RAD PIH Notice 2012-32 (.pdf, 1 MB) - National Low Income ...

Section I: Public Housing Projects1.5 Waivers, Alternatives, and Other Public Housing RequirementsUnder the Demonstration, HUD has the authority to waive or specify alternative public housingrequirements, or to establish requirements for converted assistance under the demonstration.Additionally, the RAD statute imposes certain unique requirements. To facilitate the conversionof assistance, HUD is waiving or imposing the following alternative and other public housingprogram requirements for public housing projects converting assistance (Sections 1.6 and 1.7 listthe waivers and alternative and other requirements of programs into which assistance is beingconverted):A. Use of Public Housing Program Funds to Support Conversion. PHAs are permitted underthe Demonstration to use available public housing funding, including Operating Reserves,Capital Funds, and Replacement Housing Factor (RHF) funds, as an additional source ofcapital to support conversion, whether for rehabilitation or new construction. Eligibleconversion-related uses for these funds include pre-development, development, orrehabilitation costs and establishment of a capital replacement reserve or operating reserve.These funds must be identified in the Financing Plan submitted to HUD for review. (A PHAmay not use public housing program funds on a project following conversion.)Prior to the approval of a project’s Financing Plan, a PHA may expend up to $100,000 inpublic housing program funds in related pre-development conversion costs per project.Predevelopment assistance may be used to pay for materials and services related to proposeddevelopment and may also be used for preliminary development work. Public housingprogram funds spent prior to the effective date of the HAP are subject to public housingprocurement rules.In the case of a PHA that is converting all units under ACC, there is no restriction on theamount of public housing funds that may be contributed to the converting project(s) at thepoint of conversion, i.e., the PHA may convey all program funds to the project undergoingconversion. In the case where the PHA will continue to maintain other units in its inventoryunder public housing ACC, a contribution to the converting project of Operating Funds thatexceeds the average amount the project has held in Operating Reserves over the past threeyears will trigger a subsidy layering review under 24 CFR § 4.13. Similarly, any contributionof Capital Funds, including RHF funds, will trigger a subsidy layering review.Following execution of the HAP, a PHA may not contribute public housing program funds tothe covered project unless such funding has been identified in the approved Financing Plan.PIH-2012-32 (HA) Rental Assistance Demonstration – Final Implementation 23