Why RAD? - Mississippi Home Corporation

Report
WHY RAD?
Mississippi Home Conference
Biloxi, MS
February 20, 2013
Gregory A. Byrne
Senior Program Manager
HUD
[email protected]
RAD AUTHORITY
• Authorized as part of the Consolidated Further Continuing
Appropriations Act of 2012 (Public Law 112-55)
• Allows public housing and certain at-risk Multifamily legacy
programs to convert to long-term Section 8 rental
assistance
• Two components
– Competitive – cap of 60,000 units (public housing and
Mod Rehab)
– Non-competitive – no cap but subject to availability of
tenant protection vouchers (Mod Rehab, Rent
Supplement and Rental Assistance (RAP) programs)
2
RAD CONVERSION AUTHORITY
Public Housing
Mod Rehab
No Cap , but subject
to availability of TPVs
Cap of 60,000 Units
PBRA
RS & RAP
PBV
PBV
3
THIS IS RAD
$900
Sample Public Housing Conversion
Per Unit Monthly
$800
$700
$600
Operating Fund
$330
Housing
Assistance
Payment
$474
$500
$400
Capital Fund
$144
$792
At closing,
funding is
converted to a
Section 8
contract rent
$300
$200
$100
Tenant
Payment $318
Tenant
Payment $318
Pre-Conversion
Post-Conversion
$ACC
Section 8
4
EXAMPLE
Milwood I Mixed-Finance Project (McComb, MS)
First phase of a redevelopment of an existing public housing project,
involving demolition and new construction
10 project-based vouchers (with tax credits)
16 public housing units (with tax credits)
26 total units
13 duplexes
PBV contract rents average $621
Public housing contract rents average $325
2/2/2012
5
DEVELOPMENT BUDGET – ORIGINAL
Sources
Capital Fund Financing Program (CFFP) Loan
Tax Credit Equity
FHLB AHP Funds
Deferred Developer Fee
Total
$595,000
$3,925,486
$182,000
$90,658
$4,793,144
Uses
Construction Costs
Soft Costs
Soft/CFFP Loan
Total
2/2/2012
$3,045,000
$1,653,144
$95,000
$4,793,144
6
PRO-FORMA – ORIGINAL
Annual
PUM
Revenues
Section 8 Rents
$74,496
$239
Public Housing Rents
$62,367
$200
$1,800
$6
$(6,843)
($22)
$131,820
$423
$101,191
$324
$7800
$25
Total
$108,991
$349
NOI
$22,829
$73
($0)
($0)
$22,829
$73
Other
Vacancy loss
Effective Gross Income
Expenses
Operating Expense
Replacement Reserves
Debt Service
Cash Flow
2/2/2012
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WHAT IF?
•
The public housing units were assigned the RAD rents of
approximately $500 PUM
•
First mortgage terms were as follows:
•
•
•
•
2/2/2012
Amortization period = 30 years
Rate = 3.5%
Mortgage Insurance Premium = 0.45%
Debt coverage ratio = 1.20
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PRO-FORMA – REVISED
Annual
PUM
Revenues
Section 8 Rents
$74,496
$239
Public Housing Rents
$96,000
$308
$1,800
$6
($8,525)
($27)
$163,771
$526
$101,191
$324
$7800
$25
Total
$108,991
$349
NOI
$54,780
$176
($45,650)
($146)
$9,130
$29
Other
Vacancy loss
Effective Gross Income
Expenses
Operating Expense
Replacement Reserves
Debt Service
Cash Flow
2/2/2012
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MAGIC
With the RAD rents, the project is able to generate in excess of
$800,000 in first mortgage proceeds, which would have
eliminated the need for the PHA to contribute CFFP funds.
2/2/2012
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RAD WEB PAGE
RAD Notice, application materials, and
additional resources can be found at
www.hud.gov/rad
Email questions to radresource.net
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