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RAD: Rental Assistance Demonstration in Relation to HUD 223f Loans

HUD 223(f) Loans and Rental Assistance Demonstration (RAD)

The RAD (Rental Assistance Demonstration) Program gives PHAs (public housing authorities) the power to “preserve and improve public housing properties.” RAD also allows them to address the $26 billion dollar deferred maintenance backlog across the United States.

RAD also lets owners of certain HUD ‘legacy’ programs enter into long-term contracts that facilitate the financing of necessary improvements. These legacy programs are:

  • Rent Supplement

  • Rental Assistance Payment

  • Section 8 Moderate Rehabilitation

Although Davis-Bacon prevailing wage rates don’t apply to FHA 223f mortgages, public housing conversions RAD I (RAD first component) transactions are subject to Davis-Bacon, even when using HUD 223f.

Other Important Information About the RAD Program

Regarding public housing conversions, HUD lists 5 things to know:

  • PHAs can use RAD to use public and private debt and equity to reinvest in public housing stock.

  • “In RAD, units move to a Section 8 platform with a long-term contract that, by law, must be renewed. This ensures that the units remain permanently affordable to low-income households."

  • “Residents continue to pay 30% of their income towards the rent and they maintain the same basic rights as they possess in the public housing program."

  • “RAD maintains the public stewardship of the converted property through clear rules on ongoing ownership and use."

  • “The RAD program is cost-neutral and does not increase HUD's budget. This program simply shifts units from the Public Housing program to the Section 8 program so that providers may leverage the private capital markets to make capital improvements."

For additional information, read: 

To learn more about FHA 223f loans, fill out the form below and a HUD lending expert will get in touch. 

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