The Rental Assistance Demonstration (RAD) is a preservation program focused on protecting and improving the nation’s at-risk public housing stock.
From Shelterforce:
Back in 2006, Cambridge, Massachusetts’s aging public housing stock needed serious work. Some of the housing authority’s nearly 2,500 apartments were in 70-year-old buildings with deteriorating and outdated infrastructure, Cambridge Housing Authority officials say, and a few properties built in the 1970s had leaked for decades. Many needed upgrades to heating, ventilation, and plumbing systems.
A five-year capital assessment required by the U.S. Department of Housing and Urban Development (HUD) revealed capital needs of at least $228 million. CHA officials estimated it would take 32 years to make the needed improvements based on its annual HUD funding at the time.
“Our backs were against the wall. We were going to start losing units,” says Margaret Moran, CHA’s deputy executive director for development. “Out of desperation, we began a process, both internally and with our residents, of exploring alternate ways to tackle the capital need.”
That exploration helped launch a series of improvement projects starting in 2010. Today, CHA is about 75 percent done with a portfolio-wide redevelopment, Moran says, with extensive work completed on 17 properties encompassing more than 2,345 units. Moreover, they’ve exceeded original plans, including addressing more resident comfort issues, achieving energy efficiency improvements, and adding 200 new deeply affordable housing units, with further expansion in the works.
It’s not news that federal support and funding for public housing has declined sharply since the early 1970s. Housing authorities across the U.S. have struggled to afford maintenance, repairs, and upgrades to their properties, and the number of available units is steadily declining. Against that grim backdrop, Cambridge stands out as a positive exception.
CHA’s redevelopment has been cited as an innovative model for its layering of strategies and funding sources to pay for the renovations, as well as for minimizing disruption for residents and retaining ownership or control of the properties rather than ceding them to private interests.
“It’s a great example of what can be possible,” says Susan Popkin, a fellow at the Urban Institute who co-authored a 2024 research report that profiles CHA as one of a few public housing authorities that have financed redevelopment in innovative ways.
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CLPHA applauds HUD’s newly announced policy allowing RAD project owners to request a one-time, good-cause exception to the standard Operating Cost Adjustment Factor (OCAF), a meaningful step toward addressing the financial strain many public housing authorities (PHAs) are facing. This change is especially important for early adopters of RAD, who have long struggled with operating cost increases that outpace annual OCAF adjustments. This policy update reflects the sustained advocacy of CLPHA’s RAD Rents Working Group, which has consistently elevated members’ concerns about the inadequacy of current rent-setting mechanisms. While HUD has acknowledged that this exception will not bring RAD rents to the level of Fair Market Rents (FMRs), it demonstrates a willingness to respond to the real-world challenges PHAs are experiencing. CLPHA is proud to see this progress and remains committed to working with HUD and our members to pursue further improvements to RAD rent sustainability through future changes to program operations. Starting September 30, 2025, RAD project owners may request a one-time, good-cause exception to the standard OCAF if they can demonstrate that cost increases are beyond their control and are causing severe financial strain. An overview of the submission and review process is available here. Owners will be prompted to answer a series of questions and upload concise supporting documentation to help HUD determine whether the project qualifies for an Alternative Operating Cost Factor (Alternative OCF) under extraordinary circumstances to be applied to the current RAD rents. If approved, the Office of Recapitalization (Recap) will calculate an Alternative OCF using administrative data on operating cost increases in the project’s market. The adjustment will take effect at the next contract anniversary date, subject to the availability of funding. Owners may either accept the Alternative OCF or request a more detailed, project-specific analysis if the initial adjustment does not sufficiently address the project’s financial viability. If a PHA requests an in-depth analysis from Recap, the previously offered Alternative OCF based on administrative data will no longer be available. Additionally, by accepting the Alternative OCF, the owner gives up any claim to missed or under-calculated OCAF adjustments from prior years.
RAD Office Hours Recap will hold office hours for PHAs and their partners on the Alternative OCF on September 25 at 2:00 p.m. ET.
CLPHA will continue to advocate for additional pathways to make RAD rents more sustainable, including future updates to RAD program operations notices. |
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Beneficial Provisions Related to HOME, HCV, and RAD Programs Included
Yesterday, the Senate Banking Committee announced the ROAD to Housing Act of 2025, which includes several bills related to housing that have provisions beneficial to PHAs such as authorizing the HOME Program, incentivizing landlord participation in the Housing Choice Voucher (HCV) program, and lifting the Rental Assistance Demonstration (RAD) cap. The bill also includes a very limited expansion of the Moving to Work (MTW) program with significant restrictions on activities for new MTW PHAs and new onerous reporting requirements for all MTW agencies.
