The Rental Assistance Demonstration (“RAD”) is well known for the option to convert public housing subsidy to a long-term Section 8 Housing Assistance Payments contract (“HAP Contract”) — but RAD also allows owners to convert their Moderate Rehabilitation (“Mod Rehab”) and Moderate Rehabilitation Single Room Occupancy (“SRO”) contracts to a Section 8 HAP Contract.  HUD estimates that there are over twenty thousand units of Mod Rehab and SRO units across the country with no cap on the number of units that can convert through RAD (see database of units here).

Converting Mod Rehab and SRO contracts to long-term Section 8 HAPs through RAD can present advantages to both the owners of the project and the public housing authorities (“PHA”) that administer the existing contracts.  Below are just a few of the possible benefits for owners and PHAs:

Benefits to Owner:

Long-term RAD HAP Contract:

• Likely higher rents
• Provides stability
• Can be used to secure/leverage financing for rehabilitation
• Preserve affordable housing

Benefits to PHAs:

For Project Based Voucher (PBV) conversions:

• New vouchers added to PHA’s Annual Contributions Contract (ACC)
• PHA receives ongoing administrative fee
• Contract administration responsibilities align with standard PBV program

For Project Based Rental Assistance (PBRA) conversions:

• HUD administers HAP contract
• PHA relieved of contract administration

Ballard Spahr recently hosted a webinar with HUD on the RAD conversion process for Mod Rehab and SRO projects.  You can find a recording of the webinar and the associated slides on the Ballard Spahr website.