Rental Assistance Demonstration This is RAD 900 Sample

Rental Assistance Demonstration

This is RAD $ 900 Sample Public Housing Conversion Per Unit Monthly $ 800 $ 700 $ 600 Operating Fund $330 Housing Assistance Payment $474 $ 500 $ 400 Capital Fund $144 $792 $ 300 $ 200 $ 100 Tenant Payment $318 Pre-Conversion Post-Conversion At closing, funding is converted to a Section 8 contract rent $ ACC Section 8 2

What RAD Can Do Terms Financing Ø 15 -20 year, renewable contracts with Use Agreement Ø Access to FHA LIHTC Pilot processing Ø Predictable initial contract rent setting; annual operating cost adjustments for inflation (OCAF) Ø Ability to tap 9% & 4% LIHTCs, including “short bond” structures Ø Established Replacement and Operating Reserves; Ø Ability to support transaction with public housing reserves and capital funds, including Replacement Housing Factor funds Ø RAD HAP funding begins at construction closing !! Ø No limitations on use of project cash flow Ø PHA Ownership/control similar to LIHTC practices Ø Access to HOME and CDBG for development budgets Ø Long term affordability ensured Ø Available sales proceeds can support other affordable housing purposes Process Flexibility Ø Partial or Full AMP Ø Transfer assistance from unworkable units prior to conversion Ø No SAC approval Ø Market accommodations in meeting 1 -for-1 preservation (e. g. , convert efficiencies to 1 bdrms; long-term vacant units) Ø Subsidy layering review via RAD Ø Simplified procurement Ø Freed from PH Annual Plans, PHAS, Community Service, PIC, etc. Ø Combine RAD & agency PBVs or SAC TPVs>PBVs Ø Flexibility to reduce densities, replace housing off-site, produce mixed income communities Ø Allows PHA to undertake renovations immediately or after conversion, as warranted Ø Demolition/New Construction allowed Ø Ability to “bundle” project applications for flexibility with initial contract rents

New RAD Notice FY 2012 rent (from HUD Tool) if apply by 12 -31 -2013 Exempting those with CHAPs from occupancy criteria of Performance Housing Assessment System (PHAS) Bundling of multiple project rents Commitments for multiple-phase projects Allows Portfolio Awards Option for distressed HOPE VI projects regardless of DOFA Allowing MTW Agencies to use block grant in rent setting for 2 or more projects, subject to service level requirements & subsidy layering review 4

Comparison of PHA fees ACC vs RAD Assume a 100 unit project, new const, at a cost of $120 K per unit Per unit per month Current ACC Property Mgmt Fee $ 45. 00 Bookkeeping $ 7. 50 IT $ 2. 00 Asset Mgmt Fee $ 10. 00 Capital Fund Fee $ 15. 00 Cash Flow (50% share) Per Unit Per Month Total $ 79. 50 Annual Total $ 95, 400. 00 Annual difference Developer Fee (35% of $1. 8 M Fee) RAD $ 35. 00 $ - $ 37. 00 $ 72. 00 $ 86, 400. 00 $ (9, 000. 00) $ 630, 000. 00 Net unrestricted funds to the PHA $ 621, 000. 00

Development objectives Partnership with PHAs – Modernize/ Substantially rehab aging rental properties – Demolish/replace severely distressed/obsolete properties – Thin densities/mix incomes via RAD HAPs and transfer authority Place RAD HAP contracts in off-site, high-amenity locations 6

Case Study: Hopewell, Virginia Key Features PHA in Partnership with Experienced Nonprofit Developer, Community Housing Partners 9% Low Income Housing Tax Credits Resident Council Input 7

Case Study: Hopewell, Virginia Pre- Conversion Post-Conversion Public Housing Mixed Income Development 30 units 56 units In need of major repair Demolition/ New Construction 8

Case Study: Hopewell, Virginia Pre- Conversion Post-Conversion 9

Case Study: Hopewell, Virginia Sources & Uses Sources of Funds New First Mortgage Loan Public Housing Operating Reserves Public Housing Capital Funds Replacement Housing Factor Low Income Housing Tax Credit Equity - 9% Soft Sources Developer Equity Other Total Sources of Funds Uses of Funds Acquisition Costs Construction Costs Relocation Costs Professional Fees Loan Fees and Costs Reserves Developer Fees Total Uses of Funds Amount $2, 871, 830 $0 $5, 455, 975 $500, 000 $105 $0 $8, 827, 910 Amount $96, 365 $6, 388, 848 $65, 000 $683, 197 $400, 000 $362, 000 $832, 500 $8, 827, 910 Per Unit $44, 872 $0 $0 $0 $85, 249 $7, 813 $2 $0 $137, 936 Per Unit $1, 506 $99, 826 $1, 016 $10, 675 $6, 250 $5, 656 $13, 008 $137, 936 10

Case Study: Hopewell, Virginia Income & Expenses: Stabilized Cash Flow Pro Forma Gross Potential Rents for RAD Units Gross Potential Rents for Other Apartment Units Gross Potential Rents for Commercial Vacancy Loss and Bad Debt Loss Other Income Effective Gross Income Total Operating Expenses Annual Deposit to Replacement Reserve Net Operating Income First Mortgage Debt Service Operating Cash Flow Total $243, 624 $327, 015 $0 ($43, 215) $8, 400 $535, 824 ($286, 550) ($19, 200) $230, 074 ($190, 300) $39, 774 PUPA $8, 121 $9, 618 N/A -$675 $131 $8, 372 ($9, 552) ($640) $6, 767 ($6, 343) $1, 170 11

What advice would you give to PHAs? “The writing is on the wall – we can’t sustain the public housing or the quality of life the way things have been going. It became apparent that this old housing stock with diminishing capital funds was not going to be sustainable. ” -Steven Benham, Executive Director, Hopewell Redevelopment and Housing Authority

Visit our website: www. communityhousingpartners. org 13