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

Section I: Public Housing Projectsavailable for occupancy by eligible tenants the number of assisted units under the termsof the contract and may not reduce the number of assisted units without HUD approval.Any HUD approval of a PHA’s request to reduce the number of assisted units under thecontract shall be subject to conditions that HUD may impose.2. Mandatory Contract Renewal. By statute, upon contract expiration, the agencyadministering the vouchers shall offer, and the PHA shall accept, renewal of the contractsubject to the terms and conditions applicable at the time of renewal and the availabilityof appropriations each year for such renewal. Consequently, section 8(o)(13)(G) of theAct, as well as 24 CFR § 983.205(b), governing the PHA discretion to renew the contractfor terms of up to 15 years, will not apply. 203. Ownership or Control. Pursuant to the RAD statute, during the initial term and allrenewal terms of the HAP contract, HUD will require ownership or control of assistedunits by a public or non-profit entity. 21 However, as HUD, in its sole discretion,determines necessary pursuant to foreclosure, bankruptcy, or termination and transfer ofassistance for material violations of, or default under, the HAP contract, HUD willrequire ownership or control of assisted units in the following priority: (1) a capablepublic entity; and (2) a capable non-public entity (e.g., a private entity), as determined bythe Secretary. HUD may allow ownership of the project to be transferred to a for-profitentity to facilitate such entity’s use of tax credits, but only if the PHA preserves itsinterest in the property in a manner approved by the Secretary. 22 All current and futureownership entities are subject to the eligibility requirements of Section 1.3 of this finalNotice, including the civil rights threshold requirements.4. RAD Use Agreement. Pursuant to the RAD statute, covered projects shall have an initialRAD Use Agreement that:a. Will be recorded superior to other liens on the property;b. Will run for the same term as the initial HAP contract, automatically renew uponextension or renewal of the HAP contract for a term that runs with the renewalterm of the HAP contract, and remain in effect even in the case of abatement ortermination of the HAP contract (for the term the HAP contract would have run,20 See previous note.21 ―Ownership or Control‖ as defined in the Definitions section of this Notice.22 Sufficient control in the project could include, but not be limited to, the following: long-term ground lease on theland, seller take-back financing subordinate to the first mortgage financing and serviced by available cash flow fromproperty operations; other seller funds lent to the property that is subordinate to the first mortgage financing andserviced by available cash flow from property operations; and right of first refusal for sale of property.PIH-2012-32 (HA) Rental Assistance Demonstration – Final Implementation 29