HUD Provides Near-Term Deadlines for RAD Transactions Set to Close in Late 2022
Public housing authorities (PHAs) and developers planning to close a Rental Assistance Demonstration (RAD) transaction by the end of this year have some near-term deadlines to meet.
Starting as soon as July 1.
The U.S. Department of Housing and Urban Development (HUD) this week published a timeline for properties planning to close their transaction by Nov. 30 or Dec. 31.
The timeline is part of HUD’s effort to mitigate the high demand to close RAD transactions in the final months of the year. Properties need to meet those deadlines to start their project-based voucher (PBV) subsidy in January 2023 or to finalize their use of low-income housing tax credit equity in the financial package.
Nov. 30 is a key date. PHAs that close a RAD transaction by then are eligible to receive RAD rents beginning Jan. 1 of the following year–a month later. RAD transactions that close after Nov. 30 continue to operate with a public housing subsidy and capital fund until the Jan. 1 of the year that starts 13 months later. Closing a RAD transaction Dec. 1 or later means a delay of 12 months in the conversion to the Section 8 platform–so meeting the HUD timeline to allow the transaction to close is crucial.
The first deadline is to upload all required financing plan documents. Transactions closing by Nov. 30 face a July 1 deadline and those with a Dec. 31 closing date face an Aug. 1 deadline. Other items on the timeline include receiving a HUD-executed RAD conversion commitment (RCC), submitting a complete closing package and having all RAD documents approved and ready for HUD signatures.
HUD’s announcement suggested that PHAs or developers submitting documents do so ahead of the deadline and build in sufficient time to meet all the timeline requirements.
HUD’s announcement also stated that if transaction volume is greater than the department’s processing capacity, work will be prioritized on several factors. The two factors it mentioned were adherence to the deadlines and critical deadlines that are beyond the control of the PHA and development team (HUD requires documentation of those deadlines).
The announcement also said HUD will grant lower priority to transactions if RCCs have been extended. That includes a simple extension, if the RCC has been placed on delayed submission status or when an RCC expires and a new RCC is issued.
PHAs and developers involved in RAD transactions that are scheduled to close in 2022 should pay particular attention to the timeline and confirm that they will meet all the deadlines.
The Novogradac Rental Assistance Demonstration Handbook provides an overview of the RAD program, from consideration through development and post-development compliance. Novogradac’s Public Housing Authority practice can assist PHAs interested in a RAD conversion navigate the process.