HUD Notice Rental Assistance Demonstration (RAD) – Partial Implementation and Request for Comments April 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 (deed 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 (RS) & Rental Assistance Payment (RAP) No option to renew when contracts expire C URRENT C HALLENGES 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 Senator Shelby November 2011: FY12 Appropriations minibus authorized RAD H ISTORY 3

G OALS FY12 Rental Assistance Demonstration (RAD) Allow selected Public Housing & some at-risk assisted Multifamily programs to convert to long-term Section 8 Housing Assistance Payment (HAP) contracts Goals Build on proven Section 8 multifamily platform Leverage private capital to preserve public housing Offer residents greater choice & mobility 4

Authorized as part of the Consolidated Further Continuing Appropriations Act of 2012 (Public Law )Public Law Program Rules outlined in PIH Notice PIH Notice Components 1 st Component: Competitive – Public Housing & Mod Rehab 2 nd Component: Non-competitive – Mod Rehab, Rent Supp, & RAP A UTHORITY 5

RAD C ONVERSION E LIGIBILITY Public HousingMod RehabRS & RAP Cap of 60,000 Units PBRAPBV No Cap, but subject to availability of TPVs PBV Effective Immediately

Public Housing & Mod Rehab – Proposed: Public Comments due April 9, 2012 Can compete to convert assistance to: – Project-Based Rental Assistance (PBRA) or – Project-Based Vouchers (PBV) Cap of 60,000 units Convert at current funding only Choice-mobility, with limited exemptions Extensive waiver authority to facilitate conversion Applications through September 30, ST C OMPONENT : C OMPETITIVE 7

K EY P ROGRAM P ROVISIONS : P UBLIC H OUSING 8 ProvisionRequirement Application Pools4 Census Regions, by PHA size; 58,750 total units Application Ranking Factors  Capital Needs  Choice-Mobility  Green-Building  Priority Project Ownership /Control Public or non-profit ownership or control, except: For-profit ownership to facilitate tax credits, or In foreclosure, bankruptcy, termination for cause, dispose first to capable public entity then other capable entities as determined by Secretary Initial Contract Term PBRA – 20 years PBV – 15 years (20 with approval of voucher agency) Initial Contract RentsSubject to current funding and associated rent caps Capital and Operating FundsCan be used in financing structure Contract Rent AdjustmentsAnnually via OCAFs Contract RenewalSecretary must offer and PHA must accept renewal Use AgreementLong-term Use Agreement extended with each contract renewal Resident Choice-Mobility PBRA – Required after 2 years with PHA option of 20% project cap and 1/3 voucher turnover cap; good-cause exemption for up to 10% of conversions PBV – Per normal PBV rules

K EY P ROGRAM P ROVISIONS : P UBLIC H OUSING 9 ProvisionRequirement Approval Process (2-Step) 1.Application > Commitment to Enter Housing Assistance Payments Contract (CHAP) 2.Financing Plan > Housing Assistance Payment Contract (HAP) PBV Inventory LimitationExempt from 20% limitation PBV Income MixingRaised to 50% per property PBV Competitive Selection of Owner Proposals Waived PBRA Limitations on DistributionsWaived No Rescreening at ConversionRequired Resident ConsultationRequired Recognition of Legitimate Resident Organizations Required Resident Participation FundingContinued at $25 per occupied unit annually Resident Procedural Rights under Section 6 of 1937 Act As conveyed under Section 6 of 1937 Housing Act Davis Bacon Act and Section 3Required for initial repairs Continued

C URRENT F UNDING – C ONVERSION R ENT L EVELS 10 ACCSection 8

RAD Authority Could Impact ≈220,000 – 270,000 units could potentially convert at current funding* 60,000 unit cap ≈5% of public housing inventory 300 – 400 projects could potentially convert ≈$380M in current PH funding and ACC units to transfer to PBRA or TBRA account PBRA HAP conversions shift to Office of Multifamily Housing Programs * Defined as able to leverage sufficient debt at current funding levels to meet the average regional capital need in the Capital Needs Assessment 2010 (Abt Associates). Estimate assumes debt-only and does not account for the use of other forms of capital. I MPACTS ON P UBLIC H OUSING 11

RAD C ONVERSION E LIGIBILITY Public HousingMod RehabRS & RAP Cap of 60,000 Units PBRAPBV No Cap, but subject to availability of TPVs PBV Effective Immediately

