Today, the U.S. Department of Housing and Urban Development (HUD) launched its Rental Assistance Demonstration (RAD) in an effort to save thousands of public and HUD-assisted housing units suffering from a $26 billion backlog in capital needs.
RAD is expected to preserve more than 13,000 units of affordable housing and generate more than $650 million in private capital in the near term, writes HUD.
RAD allows public housing agencies and private owners of at-risk federally-assisted properties to convert current assistance to Section 8 contracts.
Under these long-term contracts, owners will be able to leverage millions of dollars in debt and equity to better address immediate capital needs, according to HUD.
The program is also expected to stimulate employment in construction nationwide.
So far, HUD has awarded 112 commitments to 68 public housing authorities (PHAs), which allows these agencies to seek private finance to rehab housing units that are at risk of being lost from the affordable housing inventory.
HUD reports that it has approved 11 of these requests from private owners of assisted housing projects to convert and extend rental assistance contracts for 1,100 units.
“This innovative and cost-effective approach greatly enhances our ability to confront the decline of our public housing and older assisted housing stock,” said HUD Secretary Shaun Donovan.
In 2011, HUD released its study Capital Needs in the Public Housing Program, which found the nation’s 1.2 million public housing units need $26 billion to maintain safe and decent conditions for families.
“With the initial implementation of RAD, the Obama Administration has begun to demonstrate that public-private partnership can help preserve our nation’s affordable housing and create jobs in the process,” said Donovan.
Written by Jason Oliva