July is right around the corner and we wanted to remind everyone of the HUD deadlines for closing RAD conversions by year end:

Required Action Deadline to close by
November 30, 2018
Deadline to close by
December 31, 2018
Upload all required Financing Plan
June 15 July 13
Receive a HUD-executed RCC** August 17 September 14
Submit complete closing package** September 1 October 1
All RAD documents approved and ready for HUD signatures** November 15 December 13

* Note: FHA applications should be submitted at roughly the same time as the Financing Plan documents. PHAs should coordinate with their FHA lender to stay on track.

** Note: An RCC that has already been extended up to or beyond 6 months past the date of issuance will have a lower priority for closing during CY2018.

These deadlines don’t always align with standard low income housing tax credit closings and can sneak up quickly.  Keep the following tips in mind to manage a successful year end conversion:

  • Know the RAD checklists (PBV and PBRA) and what transaction documents must be submitted to HUD.
  • Work out any title and survey issues before HUD submission.
  • Establish a detailed RAD timeline and engage with financing partners as soon as possible on the timeline.
  • Share the HUD-required ownership and control provisions that must be included in transaction documents with financing partners prior to the circulation of draft documents.
  • Share the HUD sample RAD Subordination Agreement with lenders as soon as possible.
  • If necessary, consider prioritizing circulation and review of transaction documents that must be submitted to HUD.
  • Account for the time between receiving final HUD approval and HUD signing and mailing documents – this can take over a week.
  • Aim to make an initial submission to HUD within 2 weeks of RCC issuance (if not sooner). A submission beyond 2 months of RCC issuance will have the transaction placed in “Delayed Submission” status.
  • Make HUD aware of any targeted and hard closing deadlines.

Cheers to a smooth year end!

Last week, Ballard Spahr in conjunction with CSG Advisors hosted its 7th Annual Western Housing Conference in Phoenix, Arizona. The Conference brought together a wide range of public and private housing professionals facilitating a dynamic conversation on current developments in government-assisted housing.

The Conference opened with a “Washington Update” – a discussion on housing policy under the Trump Administration. Panelists Emily Cadik, Director of Public Policy at Enterprise Community Partners, and Peter Lawrence, Director of Public Policy and Government Relations at Novogradac & Company LLP, brought extensive insight into the political priorities driving forthcoming changes to government-assisted housing programs.

Significant takeaways from the discussion included:

  • The concern over a predicted decrease in HUD’s budget by $6 million, as outlined by the Washington Post on March 8th. Since the panel occurred, the Trump administration’s budget blueprint for fiscal year 2018 budget was released. Housing Plus posted a blog providing an overview of the budget blueprint on March 16, 2017.
  • The elimination of one or more of the tax credit programs, private activity bonds and/or the reduction of the corporate tax rate through tax reform will have significant impacts on the availability of equity financing needed to at least sustain affordable housing development at its current levels.
  • An infrastructure bill that includes housing may be an opportunity to meet any deficits created by HUD budget cuts to the Public Housing Capital Fund and Community Development Block Grant programs.
  • The spending caps under the existing Budget Control Act also pose a threat to government-assisted housing programs, especially in light of the proposed increases in defense spending and the resulting offsets that would be needed from non-defense discretionary spending.
  • Stakeholders should continue to invite legislators and members of Congress to ribbon cuttings and site visits in their districts. These visits are critical in gaining Congressional support for government-assisted housing programs.

The second session of the Conference focused on lessons learned from implementing the Rental Assistance Demonstration (RAD) program. Nicole Ferreira, Vice President for Development at the New York City Housing Authority, and Jenny Scanlin, Director of Development at the Housing Authority of the City of Los Angeles, each provided a case study from which they described the benefits and limitations of the program and the financial structures making each deal work. Beverly Rudman, Director of the Closing/Post Closing Department in HUD’s Office of Recapitalization, provided an update on the program and described particular challenges facing her office, which oversees the RAD program. The panel highlighted the following as effective tools for successfully underwriting a RAD deal and securing community and tenant buy-in: (1) Tenant Protection Vouchers, (2) the demolition and disposition process under Section 18 of the U.S. Housing Act of 1937, (3) seller take back financing from the Housing Authority and (4) federal and local redevelopment grants.

Panelists Tom Capp, Chief Operating Officer of Gorman & Company, C.J. Eisenbarth Hager, Director of Healthy Community Polices at Vitalyst Health Foundation, and Keon Montgomery, Housing Manager for the City of Phoenix Housing Department, then provided a local perspective on how private/public partnerships can be used to create sustaining change in communities. The panel emphasized the use of health studies in the predevelopment process to generate academic research on the specific needs of the impacted community and solicit funding from public and private partners to address those needs.