The housing package has been agreed to by both Republicans and Democrats on the Committee, but provisions of the bill may be amended once members of the Committee convene to offer amendments and vote on the bill next Tuesday, July 28, at 10:00 a.m. ET. You can listen to the hearing using this link.
The ROAD to Housing Act proposes a new “Economic Opportunity and Pathways to Independence Cohort” MTW Cohort of only 25 agencies focused on providing opt-out savings or escrow accounts for tenants, as well as reporting positive rental payments to consumer reporting agencies. The bill would curtail PHAs in this cohort from adopting program and funding flexibilities available to current MTW agencies. In addition, the legislation imposes burdensome reporting requirements for all MTW PHAs.
The bill also includes a provision to increase housing designated in Opportunity Zones to support housing preservation and construction and lifting the unit cap on the RAD program.
Below is a list of other pieces of legislation proposals to be considered under the Road to Housing Act of 2025 that pertain to CLPHA members:
- HOME Investment Partnerships Reauthorization and Improvement Act: Fully authorizes and makes improvements to the HOME program related to the administration and construction of HOME eligible activities.
- Choice in Affordable Housing Act: Authorizes grants to increase the number of landlords participating in the Housing Choice Voucher (HCV) Program through one-time incentive payments, covering security deposits, and issuing bonus payments to PHAs.
- PRICE Act: Authorizes HUD’s Preservation and Reinvestment Initiative for Community Enhancement (PRICE) Program to provide grants to communities to maintain, protect, and stabilize manufactured housing communities.
- Helping More Families Save Act: Establishes an opt-out pilot program for the Family Self-Sufficiency Program, automatically enrolling five thousand households.
- Reducing Homelessness through Program Reform Act: Reduces homelessness through improving the HCV program by allowing Housing Assistance Payments to be used for security deposits and utilities and streamlining income verification and inspection process.
CLPHA will continue to monitor the legislation as it moves through the committee process and will provide an updated analysis after the markup on July 29.
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HUD has published supplemental guidance on the Revised RAD Notice 4C. The Federal Register notice summarizes key changes made by the RAD Supplemental Notice 4C. The RAD Supplemental Notice 4C is effective June 16, 2025, except for items listed as new statutory or regulatory waivers or alternative requirements specified in this notice, which will take effect on June 26, 2025.
Key changes made to RAD by Supplemental Notice 4C that are outlined in this notice include:
- Extension of the application date to September 30, 2029.
- RAD and Section 18 Blends – implements statutory provisions allowing HUD to convert tenant protection voucher assistance to a RAD HAP contract under RAD PBV or RAD PBRA when a Section 18 event occurs.
- Resident Services – clarifies eligibility to continue services through the Jobs Plus, Resident Opportunity and Self-Sufficiency Service Coordinators (ROSS-SC), and Family Self Sufficiency (FSS) programs.
- Waivers of rental adjustments by OCAF
- Note: at this time, the actual waiver request process has not been finalized. When it is available, it will be posted on www.hud.gov/rad.
- Annual financial statements requirements.
- Extension from 14 to 30-Day notice for non-payment of rent.
- Renewal after initial term - clarifies that each HAP Contract must be renewed/extended after its initial term of 15 or 20 years.
- Leases – guidance on security deposits, pet occupancy, and the use of plain language in tenant leases.
- Restore-Rebuild (formerly Faircloth-to-RAD) – clarifying changes to resident notification requirements.
- Financing plan requirements and feasibility benchmarks for public housing conversions.
- HOTMA PBV rule conforming changes.
The new waivers and alternative requirements pertain to:
- Resident Services – specifically, provisions limiting assistance for ROSS-SC and Jobs Plus to only public housing residents are waived so that these services can be continued in RAD-converted properties.
- HOTMA PBV rule conforming changes – the newly revised definitions of housing types for PBVs are updated in the RAD statute. Also, Mod Rehab projects converting to PBV through RAD are considered existing housing as long as they meet the definition in 24 CFR part 983.3.
When the process for requesting a waiver of rental adjustment is detailed, CLPHA will alert our members.
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PHAs Can Now Apply for a Waiver to Adjust Rents, Following CLPHA’s Advocacy
HUD has published RAD Supplemental Notice 4C, which contains several major revisions. Most notably, properties that converted under RAD that have insufficiently low rents are now able to apply for a waiver of rent adjustments by OCAF; CLPHA advocated for this relief through its RAD Rents Working Group. The changes in the Notice are effective immediately and are subject to a 30-day comment period. Other major changes in the Notice include:
- Implementing the extended application date to September 30, 2029, including for both stand-alone applications and applications for Portfolio Awards;
- Changing to RAD-Section 18 Blends allowing for tenant protection voucher (TPV) assistance to convert to a RAD HAP Contract under either PBRA or PBV when a Section 18 event occurs at a property that is partially converting;
- Allowing PHAs to continue Jobs Plus, ROSS, and FSS programs at properties that undergo RAD conversion;
- Strengthening requirements for owners to submit annual financial statements;
- Extending the notification requirement to 30 days prior to termination for nonpayment of rent;
- Clarifying that each HAP Contract must be renewed/extended after its initial term of 15 or 20 years;
- Providing guidance on security deposits, pet occupancy, and the use of plain language in resident leases;
- Making clarifying changes to resident notification requirements for Restore-Rebuild developments (formerly called Faircloth-to-RAD) where the proposed project is occupied;
- Strengthens the Financing Plan Requirements and Feasibility Benchmarks for public housing properties undergoing a RAD conversion;
- Making changes to conform RAD to the HOTMA PBV rule.
