Rental Assistance Demonstration & Asset Repositioning Strategy
Multifamily Public Housing
The Housing Authority of the City and County of Sacramento (“Housing Authority”) is composed of 2712 public housing units throughout the City and County of Sacramento. These units are vital to providing critical housing to low and very low income residents. The housing stock is rapidly aging, the federal government has not adequately funded public housing programs over the last seventeen years, and the local demand for affordable housing continues to increase.
Sacramento will utilize the Rental Assistance Demonstration Program (“RAD”) to convert all properties with five or more units to the RAD Program. The Agency will leverage private debt and equity in conjunction with its Capital Improvement funds to address over $58 million of deferred maintenance issues.
In September 2018, the Housing Authority submitted applications to the US Department of Housing and Urban Development (HUD) to initiate conversions under RAD. In December 2018, HUD approved the first component of the RAD conversion (RAD 1 Pilot Program) which includes 124 units in the City and County areas of the agency’s portfolio.
What is RAD?
The RAD program was initiated in 2012 to help Public Housing Authorities (PHAs) convert its properties to more viable housing programs. HUD determined that the configuration of the Public Housing program was not sustainable; resulting in a capital needs backlog in the nation’s public housing inventory of over $26 billion. RAD allows PHAs to convert public housing to long-term, Project-based Section 8 rental assistance developments.
What are the benefits of RAD Conversions?
Converting properties to RAD allows PHAs to access private debt and equity that is not permitted in traditional public housing to address immediate and long-term capital needs. RAD conversions also allow PHAs to improve resident living conditions while at the same time not increasing resident rents beyond 30% of a households’ adjusted gross income. Residents’ rights and basic public housing protections remain in place while they also have greater mobility as a result of being on the Project based Section 8 Voucher platform.
|Properties are typically not funded at 100% in Public Housing||Properties are placed on a more stable Section 8 funding platform|
|In Public Housing, PHAs cannot borrow money to perform necessary repairs||PHAs and owners can more easily borrow money and perform rehabilitation work|
|The funding fails to keep up with the deteriorating living conditions of residents||The living conditions of residents are improved|
|Residents cannot choose to move without losing housing assistance||Residents may receive a tenant-based voucher, or similar assistance, and move after 1 or 2 years based on the program selected by the PHA|
How will RAD impact Housing Authority current residents?
The Housing Authority is committed to keeping the same basic operational rules, rent structure and tenant rights that are in place currently. Resident should feel very little change in the day to day operations of how the sites are managed.
Once sites are converted, residents will sign a new lease preserving current tenant rights and protections after the RAD conversion. The Housing Authority, in accordance with HUD program guidelines, will ensure long-term affordability and stability of the properties.
All properties under RAD will be partly financed with Tax Credits to complete needed repairs. As such, all properties will be subject to Low Income Housing Tax Credit policies.
Will current residents have to move because of RAD?
No resident will lose their home because of a RAD conversion. Some households, however, will be relocated temporarily to complete construction work in their units. Each proposed construction requires resident participation in the process including a resident Relocation Plan that spells out the details of the temporary moves. The Relocation Plan will also include Housing Authority responsibilities to each household and the residents right to return to the property upon completion of the work.
Frequently Asked Questions about RAD Conversions
Why are you converting to RAD?
Due to age, design and major capital needs, the Housing Authority’s public housing properties are becoming obsolete. SHRA has worked diligently over the years to maintain its public housing properties. However, despite best efforts, it has not been able to address all of the needs the properties have. SHRA conducted a Physical Needs Assessment which identified an immediate capital need of approximately $58 million that will grow to approximately $200 million over 20 years if something is not done immediately to address the property issues. The current conditions of some of the Housing Authority properties are below desired standards.
SHRA is committed to preserving affordable housing in the City and County of Sacramento. In order to make this possible, SHRA must seize the opportunity of the Rental Assistance Demonstration Program and Section 18 of HUD federal regulations to preserve and maintain its valuable affordable rental housing.
Will the RAD conversion affect my housing?
Residents will not lose their housing assistance and will not be subject to eligibility re-screening as a result of the RAD conversion. Resident can remain in their units regardless of their current income. However, the Housing Authority will continue to follow its annual and interim re-examination processes, including re-examination of resident’s income to adjust rents. These requirements will be in the resident lease.
