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HomeMy WebLinkAboutMINUTES - 12172013 - HA D.1RECOMMENDATIONS CONSIDER adopting Resolution No. 5170 authorizing submission of a Rental Assistance Demonstration application to the U. S. Department of Housing and Urban Development for vacant units at Las Deltas in North Richmond. BACKGROUND HUD first offered its Rental Assistance Demonstration (RAD) program to housing authorities on September 24, 2012. Under RAD, public housing is converted into either Project-Based Vouchers (PBV) or Project Based Contract Assistance (PBCA), both of which have provided more reliable funding streams than public housing. HACCC has used PBVs to fund nearly 500 units of affordable housing throughout the County, most of it new construction developed and managed by local nonprofits. HUD developed RAD as a way to preserve affordable housing in response to the fact that Congress has not appropriated sufficient public housing operating subsidy or public housing capital funds for several decades. Although still a limited demonstration program, RAD is HUD’s primary tool to preserve housing while maintaining its affordability for low-income households over the long term. If approved by HUD, staff intends to use RAD as part of a multi-step effort to transform the Las Deltas property in North Richmond by converting public housing units into subsidies that can be used to develop new affordable housing or support existing affordable housing. RAD would also help HACCC increase the stock of affordable housing available to Contra Costa residents since it will replace units that are empty. Action of Board On: 12/17/2013 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF COMMISSIONERS AYE:John Gioia, District I Commissioner Candace Andersen, District II Commissioner Mary N. Piepho, District III Commissioner Karen Mitchoff, District IV Commissioner Federal D. Glover, District V Commissioner ABSENT:Geneva Green, Tenant Seat Commissioner Contact: 925-957-8028 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: December 17, 2013 Joseph Villarreal, Executive Director By: June McHuen, Deputy cc: D.1 To:Contra Costa County Housing Authority Board of Commissioners From:Joseph Villarreal, Housing Authority Date:December 17, 2013 Contra Costa County Subject:Submission of a Rental Assistance Demonstration Application to HUD BACKGROUND (CONT'D) Las Deltas needs over $4.5 million in immediate capital repairs to bring all of the units there back in compliance with HUD’s Uniform Physical Condition Standards under the public housing program. Yet HACCC received only $1.5 million in capital funds from HUD last year for all of the agency’s public housing properties. Of that $1.5 million, about half went to pay for police and Sheriff’s deputies in North Richmond, Rodeo and Pittsburg, social services in North Richmond and HACCC’s development staff. Of the 210 units at North Richmond, 90 (43%) are vacant and 61 (29% of total units) of those have been vacant for over two years. A significant number of the vacant units have been empty for ten, fifteen and twenty years. HACCC has tried repeatedly over the past two decades to provide adequate funding for the repairs needed at Las Deltas, primarily by applying for HUD’s HOPE VI program. However, HACCC has been unsuccessful in these efforts, most likely due to HUD’s negative view of the larger neighborhood, the lack of other significant funding sources and the extremely limited nature of HOPE VI funding. Staff intends to submit a Section 18 Demolition/Disposition application to HUD for Las Deltas in the spring of 2014. While HUD has largely discontinued use of the Section 18 program, staff have been in discussions with HUD and have been told that an application would be seriously considered. Section 18 would allow the Authority to remove public housing units and provide full voucher funding to replace the units. Replacement housing factor funding would also be provided that could be used to rehabilitate or build other public housing units. HACCC would receive more replacement housing funding under a Section 18 Demolition/Disposition than under RAD. However, under Section 18, HACCC is not eligible to receive replacement funding for vacant units. Therefore, in order to maximize the replacement funding available, HACCC is submitting the RAD application for the vacant units at Las Deltas. The RAD application is being submitted at this time because HUD has said that any application received before December 31, 2013, and subsequently approved, will be eligible for RAD contract rents set at fiscal year 2012 levels. This is attractive because subsidy levels may drop in fiscal year 2013 or beyond and also because it establishes predictable rent levels for HACCC and the agency’s development/financing partners. If approved, no current tenants at Las Deltas will be affected since the RAD application only impacts vacant units. Additional affordable