In the near term, RAD is expected to preserve and enhance more than 278 units of affordable housing in Austin, Fort Worth, and McKinney and generate private capital to address the significant backlog in capital needs faced by public housing authorities in the U.S. This additional capital will also stimulate employment in the construction trades across the country. Nationally, RAD is expected to benefit more than 13,000 units of affordable housing and generate more than $650 million in private capital.
"This innovative and cost-effective approach greatly enhances our ability to confront the decline of our public housing and older assisted housing stock," said HUD Secretary Shaun Donovan. "With the initial implementation of RAD, the Obama Administration has begun to demonstrate that public-private partnership can help preserve our nation's affordable housing and create jobs in the process."
"HUD and our local partners are working to protect critically needed affordable housing for the residents in these communities," said Acting Regional Administrator Mark Brezina. "This is a market-based approach to helping local housing authorities tap into private capital to preserve housing for some of our most vulnerable citizens."
HUD awarded commitments to the Austin Housing Authority, the Fort Worth Housing Authority, and the McKinney Housing Authority, allowing them to seek private financing to rehabilitate 278 units that are otherwise at risk of being lost from the affordable housing inventory.
RAD allows public housing agencies and private owners of certain at-risk, federally assisted properties to convert their current assistance to long-term Section 8 contracts. Such contracts will allow owners to leverage millions of dollars in debt and equity to better address immediate capital needs and preserve these affordable housing units. In addition, participating agencies are freed from antiquated public housing rules and restrictions that hindered their ability to best preserve and manage their housing similar to other affordable housing owners and managers.
In 2011, HUD released Capital Needs in the Public Housing Program, a study that found the nation's 1.2 million public housing units need nearly $26 billion to keep these homes in safe and decent condition for families, a figure well in excess of the roughly $2 billion Congress appropriates for capital repairs annually. Beyond the potential loss of this public housing, the Moderate Rehabilitation, Rent Supplement, and older Rental Assistance Payment (RAP) programs are at risk of being lost from the affordable housing stock.
RAD is part of the Obama Administration's comprehensive strategy to preserve public and HUD-assisted housing. In November 2011, Congress authorized HUD to implement RAD as a budget-neutral demonstration program with two components, allowing for the conversion of assistance for both public housing and HUD-assisted properties that have expiring subsidies.