blends, provides criteria for local field offices to approve PHAs to administer resulting contracts when the PHA’s voucher program size is under 250.
    • Exempts non-RAD PBV units from a PHA’s program cap when used in conjunction with a RAD Transfer of Assistance
    • Exempts non-RAD PBV units in a Blend from PBV owner selection provisions when another PHA is administering the resulting contracts
    • Applies the same HQS Inspection protocol to both the RAD and the Section 18 units in a RAD/Section 18 Blend.

Altogether, these changes will make RAD a more robust and effective tool to transform the affordable housing stock and protect residents and communities. Building on prior successes – over 230,000 deeply affordable units preserved across all components of RAD and over $17 billion raised to improve the quality of homes for families – HUD continues to seek ways to make RAD a more effective tool for communities across the country.

We will provide a live webinar in the coming weeks to provide an overview of the RAD Supplemental Notice on Wednesday, August 9, 2023. Register Here.