In a RAD conversion, residents housing assistance program will change from public housing assistance to Section 8 housing assistance under the Project Based Voucher (PBV) program.
Will the RAD conversion affect resident’s rent?
RAD rents are based on a resident paying 30% of their adjusted gross income. In public housing HUD regulations require Housing Authorities to offer resident one of two options to pay rent. One option is to have an income based rent which is based on 30% of a households’ adjusted gross income. The other option is a flat rent which is based on the market rent charged for comparable units in the private unassisted rental market. Flat rate rents will not be affected by increases in income from employment or disability benefits, but may be higher than income-based rent. Most residents therefore choose income based rents.
In the RAD program all rents that are at 30% of the households’ adjusted gross income will remain the same. However, if a resident household is paying a flat rent and it is not at 30% of that households’ income, the rent will be subject to adjustment.
In all cases, if the resident paid monthly rent increases by more than the greater of 10% or $25 purely as a result of conversion, the rent increase will be phased in over a 3 year or 5 year period.
How can residents participate in the RAD Planning process?
Prior to participating in RAD, HUD requires PHAs to:
- Notify all residents at the property about their RAD plans, and
- Conduct at least two (2) meetings with residents.
These meetings are an opportunity for residents to discuss the proposed conversion plans with the Housing Authority, ask questions, express concerns and provide comments. These meetings are also an opportunity to tell the Housing Authority what residents believe should be repaired at the properties. The Housing Authority can then consider that information when developing plans for the property.
The Housing Authority must have at least one more meeting with all residents of the property before HUD approves the final RAD conversion. This additional meeting is another opportunity for the Housing Authority to keep residents informed and for residents to provide comments about the Housing Authority’s RAD conversion plans.
In addition to these resident meetings, the Resident Advisory Board (RAB) will also be consulted and have an opportunity to make recommendations on the Housing Authority’s RAD conversion plans during the PHA Plan public hearing process.
In addition to these resident meetings, your Resident Advisory Board (RAB) will also be consulted and have an opportunity to make recommendations on your SHRA’s RAD conversion plans during the PHA Plan public hearing process.
Will RAD increase residents ability to choose where they live?
In most cases, residents will have a greater choice in where to live under the RAD “choice mobility option.” This option is available under PBV after a resident lives in a property converted to RAD for at least one (1) year. After the required time living in the RAD property after conversion, a resident may request a Housing Choice Voucher (HCV) and will have priority on the HCV waiting list when an HCV is available.
Will the RAD conversion make public housing more difficult for residents?
The RAD program is not intended to make housing more difficult for residents. Residents will retain their basic protections under the Public Housing program, continue to pay 30% of their adjusted gross income for rent and continue to have access to Resident Services Programs (FSS, ROSS, Life Steps and Jobs Plus) relative to their property. Consistent with the Housing Authority plans, residents also retain the benefit of having the Housing Authority as their property managers.
The goal of the RAD program is to provide public housing authorities with more flexibility to address deferred maintenance issues at public housing sites. Given this goal, residents have the benefit of improved living conditions without the sacrifice of more money or reduced protections.
What if residents need accommodations to participate?
The Housing Authority will make materials available in accessible formats for persons with disabilities and make meetings accessible for persons with disabilities.
The Housing Authority will also provide language assistance to persons with limited English proficiency so that affected residents can understand materials, participate in meetings, and provide comments on proposed RAD conversions. This may include providing written translation of the Housing Authority’s written materials and providing oral interpreters at meetings as necessary.
Will residents have to move if their apartment is being rehabbed?
If the repairs planned at a resident’s property are small, they may be able to stay in their home during renovation. If the repairs planned at a resident’s property are more extensive, that resident will most likely be relocated during rehabilitation. Even if a resident is required to move during construction, they have a right to return to a RAD-assisted unit after construction is completed.
If relocation lasts longer than 12 months, residents benefit from additional protections as a “displaced person” under the Uniform Relocation Act. In this situation, a resident will be able to choose between the permanent relocation assistance that is offered under the Uniform Relocation Act and the temporary relocation assistance (including the right to return) that residents are eligible for under the RAD program. The Housing Authority must ensure that resident understand their relocation options so that households may make informed decisions under the law.
What changes will residents see in their lease renewal processes?
