HUD to Begin Issuing RAD CHAPs under Expanded Cap

Following the increase in the Rental Assistance Demonstration (RAD) cap to 185,000 units, HUD has begun issuing Commitments to Enter into Housing Assistance Payments Contracts (CHAPs) for applicants who have been on the RAD 1st Component waiting list. All award letters are expected to be issued in March. However, CHAP milestones will not begin until the later of the date of award or the publication of the upcoming revisions to the RAD Notice (expected in early spring).

HUD has published a “Welcome Guide” for all new awardees. The purpose of the guide is to offer advice and suggestions regarding the various key steps associated with a successful conversion. HUD recommends all awardees and their development partners read the guide. A copy of the Guide can be accessed here.

HUD Trains Teams of Underwriters on RAD, LIHTC Deals

HUD updated constituents on its changes to RAD under the 2015 funding plan. Teams of FHA/RAD underwriters in Seattle, Chicago, Atlanta, and Fort Worth are being trained to meet the unique timelines and complexities of RAD and LIHTC deals. The teams were assembled following HUD’s decision to lift the cap on RAD to 185,000 units.

HUD Outlines Changes to RAD Under 2015 Funding Plan

The U.S. Department of Housing and Urban Development (HUD) released a notice in the Federal Register announcing its plan to implement changes made to the Rental Assistance Demonstration (RAD) program in the 2015 HUD Appropriations Act.  HUD notes that the agency will review applications as quickly as possible, and may award Commitments To Enter Into Housing Assistance Payment Contracts (CHAPs) to projects with approaching financing deadlines ahead of other projects on the wait list in order support successful conversions.  Given the passage of time, HUD will allow applicants to amend or update applications.

HUD will accept comments on the Federal Register notice through March 2, 2015.

HUD’s original plans to implement the 2015 HUD Appropriations Act as it relates to the Rental Assistance Demonstration (RAD) are as follows:

1st Component

  • Subject to re-review of their eligibility status, applications on the RAD waiting list that previously received Contingent Approval Letters will be issued Commitments to enter into Housing Assistance Payments (CHAP) contract awards. The Department expects to begin issuing these CHAPs in February 2015.
  • For all other applications previously submitted, once their review is complete and they are determined to be eligible, a CHAP will be issued.
  • RAD rents will be set according to FY 2014 Funding Levels.
  • Because Congress extended the date for which RAD awards could be made to September 30, 2018, the Department will also extend the submission dates for portfolio and multi-phase applications, accordingly.
  • With the conversion limit increased to 185,000 units, the Department expects that there will be approximately 8,000 units that will be available to applications not yet submitted. The Department will continue to accept applications on a first-come, first-serve basis.
  • Once the Department reaches the cap of 185,000 units, it will maintain a waiting list.
  • Following CHAP issuance, the Department will be conducting regional RAD training sessions for all awardees. These sessions will be voluntary, but strongly encouraged.
  • Based on feedback received from program participants, the Department is examining a number of suggestions for streamlining transactions, which will be addressed through further guidance.

2nd Component

  • The Department will continue to process all active applications received under the 2nd component.
  • Owners may continue to submit conversion requests for Rent Supplement (Rent Supp), Rental Assistance Payment (RAP), and Moderate Rehabilitation (Mod Rehab) properties.
  • A revision to the RAD Notice will establish program requirements for conversion to Project Based Rental Assistance (PBRA). The Department expects to publish this revision by March 1, 2015.
  • Revised guidance on contract extension for Rent Supp and RAP contracts will be published on or before March 1, 2015. In the interim, the Office of Recapitalization will be reviewing rent supplement and RAP contract extension requests on a case-by-case basis.
  • Guidance on applicability of Davis-Bacon requirements for 2nd Component transactions has now been posted to the RAD website.

Moderate Rehabilitation (Mod Rehab) SRO

A revision to the RAD Notice will establish program requirements for conversion of Mod Rehab McKinney SRO properties to either PBRA or Project Based Vouchers (PBV) contracts under either component. The Department expects to publish this revision by March 1, 2015.