The last panel focused on the changes in the affordable housing finance market. Monty Childs, Director of Loan Origination and Structuring at Freddie Mac, John Ducey, Manager of Multifamily Affordable Housing-Credit at Fannie Mae, Sarah Garland, Senior Vice President at PNC Bank, Catalina Velma, Vice President of Public Housing at the National Equity Fund, and Cody Wilson, Director at Stifel, Nicolaus & Company, each provided a unique perspective on the impact of recent and prospective economic changes (e.g. tax reform, HUD budget cuts and rises in interest rates) on the equity, bond and lending markets, as well as the increased challenge in financing small and rural projects. The panel also discussed financing tools like Tax-Exempt Loans (Freddie Mac), Reduced Occupancy Affordable Rehab (ROAR) Execution (Fannie Mae) and FHA 221(d)(4) Loans (HUD), which have been found to address some of the challenges faced in the market.

A copy of the conference materials can be found here.

If you have any questions regarding the information above, or want more information on how to register for next year’s conference, please contact Jennifer Boehm at boehmj@ballarspahr.com.

On May 17, 2016, HUD published a notice in the Federal Register to announce the issuance of the “Processing Guide for Previous Participation Reviews of Prospective Multifamily Housing and Healthcare Programs’ Participants” (the “Processing Guide”). A copy of the Processing Guide can be accessed here.

HUD proposes that the Processing Guide be used to supplement the proposed rule published in August that announced changes to regulations at 24 CFR Part 200, Subpart H, which govern the previous participation review process (the “Proposed Rule”). HUD reports that commenters expressed concern that the Proposed Rule was overly broad, which could further complicate the current process. In response to those comments, HUD proposes that the Processing Guide be used to supplement the Proposed Rule with specific information on review procedures, including, for the first time, detailed information on how “flags” are to be handled.

The Processing Guide is subject to a 30-day comment period ending June 16, 2016.

In addition to feedback on the Processing Guide, HUD also solicits comments on the following topics:

  1. HUD intends to revise 24 CFR 200.210 to state that the regulations are to be supplemented by the Processing Guide and that significant changes to the Proposed Guide will be subject to a 30-day notice and comment period.
  2. HUD also intends to add a definition of “Risk” to the Proposed Rule. HUD did not provide an actual definition, but states that the definition would clarify that the FHA Commissioner must determine whether the Controlling Participant (as defined in the Proposed Rule) could be expected to participate in the Covered Project (as defined in the Proposed Rule) in a manner consistent with furthering the HUD’s purpose of supporting and providing decent, safe and affordable housing for the public.

StopwatchFor efficient closing of RAD transactions by December 31, 2015, public housing authorities and developers should remain mindful of the Office of Recapitalization’s recently released processing deadlines. Planning ahead and incorporating the following issuance dates into operating schedules will help ensure your projects advance in a timely manner:

  • Upload all required Financing Plan documents no later than September 18, 2015.
    • To avoid delays in the review process, be sure that Financing Plan submissions contain all required documentation.
  •  Receive a RAD Conversion Commitment (“RCC”) no later than November 2, 2015.
    • Submit FHA financing applications by August 1, 2015, to ensure that FHA firm commitments will be ready with the RCC for processing.
  • Submit counter-signed RCC no later than November 9, 2014.
  • Submit complete closing package no later than November 9, 2014.
    • For a HAP effective date of December 1, transactions must close in November.
    • For a HAP effective date of January 1, transactions must close in December.

Considering the expansion of the RAD program, along with the usual bevvy of holidays, the Office of Recapitalization expects to be unprecedentedly busy in the last two months of the calendar year. Plan to avoid late-December closings within project planning milestones.

Housing Plus and Ballard Spahr’s RAD Team would be happy to address any questions or comments regarding RAD transaction closings and the schedule outlined above.


The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, have announced that they are quickly approaching their 2015 volume caps. In January of this year, the Federal Housing Finance Agency (FHFA), who regulates these agencies, released its 2015 scorecard which detailed 2014 activities and outlined 2015 priorities for the agencies.  The scorecard retained the volume caps imposed on Fannie and Freddie for multifamily business; leaving Fannie at its 2014 cap of $30 billion, and increasing Freddie’s by $4 billion, to the same $30 billion.