At the time of the RAD conversion, residents will need to sign a new lease. Unless there is good cause for eviction based on a resident’s actions, residents new leases will continue to renew. Under the PBV program, a property owner who tries to end your lease must give you notice and grievance rights similar to the rights you have under public housing and the owner must follow state and local eviction laws.
Will RAD affect resident’s rights and participation at the sites?
RAD keeps many of the resident’s rights available under public housing. Those rights include but are not limited to the ability to request an informal hearing or the timeliness of a notice of termination. Residents also have a right to organize. In accordance with HUD provisions, resident organizations will continue to receive up to $25 per occupied unit each year.
Will residents still be able to participate in self- sufficiency programs?
The public housing Family-Self-Sufficiency Program (PH FSS) helps families obtain and maintain living wage employment (income that covers a family’s basic needs) by connecting residents to services. If a resident is a current participant in the FSS program, that resident will still be able to participate in FSS after the RAD conversion.
If the development converts to PBV, residents will be automatically moved from the public housing FSS to the Housing Choice Voucher FSS program. The rules for both public housing and Housing Choice Voucher FSS programs are very similar.
The Resident Opportunities and Self Sufficiency-Service Coordinator Program (ROSS-SC) provides public housing residents with coordinators to connect them to supportive services and empowerment activities.
If a resident currently participates in the ROSS-SC, that resident can continue to participate in ROSS-SC until program funds are used up. Once the grant funds are spent, the Housing Authority will pursue other avenues to continue providing services at the RAD properties.
What prevents the Housing Authority from demolishing the Public Housing communities as part of its asset repositioning plan?
HUD has what it calls an obsolescence test. In this test it must be demonstrated that based on physical conditions, location, and other factors that the property is unsuitable for housing purposes and no reasonable program of modifications is cost effective to return the public housing project or portion of the project to its useful life.
To evidence obsolescence for demolition of a project, PHAs must show that the necessary modifications and/or rehabilitation to a project are not cost effective. HUD generally considers modifications not to be cost effective if costs exceed 62.5% of Total Development Cost (TDC) for elevator structures and 57.14% of TDC for other types of structures.
None of the properties selected for RAD conversion met the conditions of this test.
Who is the developer associated with the RAD conversion? Why are they motivated to perform this conversion of SHRA’s Public Housing Units?
The Housing Authority will utilize its non-profit affiliate Sacramento Housing Authority Repositioning Program, Inc. also known as SHARP, in conjunction with a Tax Credit investor to develop the RAD projects. With this partnership, SHRA will be looking to self-develop all of its Public Housing properties.
The motivation is simply to secure the funding necessary to perform the capital improvements necessary for each site, which will ensure the longevity of these affordable housing sites for many years to come.
What’s the plan for the existing Public Housing properties? My property was not included in the RAD Pilot. Will my property be demolished?
The Housing Authority’s plan is for all existing Public Housing properties to be converted out of Public Housing through either RAD or the Section 18 Disposition process. The Housing Authority is approaching this work in manageable phases for financial feasibility and to minimize resident disruption/relocation.
There are no currently occupied properties scheduled for demolition. Each site would have varying levels of rehabilitation needed based on third party physical needs assessments (PNAs) and other functional and/or cosmetic upgrades. The goal is to provide our residents with long-term, safe, decent, and sanitary affordable housing for the foreseeable future.
What will the Housing Authority do to prevent or mitigate potential negative impacts to their residents’ lives and health?
The Housing Authority will follow a relocation plan, and will have a relocation counselor in place to assist with any sort of temporary or permanent relocation that may be necessary to complete the renovation/rehabilitation of the units. Resident services will continue to be available through and after this transition under the RAD program.
I’ve heard about Opportunity Zones. What are they and how will they affect or impact properties selected for RAD conversion?
Opportunity Zones are fairly new program introduced in 2017 by the Federal government as a program to provide tax incentives for investors who invest in real estate or businesses in designated low-income census tracts. They were designed as potentially another funding source for improvements in those areas, in which a RAD conversion could potentially qualify. The investors benefit by having their capital gains taxes deferred for a specified period of time if those gains are invested into what are called Opportunity Zone Funds.
HUD is still exploring how these Opportunity Zone Funds could be utilized for its various Housing Programs, including RAD.