K EY P ROGRAM P ROVISIONS : M OD R EHAB 13 ProvisionRequirement Application Pools4 Census Regions; 1,250 units Application Ranking Factors  Capital Needs  Green Building  Choice-Mobility Initial Contract Terms  PBRA – 20 years  PBV – 15 years (20 with approval of voucher agency) Initial Contract RentsSubject to current funding and associated rent caps Contract Rent AdjustmentsAnnually via OCAFs Contract Renewal  PBRA – if owner requests, Secretary renews per MAHRA terms  PBV – per normal PBV rules (up to 15 years) Resident Choice-Mobility  PBRA – Required after 2 years with owner option of 20% project cap & PHA option of 1/3 voucher turnover cap; good-cause exemption for up to 10% of conversions.  PBV – Per normal PBV rules Approval Process (2-Step) 1.Application > Commitment to Enter Housing Assistance Payments Contract (CHAP) 2.Financing Plan > Housing Assistance Payment Contract (HAP) PBV Inventory LimitationExempt from 20% limitation PBV Income MixingRaised to 50% per property PBV Competitive Selection of Owner Proposals Waived No Rescreening at ConversionRequired Resident ConsultationRequired Recognition of Legitimate Resident Organizations Required 1 st Component

PBV Adhere to current program rules: – Minimum residency: 1 year – Waitlist priority if comparable TBRA is not immediately available PBRA Minimum residency: 2 years PHA may limit: – Choice-mobility vouchers to one-third of its turnover vouchers – Choice-mobility moves to 20 percent of the assisted units in the project HUD may exempt up to 10% of converted units for: – PHAs/owners without voucher program – PHAs with one-third of voucher turnover already committed to veterans or to the homeless Ranking factor (in competition) for applicants who obtain/commit choice- mobility vouchers R ESIDENT C HOICE -M OBILITY 14

RAD C ONVERSION E LIGIBILITY Public HousingMod RehabRS & RAP Cap of 60,000 Units PBRAPBV No Cap, but subject to availability of TPVs PBV Effective Immediately

16 K EY P ROGRAM P ROVISIONS : M OD R EHAB 2 nd Component ProvisionRequirement Initial Contract TermPer normal PBV rules (up to 15 years) Initial Contract RentsPer normal PBV rules Contract Rent AdjustmentsAnnually per normal PBV rules Contract RenewalPer normal PBV rules (up to 15 years) Resident Choice-MobilityPer normal PBV rules PBV Inventory LimitationExempt from 20% limitation PBV Income MixingRaised to 50% per property PBV Competitive Selection of Owner Proposals Waived Resident ConsultationRequired

Mod Rehab, Rent Supp & RAP – All Public Comments due April 9, 2012 – Proposed: Mod Rehab – Interim Authority: 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 as found in PBV program Limited waiver authority to facilitate conversion 2-year prospective conversion authority (ends 9/30/2013) 5-year retroactive conversion authority (10/1/2006) 2 ND C OMPONENT : N ON -C OMPETITIVE 17

RAD C ONVERSION E LIGIBILITY Public HousingMod RehabRS & RAP Cap of 60,000 Units PBRAPBV No Cap, but subject to availability of TPVs PBV Effective Immediately

Rent Supp program authorized under Section 101 of the Housing and Urban Development Act of 1965 RAP program authorized under Section 236(f)(2) of the National Housing Act Contracts authorized for 30 to 40 year terms. Budget authority provided for contract term. No option for renewal. – All contracts expire by 2019, most prior to 2016 Today: Approximately 25,000 Rent Supp/RAP units remain, in 345 properties (236 and some 202s). In most cases the Rent Supp or RAP provides assistance to some, but not all units. R ENT S UPP & RAP B ACKGROUND 19

G EOGRAPHY OF R ENT S UPP & RAP 20

21 K EY P ROGRAM P ROVISIONS : R ENT S UPP & RAP ProvisionRequirement Initial Contract TermPer normal PBV rules (up to 15 years) Initial Contract RentsPer normal PBV rules Contract Rent AdjustmentsAnnually per normal PBV rules Contract RenewalPer normal PBV rules (up to 15 years) Resident Choice-MobilityPer normal PBV rules PBV Inventory LimitationExempt from 20% limitation PBV Income MixingRaised to 50% per property PBV Competitive Selection of Owner Proposals Waived Resident ConsultationRequired

22 S UBMISSION OF P UBLIC C OMMENTS Due April 23, methods for submitting public comments Electronic – Federal eRulemaking Portal at HUD strongly encourages electronic submissions of comments. Mail – Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 Seventh Street, SW, Room 10276, Washington, DC Submissions must refer to HUD Notice (PIH ) All comments submitted will be posted for public viewing on

Initial Notice Published3/8/ Day Public Comment Period Ends4/23/2012 Final Notice Published6/15/2012 First Component (Public Housing & Mod Rehab) Initial Application Window Opens 8/1/2012 Public Housing Ongoing Application Window Opens 9/1/2012 Initial CHAP Awards 10/1/2012 Second Component (Mod Rehab, Rent Supp, & RAP) Rent Supp/RAP Requests for Conversions Under Interim Authority3/8/2012 Rent Supp/RAP/Mod Rehab Requests for Conversions Under Final Notice8/1/2012 P ROJECTED T IMELINE 23

All Notice and application materials, as well as additional resources, can be found at RAD W EB P AGE 24