In light of their volume to date, the GSEs predict that they may run dry of allocation as soon as late-Summer 2015. Fannie Mae has closed approximately $10 billion (or 33% of its cap) and Freddie has either closed or currently has in its pipeline $25 billion (or over 80% of its cap).

Having just completed the first quarter of 2015, the GSE’s are faced with having to mitigate the fleeing allocation.  They had already begun to increase pricing over the last few weeks and are likely to continue to do so for the foreseeable future. Both agencies have widened spreads at least 25 bps. Such increases have already placed them at higher rates than CMBS and life companies.  Freddie may increase pricing another 45 bps in the next week.  Such actions are likely to halt loan volume and throw Fannie and Freddie to the very rear of the competitive multifamily debt race, together with their stakeholders and servicer partners.

While this is bad news for those seeking market rate deals, there is a silver lining:  Freddie Mac’s Targeted Affordable Housing and Small Balance (less than $5MM) loan products and Fannie Mae’s Multifamily Affordable Housing, DUS Small Loan and Manufactured Housing Community loan products are exceptions from the volume cap allocation. These loans, typically for underserved markets and property types, may continue to flourish with the agencies, and are exactly the types of financing that the GSE’s and FHFA are committed to providing.

Both Fannie Mae and Freddie Mac have also developed several new rate lock programs that allow borrowers the ability to rate at least some portion of its interest rate with reduced underwriting on the part of the lender.  Those borrowers willing to take the increased risk with these new rate lock programs are rewarded by at least partly mitigating the future increase in spreads.


Last week, HUD has announced a proposed rule to implement protections arising under the Violence Against Women Reauthorization Act of 2103 (VAWA).  The reauthorization added a number of programs covered by VAWA, including:

  • HOME Investment Partnerships program for rental housing;
  • Section 202 supportive housing for the elderly;
  • Section 236 Rental Program;
  • Section 811 supportive housing for people with disabilities;
  • Section 221(d)(3) Below Market Rate Interest Rate Program;
  • HOPWA (Housing Opportunities for Persons with AIDS) housing program;
  • McKinney-Vento homeless programs;
  • U.S. Department of Agriculture Rural Housing properties that receive Section 8 assistance;
  • Low-income Housing Tax Credit properties.

These programs are in addition to VAWA’s initial application to housing assisted with public housing funds, Section 8 vouchers and project-based Section 8 assistance proposed.  HUD’s proposed rule also adds the Housing Trust Fund (HTF) to the list of programs (the HTF was not yet implemented at the time of VAWA reauthorization).

HUD has also posted a summary of key elements of the proposed rule. Among these are:

  • extension of protections to “intimate partners” and “affiliated individuals” (i.e., spouse, parent, brother, sister or child of the individual of a child for whom the individual is loco parentis, or any other individual, tenant or lawful occupant living with the individual);
  • clarifies the provision that allows for the bifurcation of the resident lease and the eviction of a tenant who commits criminal acts of physical violence against family members or others, to permit the remaining residents a reasonable opportunity to establish eligibility to maintain tenancy under an assisted housing program or find other housing;
  • requires agencies to adopt a model transfer plan when a tenant reasonably believes there is a threat of imminent harm from further violence if the tenant remains in the unit.

The proposed rule was not published in the Federal Register this Wednesday.  The deadline for submitting comments on the proposed rule is June 1, 2015.

Community TopographyBefore a robust crowd at the recent Best of the West in Affordable Housing Development and Finance conference sponsored by Ballard Spahr and CSG Advisors in San Francisco, the value and evolution of the U.S. Department of Housing and Urban Development (HUD) Rental Assistance Demonstration (RAD) program was a common point of discussion among panelists. Lydia Ely from the San Francisco Mayor’s Office of Housing and Community Development, Daniel Nackerman of the Housing Authority of the County of San Bernadino and Starla Warren of the Housing Authority of the County of Monterey offered a cross-cutting review of the types of RAD conversions that support deals of various sizes and rely on a mix of structures using private developers, housing authority expertise and/or collaborations with city agencies.  Catalina Vielma, a branch chief on the RAD team within the HUD Office of Recapitalization, offered pointers about working with HUD and Terry Wellman of PNC Real Estate brought the lender and investor perspective to our RAD-focused panel.

