Public housing is a key part of affordable housing programs throughout the United States. However, public housing units across the country have been underfunded by Congress for many years. As a result, necessary maintenance and repairs for public housing units have been perpetually delayed. In fact, public housing units across the country need more than $30 billion in repairs. Because of this, an average of 10,000 public housing units are lost per year, primarily due to disrepair and unsafe housing conditions.
In response to these serious needs, Congress enacted the Rental Assistance Demonstration (RAD) in 2012 to preserve and improve public housing buildings. RAD is the voluntary, permanent conversion of public housing to the Section 8 housing program. Unlike the public housing program, the Section 8 housing program allows for more funding flexibility, including the use of other funding sources like tax credits in addition to public funds, to maintain and improve existing public housing buildings. RAD also guarantees strong tenant protections that tenants had under the public housing program.
Five Things You Should Know About RAD Public Housing Conversions
RAD allows public housing agencies to leverage public and private debt and equity in order to reinvest in the public housing stock. This is critical given the 25.6 billion dollar backlog of public housing capital improvements.
In RAD, units move to a Section 8 platform with a long-term contract that, by law, must be renewed. This ensures that the units remain permanently affordable to low-income households.
Residents continue to pay 30% of their income towards the rent and they maintain the same basic rights as they possess in the public housing program.
RAD maintains the public stewardship of the converted property through clear rules on ongoing ownership and use.
The RAD program is cost-neutral and does not increase HUD’s budget. This program simply shifts units from the Public Housing program to the Section 8 program so that providers may leverage the private capital markets to make capital improvements.
BHA’s RAD Story
In March 2018 the Bloomington Housing Authority (BHA) submitted applications for U.S. Department of Housing and Urban Development (HUD) for its three public housing communities, Crestmont, Reverend Butler, and Walnut Woods development to be considered for conversion to HUD’s Rental Assistance Demonstration (RAD) program. A RAD conversion offers BHA needed flexibility to protect its affordable housing stock and financially stabilize BHA’s properties in the face of substantial and continued cuts to HUD’s Federal Public Housing Programs.
On May 12, 2020, BHA announced the closing of $17.8 million in funding for the preservation and renovation of 116 units at their Reverend E.D Butler and Walnut Woods Communities in Bloomington, Indiana. Thanks to an allocation of $11 million in Tax Exempt Bond Volume Cap and a low-income housing tax credit allocation from the Indiana Housing and Community Development Authority (IHCDA), and the sale of those credits to Cinnaire for $5.28 million along with construction and permanent financing from BMO Harris Bank for $6.1 million, all units in these former public housing communities will undergo rehabilitation to promote accessibility, energy efficiency and modernization. Site and infrastructure updates are also planned. The City of Bloomington pledged $285,000 in HOME funds and a $215,000 loan from the Housing Development Fund as well as acted as conduit for the tax exempt bonds.
The full press release on the closing can be found by clicking here.
What RAD means for residents?
PROTECTIONS: Every resident has the right to stay in assisted housing and return to an upgraded unit in their original property. Rents will still be based on 30% of adjusted household income, and no current resident has to reapply to stay at the property. Because of the upgrade the market rate for these properties will rent at a higher cost than the original public housing units. Therefore, those who are paying flat rent, will pay more in rent, however the BHA will phase those increases in over a three year period. BHA will maintain a high level of services to its residents.
IMPROVEMENTS: Every property will receive some improvements, and many units will receive extensive needed upgrades, be modernized, and made more energy-efficient. Residents will have a voice in planning these improvements.
CHOICES: Residents in the RAD program will have the opportunity to request a voucher for housing in the private market after one year in a RAD unit.