housing will be created that will be offered to families on HACCC’s voucher and public housing wait lists. Under RAD, the method for calculating the tenant rent share remains the same and certain tenant rights under the public housing program will remain in place such as the right to have a resident council, access to modest funding for resident activities, and the right to a grievance hearing. Staff met with the RAB and residents of Las Deltas, as is required by RAD. The RAD program was explained along with the general program parameters. At the time this Board Order was prepared, no tenant objected to the RAD conversion. Because there is a second meeting the evening prior to the Board meeting, the Board will be apprised if any tenant raised an objection at that meeting. HUD does not provide any new funding for RAD—instead, it sums the amount of public housing operating subsidy and the amount of public housing capital funds, adds that to the average tenant rent contribution and “converts” that total into a monthly PBV or PBCA payment (there is no difference in funding between the two programs). However, because HACCC’s application is for vacant units that do not receive operating subsidy or rent, RAD, if approved, would provide a significant new stream of funding to HACCC. The attached Board Approval Forms are HUD forms that must be submitted with the application. HACCC has two contracts with HUD for Las Deltas, which is why there are two forms to approve. In general, the forms show the sources and uses of funds to convert the project to RAD. A PowerPoint presentation prepared by HUD has also been attached in order to provide some more detailed background to the Board. FISCAL IMPACT If approved by HUD, the Housing Authority’s (HACCC) RAD application would convert 90 vacant public housing units for which HACCC receives no operating subsidy or rent into project-based voucher units. The project based voucher subsidy for these units will be worth approximately $23 million in funding over the next 20 years. CONSEQUENCE OF NEGATIVE ACTION Should the Board of Commissioners elect not to approve Resolution No. 5170, authorizing submission of a RAD application to HUD, HACCC will be in jeopardy of losing approximately $23 million in funding over the next 20 years. CLERK'S ADDENDUM ATTACHMENTS RAD Resolution 5170 RAD Approval Forms RAD Powerpoint Rental Assistance Demonstration (RAD) Final Notice Overview December 2012 Public Housing •Capital repair needs in excess of $25.6B across portfolio, or $23,365/unit •Section 9 funding platform unreliable (pro-rations, cuts), inhibits access to private debt and equity capital (declaration of trust) •Losing 10,000-15,000 hard units/year Section 8 Moderate Rehabilitation (Mod Rehab) •Cannot renew on terms needed to secure financing Rent Supplement (Rent Supp) & Rental Assistance Payment (RAP) •No option to renew when contracts expire CURRENT CHALLENGES 2 •February 2010: FY11 Budget requests $350M for Transforming Rental Assistance (TRA) initiative •May 2010: “Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010” (PETRA) - Administration’s bill •December 2010: “Rental Housing Revitalization Act” (RHRA) introduced by Rep. Ellison and co-sponsors •February 2011: FY12 Budget requests $200M for a “Rental Assistance Demonstration” (RAD) •August 2011: RAD language submitted as “Technical Drafting Service” (TDS) to Rep. Ellison, Rep. Bachus, and Sen. Shelby •November 2011: FY12 Appropriations minibus authorized RAD LEGISLATIVE HISTORY 3 KEY RAD GOALS •Build on the proven Section 8 platform •Leverage private capital to preserve assets •Offer residents greater choice and mobility 4 •Authorized in Consolidated Further Continuing Appropriations Act of 2012 (Public Law 112-55) –Initial program rules outlined in PIH Notice 2012-18 (3/8/12) –Over 100 comments received –HUD’s response to public comments on RAD website –Final program rules outlined in PIH Notice 2012-32 (7/26/12) •Allows public housing and certain at-risk multifamily legacy programs to convert to long-term Section 8 rental assistance •Two Components –1st Component, Competitive: Public Housing & Mod Rehab –2nd Component, Non-competitive: Mod Rehab, Rent Supp, & RAP RAD AUTHORITY 5 RAD CONVERSION ELIGIBILITY Public Housing Mod Rehab Rent Supp & RAP 1st Component: Competitive, 60,000 Units PBRA PBV 2nd Component: Non-Competitive, No-Cap (subject to availability of TPVs) PBV 6 •Public Housing & Mod Rehab •Can compete to convert assistance to: –Project-Based Rental Assistance (PBRA) or –Project-Based Vouchers (PBV) •Cap of 60,000 units (applications must be received by 9/30/2015) •Convert at current funding only •Choice-Mobility, with limited exemptions •Extensive waiver authority to facilitate conversion •Initial application period: September 24 – October 24, 2012 1ST COMPONENT 7 •Mod Rehab, Rent Supp & RAP •Upon contract termination/expiration, convert Tenant Protection Vouchers (TPVs) to PBVs •No cap, but subject to availability of TPVs •Choice-Mobility requirement per PBV program rules •Limited waiver authority to facilitate conversion •Prospective conversion authority through 9/30/2013 •Retroactive conversion authority back to 10/1/2006 (convert by 9/30/2013) 2ND COMPONENT 8 Tenant Payment $318 Tenant Payment $318 Capital Fund $144 Operating Fund $330 Housing Assistance Payment $474 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 Pre-Conversion Post-Conversion Sample Public Housing Conversion Per Unit Monthly (PUM) $792 PUBLIC HOUSING CONVERSION RENT LEVELS 9 ACC Section 8 At conversion, PHAs will convert funding to a Section 8 contract rent. KEY PROGRAM PROVISIONS: 1ST COMPONENT 10 Provision Requirement Public Housing Mod Rehab Application Pools 4 Census Regions, by PHA size; 58,750 total units 4 Census Regions, by Mod Rehab size; 1,250 total units Application Ranking Factors Capital Needs Green Building Choice-Mobility Priority Project Same Ownership/Control Public or non-profit ownership or control, except to facilitate tax credits, or, in foreclosure, bankruptcy, termination for cause, wherein project disposed first to capable public entity, then other capable entities as determined by Secretary N/A Initial Contract Term • PBRA – 20 years • PBV – 15 years (20 with approval of voucher agency) Same Initial Contract Rents •PBRA – Lower of a) current funding, or b) 120% of FMR (less utility allowance); except where current funding is below market, wherein rent is limited to 150% of FMR •PBV – Lower of a) current funding, b) 110% of FMR (less utility allowance), or c) reasonable rent Same KEY PROGRAM PROVISIONS: 1ST COMPONENT 11 Provision Requirement Public Housing Mod Rehab Capital and Operating Funds Can be used in financing structure N/A Contract Rent Adjustments Annually via Operating Cost Adjustment Factor (OCAF) Same Contract Renewal Secretary shall offer and PHA shall accept renewals of such terms as provided in PBV and PBRA programs •PBRA – if owner requests, Secretary renews per MAHRA terms •PBV – per normal PBV rules (up to 15 years) Use Agreement Long-term use agreement extended with each contract renewal N/A Resident Choice-Mobility •PBRA – Required after 2 years with PHA option of 15% project cap and 1/3 voucher turnover cap; good-cause exemption for up to 10% of conversions •PBV – Per normal PBV rules Same PBV Inventory Limitation Exempt from 20% limitation Same Continued KEY PROGRAM PROVISIONS: 1ST COMPONENT 12 Provision Requirement Public Housing Mod Rehab PBV Income Mixing Raised to 50% per property Same PBV Competitive Selection of Owner Proposals Waived Same PBRA Limitations on Distributions Waived N/A No Rescreening at Conversion Required Same Resident Consultation Required Same Recognition of Legitimate Resident Organizations Required Required for PBRA Resident Participation Funding Continued at $25 per occupied unit annually N/A Resident Procedural Rights under Section 6 of 1937 Act As conveyed under Section 6 of 1937 Housing Act N/A Davis Bacon Act and Section 3 Required for initial repairs N/A Continued 13 KEY PROGRAM PROVISIONS: 2ND COMPONENT Mod Rehab, Rent Supp, & RAP Provision Requirement Initial Contract Term 15 years Initial Contract Rents Per normal PBV rules Contract Rent Adjustments Annually per normal PBV rules Contract Renewal Per normal PBV rules (up to 15 years) Resident Choice-Mobility Per normal PBV rules PBV Inventory Limitation Exempt from 20% limitation PBV Income Mixing Raised to 50% per property PBV Competitive Selection of Owner Proposals Waived Resident Consultation Required PUBLIC HOUSING RESIDENT PROVISIONS 14 •Resident Notification Prior to and During Conversion •No Rescreening of Residents at Conversion •One-for-One Replacement –Must convert all or substantially all units in covered project •Family Self-Sufficiency (FSS) & Resident Opportunities and Self- Sufficiency (ROSS) –FSS & ROSS participants may continue in programs •Resident Participation & Funding –PHAs must recognize legitimate tenant organizations –PHAs must provide $25 per occupied unit annually for resident participation per current Public Housing program rules •Resident Procedural Rights –Consistent with Section 6 of the 1937 Housing Act APPLICATION SNAPSHOT 15 Under the 1st Component, PHAs and owners will complete an Excel-based application, a draft of which is posted on the RAD website. 1st Component (Public Housing & Mod Rehab) Initial Application Window Opens 9/24/2012 Initial Application Window Closes 10/24/2012 Public Housing Ongoing Application Window Opens 10/25/2012 Initial CHAP Awards 12/2012 2nd Component (Mod Rehab, Rent Supp, & RAP) Rent Supp & RAP Requests for Conversions under 3/8/2012 Interim Authority Rent Supp, RAP, & Mod Rehab Requests for 7/26/2012 Conversions under Final Notice KEY DATES 16 RAD Notice, application materials, and additional resources can be found at www.hud.gov/rad Email questions to rad@hud.gov RAD WEB PAGE 17