RAD-Section 18 Blends:
The Notice implements statutory changes around RAD and Section 18 Blends that allow HUD to convert tenant protection voucher (TPV) assistance to a RAD HAP Contract, under either PBRA or PBV, when partially converting a Section 9 property under RAD and an event under Section 18 occurs that results in eligibility for TPVs. Public housing properties that have been developed pursuant to the mixed-finance development method are eligible for RAD/Section 18 Blends.
Owners of properties that previously entered into a RAD PBRA HAP Contract that also includes units assisted by a PBV HAP contract can now request to terminate the PBV HAP Contract and enter into one single RAD PBRA HAP Contract for all assisted units with a term at least as long as the remaining term of the original RAD PBRA HAP Contract. Any residents of PBV units will not be rescreened and will retain all choice-mobility rights.
MTW agencies can use their MTW funds to set the initial contract rents higher than the normally applicable contract rent cap. However, the initial contract rent set by the PHA is still subject to all other applicable program caps. The agency must use existing MTW funds to supplement the initial contract rent, and any use of MTW funds in setting higher initial contract rents is still subject to subsidy layering review and MTW continued service requirements, as calculated using the MTW Baseline Methodology (described in Notice PIH 2013-02).
HUD will produce a single, blended rent schedule for all units resulting from a RAD/Section 18 Blend. The rent schedule will be calculated as the unit-weighted average contract rent by bedroom of the Converting Public Housing Assistance using the RAD rents based on their “RAD rent base year” (described in Attachment 1C of the Notice), and the Converting TPV Assistance using the lower of 110% of the applicable FMR (or approved exception payment standard) minus any Utility Allowance or the Reasonable Rent.
Requesting Waivers of Rental Adjustments by OCAF
A project owner may request a waiver of the rental adjustment by OCAF and receive a rental adjustment by an alternative operating cost factor. To request a waiver of the rental adjustment by OCAF, project owners must submit a request along with documentation demonstrating the need for an alternative operating cost factor rental adjustment in order to preserve the project. The submission to the Office of Recapitalization must be consistent with instructions published on www.hud.gov/rad. If the Office of Recapitalization grants the waiver, they will determine the appropriate alternative operating cost factor and resulting rents. For PBV, the Contract Administrator must consent to the request and their consent must be evidenced in the Project Owner’s documentation.
Financing Plan Requirements and Feasibility Benchmarks
The Notice makes changes to financing plan requirements and feasibility benchmarks for any transaction that has not submitted a complete Financing Plan on or before April 16, 2025 (the 90th day after the Effective Date of this Notice). All other transactions will be subject to the previous provisions of the RAD Notice, Rev-4.
Under 24 CFR § 58.11(c), all conversions will be subject to an environmental review under Part 50. Environmental documents are required to be submitted no later than the applicant’s Financing Plan. Once an awardee has submitted an application for a specific project, they may not make any choice limiting actions before the completion of the environmental review. The Notice contains details about the environmental documents that must be submitted, the entity that performs the review for each transaction type, and more.
HOTMA conforming changes
The Notice makes technical changes to the RAD Notice to update regulatory references and language and certain non-technical changes to resolve conflicts between the RAD Notice and the HOTMA Voucher Final Rule. These include several modified definitions; the maximum number of PBV units (percentage limitation); the cap on the number of PBV Units in each project (Income-Mixing requirement); proposal and project selection procedures; applicability of PBV housing types, execution of RAD PBV HAP Contract, and RAD rehab assistance payments; and changes to the execution of RAD PBV HAP Contract and rehabilitation.
Any questions should be emailed to RAD@hud.gov. Additionally, HUD will develop informational materials to address various program elements that HUD will post on the RAD website.
CLPHA, with the support of HAI Group, Reno & Cavanaugh, CF Housing Group, and the National Equity Fund formed the RAD Collaborative in 2015. The Collaborative facilitates information sharing and productive relationships among housing authorities, their residents and development and financing partners, advisors and transactional service providers, local government, policy makers and other stakeholders working to implement RAD across the country. To learn more about the RAD Collaborative, please visit radcollaborative.org.