Key insights arising from the discussion included:

  • HUD is working hard to build on lessons learned through the approval process and has issued a Welcome Guide for New Awardees: RAD 1st Component using insights learned from the focus groups HUD hosted earlier this year.  The Welcome Guide provides further detail on certain points of the approval process that may not be readily apparent in the RAD Notice or in other places on the RAD Resource Desk;
  • Ely provided an overview of the RAD waiver HUD recently granted for San Francisco, a critical piece in providing clarity in the combination of properties approved for conversion under RAD and those approved for disposition by HUD under the traditional Section 18 approval process. The waiver allows the RAD tenant protections to be applied the “Applicable Alternative Tenanting Requirements” (allowing certain Section 8 waivers on the percentage of a housing authority’s budget authority that can be project-based and the percentage of units within a project that may receive project-based vouchers, along with additional resident protections) to all of the units within projects that contain RAD units;
  • It is key for the parties within a transaction, including HUD, to have a shared understanding of the “true” closing deadline for the deal;
  • HUD will be issuing a new notice this Spring covering the RAD process for all of the applicants added to the RAD queue above the initial 60,000 unit limit.  However, the CHAP milestones will not begin to run for these applicants until the later of the date of the RAD award or the publication of the new notice.  Those RAD awardees that received CHAPs under the 60,000 cap will continue to be governed by the existing RAD notice;
  • RAD is a preservation tool with perpetual use restrictions that survive foreclosure and resident protections carrying over to the converted projects.

Housing Plus BlogSeveral exciting developments have recently brought changes to the affordable housing industry and we are inviting you to explore them with us at our fifth annual Western Housing Conference. Ballard Spahr and CSG Advisors are pleased to announce this year’s Best of the West in Affordable Housing Development and Financing conference on March 13, in San Francisco. The conference features movers and shakers in affordable housing leading panels, roundtables, and discussion about the most pertinent issues and developments shaping the housing industry.

The Legislative Update Panel has its hand on the pulse of Capitol Hill. Discussion will explore the implication and future of legislation and policies that affect the affordable housing industry.

HUD’s Rental Assistance Demonstration (RAD) Program experienced a boost in governmental support with the recent cap increase. The RAD program now offers renewed opportunities for housing authorities and developers to finance, transform, and create long-term housing options for low-income residents. The RAD Panel brings together a panorama of perspectives to discuss the need-to-know policies, timelines, financing structures, and organizational approaches to the revitalized RAD program.

The Finance Trends and Innovations Panel will offer insights to new loan products, lender programs, and interest rate structures taking shape in affordable housing finance. The discussion will examine new funding sources as a strategic means to preserve and sustain affordable housing.

Roundtable forums will feature Year 15 challenges and the implications of Fair Housing: Disparate Impact. Discussion will examine these two important topics and provide strategies, considerations, and expectations for the future of affordable housing development and management.

Registration for the event is free, and a detailed program description is available.

It is our privilege to create such an informative and collaborative forum for dialogue, exploration, and networking within an industry about which we feel so passionate. Though we will certainly blog about conference updates and insights, we hope you will join us in person.

Today, HUD hosted a focus group of nearly a dozen key stakeholders to gain insights about the RAD process.  I had the opportunity to participate in the sessions along with housing authority representatives, lenders, investors, private developers, financial advisors and other consultants.  Discussion questions explored issues extending from the RAD application process through to post-closing implementation of the RAD conversion.  With the cap on the maximum number of units permitted to go through the RAD conversion process raised to 185,000, HUD is now faced with the significant task of ensuring the initial procedures for processing and closing RAD deals can be streamlined and implemented in an efficient manner that imposes consistency across transactions.

Facilitated by members of the Enterprise team, the discussions considered positive elements of the RAD process, as well as areas in which HUD could make improvements.  Notetakers from HUD did not participate in the discussions, but sat in on the sessions to record insights and suggestions.

HUD will host additional focus groups in the next few weeks in other parts of the country, including Atlanta and Los Angeles.  The outcome will hopefully generate procedures that address issues and concerns that have arisen thus far in closing RAD deals.


Office Building NighAs part of its efforts towards continued reorganization, the U.S. Department of Housing and Urban Development (HUD) has recently announced changes to the Office of Multifamily Housing leadership staff.   Mark Van Kirk, the Director of Asset Management, and Margaret Salazar, Director of the Office of Affordable Housing Preservation (OAHP) will each be stepping down from their respective roles.  In her tenure as the OAHP Director, Margaret has been seen as a leader in developing the Rental Assistance Demonstration Program and was a panel speaker at Ballard Spahr’s Eighth Annual National Housing Symposium in November, 2013, explaining how to utilize new HUD programs for affordable housing projects. She will return to her hometown and serve as the Field Office Director for HUD’s Portland, Oregon office. To read more about Mark and Margaret’s contributions to HUD and their interim successors, please click here.