A Demo for partnership: HUD’s RAD program taps private dollars to preserve affordable public housing
By Mark Dellonte, Opinion Contributor — Published 10/27/17 10:15 AM EDT on The Hill
In many public housing communities around the country, conditions are quickly becoming unlivable. Collectively, public housing authorities (PHAs) face a backlog of $26 billion in deferred maintenance and it’s growing by the day because the properties continue to age and the PHAs have fewer resources than ever before to maintain them. The problem is made all the more pressing by the fact that roughly nine out of every 10 households that live in public housing include minor, elderly or disabled family members.
It might seem like a problem without a solution but there is reason for hope. Back in 2012, Congress authorized a new initiative at the Department of Housing and Urban Development (HUD) called the Rental Assistance Demonstration (RAD) program.
RAD is transforming the way the federal government funds PHAs by giving them access to the debt and equity markets for the first time. The program converts their existing annual operating and capital subsidies into project-based rental contracts that generate enough cash flow to attract private capital.
The money generated by the new debt and equity is used to cover the cost of repairs or new construction, and helps PHAs increase their reserves to put them on solid financial footing for the future. In addition, RAD transactions are often able to couple FHA mortgage proceeds with other means of support, including low-income housing tax credits, historic tax credits, and HOME funds allocated to states and local governments to boost affordable housing opportunities.