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

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Section I: Public Housing Projectsthe property in a manner approved by the Secretary. 33 All current and future ownershipentities are subject to the eligibility requirements of Section 1.3 of this final Notice,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,absent the abatement or termination), unless the Secretary provides approval forthe RAD Use Agreement to be terminated when an owner requests a transfer ofassistance;c. Requires that in the event that the HAP contract is removed due to breach, noncomplianceor insufficiency of Appropriations, for all units previously coveredunder the HAP contract new tenants must have incomes at or below 80 percent ofthe area median income (AMI) at the time of admission and rents may not exceed30% of 80% of median income for an appropriate size unit for the remainder ofthe term of the RAD Use Agreement; andd. Requires compliance with all applicable fair housing and civil rightsrequirements, including the obligation to affirmatively further fair housing and thesite selection and neighborhood standards requirements set forth in 24 CFR §1.4(b)(3).5. Initial Contract Rent Setting. No additional or incremental funding is associated withthis Demonstration. Consequently, section 8(c)(1) of the Act, which governs rent settingfor project-based Section 8 units, shall not apply. Nor shall section 8(c)(5) of the Act or24 CFR § 880.503(b), which govern the ―project account,‖ apply. At the time thatassistance will be converted, initial contract rents will be established based on the fundingfor which a project is currently eligible, including pro-rated Operating Subsidy eligibility,the portion of the PHA’s Capital Fund Formula Grant attributable to the project, andtenant rents (see Attachment 1C of this Notice for more detail). Initial contract rents will33 Sufficient interest 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 38
Section I: Public Housing Projectsbe capped at the lesser of (a) current funding; or (b) 120 percent of the Section 8 FMR,adjusted by the number of bedrooms, and after subtracting any applicable utilityallowance. However, when current funding exceeds 120 percent of the FMR but wherethe PHA believes that such rents are below the comparable market rent, the PHA mayrequest an exception under which the project may receive rents in excess of 120 percentof the FMR but not in excess of the lower of comparable market rents or 150 percent ofFMR. HUD will grant such a request only when HUD determines that a RentComparability Study (RCS), which the PHA must procure and pay for, establishes thatcurrent rents are below comparable market rents. 34 Any such determination will be madeby HUD in its sole and absolute discretion. 35 Where contract rents are at or below 120percent of the FMR, no RCS is required.6. Method of Adjusting Contract Rents. Contract rents will be adjusted annually byHUD’s OCAF at each anniversary of the HAP contract, subject to the availability ofappropriations for each year of the contract term. 36 Consequently, neither section 8(c)(2)of the Act nor 24 CFR § 880.609, which govern rent adjustments for project-basedSection 8 units, shall apply. While the initial rent is capped, rent caps do not apply whencalculating rent adjustments by OCAF and no RCS is required.7. Distributions. Regardless of type of financing, converted projects will not be subject toany limitation on distributions, contingent on the availability of surplus cash asdetermined by year-end audited or certified financial statements. To implement thisprovision, HUD will not apply 24 CFR § 880.205, which, among other provisions,establishes certain limitations on distributions for profit-motivated owners and authorizesHUD to require the owner to establish a residual receipts account. Distributions are notconsidered program or project funds.8. Transfer of Assistance. Pursuant to the RAD statute, in order to facilitate the financing,development, and preservation of decent, safe, and affordable housing, with HUD and34 The Rent Comparability Study must be prepared in accordance with Chapter Nine of HUD’s Section 8 RenewalGuide, including any changes to Chapter Nine that HUD publishes while the HAP contract is in effect. Seehttp://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/mfhsec8. A RCS will not be required inany other instance during the initial 20-year contract term.35 A PHA may make a permanent transfer of any subsidy in excess of the allowable rent caps from a projectconverting under RAD to its voucher program to support Choice-Mobility. The transfer of subsidy will occur at thedate of closing of the conversion of the project.36 OCAFs are calculated and published each year by HUD in the Federal Register and are applied to the portion of acontract rent that is not committed to debt service payment in order to calculate the contract rent for the project inthe following fiscal year. For the most recent guidance on OCAF, please see: http://www.gpo.gov/fdsys/pkg/FR-2011-10-26/pdf/2011-27816.pdf.PIH-2012-32 (HA) Rental Assistance Demonstration – Final Implementation 39
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Section II: Moderate Rehabilitation
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Section III: Rent Supplement and Re
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Appendix I - 24 CFR Part 880 Regula
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Appendix III- PBRA Site and Neighbo
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