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RAD for Mod Rehab – A Win-Win Proposition

The Rental Assistance Demonstration (“RAD”) is well known for the option to convert public housing subsidy to a long-term Section 8 Housing Assistance Payments contract (“HAP Contract”) — but RAD also allows owners to convert their Moderate Rehabilitation (“Mod Rehab”) and Moderate Rehabilitation Single Room Occupancy (“SRO”) contracts to a Section 8 HAP Contract.  HUD estimates that there are over twenty thousand units of Mod Rehab and SRO units across the country with no cap on the number of units that can convert through RAD (see database of units here).

Converting Mod Rehab and SRO contracts to long-term Section 8 HAPs through RAD can present advantages to both the owners of the project and the public housing authorities (“PHA”) that administer the existing contracts.  Below are just a few of the possible benefits for owners and PHAs:

Benefits to Owner:
Long-term RAD HAP Contract:
  • Likely higher rents
  • Provides stability
  • Can be used to secure/leverage financing for rehabilitation
  • Preserve affordable housing
Benefits to PHAs:
For Project Based Voucher (PBV) conversions:
  • New vouchers added to PHA’s Annual Contributions Contract (ACC)
  • PHA receives ongoing administrative fee
  • Contract administration responsibilities align with standard PBV program

For Project Based Rental Assistance (PBRA) conversions:

  • HUD administers HAP contract
  • PHA relieved of contract administration
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About this Author

Amber Mohr, Baltimore, real estate attorney, ballard spahr law firm
Associate

Amber Mohr is an associate whose practice focuses on representing developers and public housing authorities in complex multifamily affordable housing developments using mixed-finance sources such as low income housing tax credit (LIHTC) equity, private debt, bond financing, and project-based rental assistance in addition to other financing sources and initiatives for acquisition and development. She frequently represents developers, public housing authorities, and LIHTC investors in public housing conversions under the Rental Assistance Demonstration (RAD) program,...

410-528-5537
Courtney Hunter, Ballard Spahr, Real estate lawyer
Associate

Courtney E. Hunter handles a wide range of complex affordable housing development and real estate transactions involving low income housing tax credits, private financing, bond financing, HOME loan financing, and housing authority fund financing.

Courtney represents housing authorities and private developers in public housing conversions under the Rental Assistance Demonstration (RAD) program and advises them on their portfolios in mixed-finance transactions. She also counsels clients in the sale, acquisition, or refinance of HUD-insured properties, including Transfer of Physical Assets (TPA) approvals. Courtney also has experience with the transfer of Housing Assistance Payments (HAP) Contracts in the Section 8 program.

Courtney is well-versed in federal statutes and regulations affecting development in federal housing and has drafted comments to proposed changes to fair housing and demolition regulations.

202.661.7679