For the many NHC members following HUD’s Rental Assistance Demonstration (RAD), we have another encouraging sign that program is evolving in a productive direction. Last week, NHC brought a few members who are deeply engaged with the program to meet with HUD about lessons learned from the early RAD closings and to explore standardizing terms that have emerged into project documents going forward. The conversation that occurred showed a real alignment of interests around sustaining these properties as affordable housing, maintaining them as desirable homes for residents, and achieving workable business terms for lenders, public agencies, investors, and developers.
Our meeting with FHA Commissioner Carol Galante, Acting Associate Deputy Assistance Secretary Margaret Salazar, and other program staff focused particularly on questions that arise only rarely, if ever, for many properties, but are essential for capital providers: how to handle foreclosure, replacement of a general partner, and similar disruptions of property control and operations. These are necessary issues to tackle as RAD moves properties from a public housing regime designed for permanent affordability commitment but with uncertain funding to the property-based rental assistance model originally developed for a defined period of affordability commitment with more reliable funding. Bridging that change requires adaptation by all without reducing the permanent commitment to affordability at the properties.
I was particularly struck by how strong the sense of shared interest was; all participants, be they lenders, public agencies, or developers, were committed to the properties operating as affordable housing, even in the event of a default. HUD, NHC, and our members are all working to define ways to minimize delays and protect properties for the benefit of residents by drawing on the early learning from the first few RAD closings. The conversation surfaced several productive avenues and HUD committed to work quickly toward that end. NHC will report more on concrete steps as we are able. To learn more or get involved, contact me at ehandelman@nhc.org