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JULY 27, 2012

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Final Rental Assistance Demonstration Program Notice Announced
HUD announced a final program notice implementing the Rental Assistance Demonstration Program (RAD). The FY12 Appropriations Act allows HUD to convert assistance provided for up to 60,000 units of public and Moderate Rehabilitation (Mod Rehab) housing to long-term, renewable, project-based Section 8 rental assistance (PBRA) or to project-based vouchers (PBVs). RAD also allows unlimited conversion for three smaller programs: Rent Supplement (Rent Supp), Rental Assistance Program (RAP), and Mod Rehab. (see Memo, 4/27) Attached Documents
The following documents are provided with this article. RAD PIH NOTICE 2012-32 (.PDF, 1 MB) HUD'S RESPONSE TO RAD COMMENTS (.PDF, 407 KB)

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The announcement was made in the July 26 Federal Register, and PIH Notice 2012-32 was posted separately on the RAD webpage detailing specific program requirements. The Federal Register announcement presents HUD’s summary of what the department considers key changes from the proposed RAD program PIH Notice 2012-18 contained in PIH Notice 2012-32. The following analysis is based on an initial scan of the documents, focusing on public housing converted to PBV or PBRA and highlighting a few provisions raised in NLIHC’s comment letter regarding the proposed RAD provisions in PIH Notice 2012-18. If additional points are discerned after a more thorough review of the documents, they will be reported in subsequent editions of Memo. Cap on Number of PBV Units in a Development The most significant concern expressed by NLIHC and a great many other commenters, including public housing agency associations, state housing financing agencies and developers, was HUD’s proposal to limit to 50% the number of public or assisted housing units in a development that could be converted to project-based vouchers. The 50% cap could be exceeded only if the additional units were occupied by a household with an elderly or disabled person, or if the household agreed to participate in a supportive services program. NLIHC wrote that the cap “is inappropriate and counter to HUD’s negotiating stance that every unit is precious. The statute authorizing RAD states that the ‘demonstration is designed to preserve and improve public housing and certain other multifamily housing.’ In the RAD context there should be no limit because the public housing developments to be converted are already 100% occupied by eligible households. If the cap is not removed, the viability of the demonstration, and NLIHC’s support for it, will disappear.” HUD’s Federal Register announcement claims as a key change in the final notice language preventing current residents from having to agree to any requirement that they receive supportive services. This

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does not seem to be a change because both the proposed and final notices allow households living in a development at the time of conversion to PBVs to decline supportive services and remain in their homes. The one modest addition to PIH Notice 2012-32 is statements emphasizing that existing residents must not be displaced. For example: “An assisted household cannot be involuntarily displaced as a result of this provision” (p. 27). “The permanent involuntary displacement of residents may not occur as a result of a project’s conversion of assistance, including as a result of a change in bedroom distribution, a de minimis reduction of units, the reconfiguration of efficiency apartments, or the repurposing of dwelling units in order to facilitate social service delivery” (p. 24). The problem of the viability of the RAD demonstration remains, however, because once an original household moves, the final notice still requires their unit to be occupied by a household with an elderly or disabled person, or a household agreeing to participate in a supportive services program, or else lose the PBV housing assistance payment (HAP) contract. This provision creates uncertainty about a reliable, long-term and stable income stream that is likely to discourage investor or lender interest. Significant Amendment to the PHA Plan Although the draft and final notices consider a RAD conversion application to be a “significant amendment” to the Public Housing Agency Plan (PHA Plan), both require submission too late in the process. A significant amendment to the PHA Plan triggers obligations that include resident advisory board (RAB) consultation, broad public notice and comment and at least one public hearing. The final notice requires submission of a significant amendment within 60 days of HUD notifying a PHA that it has been tentatively approved, which is better than six months later as HUD originally proposed (p. 25). NLIHC commented that a PHA should complete the significant amendment process before submitting a RAD application. The final notice clarifies that a significant amendment must indicate the number of units, bedroom distribution and type of units to be converted as well as any change in the number of units and bedroom distribution as a result of conversion. The final notice adds that any substantial change to the conversion plan must undergo the significant amendment process. PIH Notice 2012-32 continues to have a separate notification process for the residents of a development proposed for conversion. Those residents are notified and have the opportunity to comment during two meetings prior to a PHA submitting a RAD application (p. 46). Resident Participation and Funding PIH Notice 2012-32 is a great improvement over the proposed notice in its response to NLIHC and other advocates’ suggestions that the final notice provide more detailed resident participation language. Conversion to PBVs will require PHAs to follow features that echo the tenant organizing provisions pertaining to HUD’s multifamily programs contained in the part 245 regulations. Attachment 1B.2 (p. 75) highlights the key provisions, including recognition of legitimate resident organizations, protected organizing activities, ensuring that resident organizers are not associated with the PHA, and making meeting space available. As with the proposed notice, conversions to PBRA must follow the part 245 regulations. While the notice continues to require PHAs to provide $25 per occupied unit annually for resident participation for both PBV and PBRA, it still allows $10 to be allocated to the PHA instead of to resident councils, contrary to PIH Notice 2001-3 which requires the full $25 to be allocated to resident councils (see attachment 1B.2, p. 75). Attachment 1B.1 is a table of contents handy for locating various resident-related provisions throughout the public housing component of the notice (p. 73). Resident Procedural Rights The notice responds to comments made by NLIHC and other advocates that the proposed notice inadequately complied with the appropriations act that created the RAD experiment. The act requires residents of RAD-converted public housing properties to have the same rights after conversion that they had under Section 6 of the Housing Act of 1937. The final notice adds language regarding reasonable notice before terminating someone’s lease, and adds text providing for informal grievance procedures regarding not just termination, but any resident dispute (pp. 33, 42). Click here to view a Federal Register announcement highlighting significant changes from proposed 2/3

notice. PIH Notice 2012-32 is attached. HUD’s response to comment letters regarding PIH Notice 2012-18 is attached. Click here to view a PowerPoint overview of the final RAD notice. NLIHC’s comment letter regarding PIH Notice 2012-18 is included in Memo, 4/6.

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