Philadelphia, PA – January 3, 2013 – (RealEstateRama) — Due to the decrease in Federal funds for housing programs, the Philadelphia Housing Authority (PHA) has submitted an application to participate in the Rental Assistance Demonstration (RAD). PHA’s Board of Commissioners authorized the agency’s application during the December 2013 Board Meeting. If the application is approved by the U.S. Department of Housing and Urban Development (HUD), the agency will be able to raise more than $102 million to address its capital and maintenance needs and preserve much needed affordable housing in the city of Philadelphia for years to come.
“In an environment of continuing reductions in Federal support for housing programs, we appreciate the creative approach that HUD has taken with the new RAD program,” said Mayor Michael A. Nutter. “And I am very hopeful that PHA will be successful in its first RAD application for funding. Philadelphia has a demonstrable need for more affordable housing, and RAD funding will help PHA to preserve existing housing units for our most vulnerable.”
RAD was authorized by Congress in 2012, and is expected to generate hundreds of millions in private capital dollars to address the estimated $26 billion backlog in capital needs faced by public housing authorities in the U.S. This additional capital will also stimulate employment in the construction trades across the country.
PHA estimates that the cost to address major repairs throughout its portfolio is over $1 billion, which is well in excess of the $40 million it receives annually for capital needs. Under RAD, PHA will be able to borrow against its rental income and HUD subsidies to generate additional funding for rehabilitation and major repairs of affordable housing units that are at risk of being lost from its inventory. The demonstration would immediately net the housing authority $102 million for rehabilitation projects.
“RAD would provide PHA with much needed money for upkeep and improvement of PHA’s public housing units at a time when the federal government is cutting funding for public housing,” said PHA President and CEO Kelvin Jeremiah. “Our RAD application represents our renewed commitment to preserving and maintaining our public housing stock for generations to come. Our participation in this innovative and cost-effective program will enhance our ability to stem the steady decline of our affordable housing stock. The RAD application is also an important step to develop public-private partnerships that are necessary to preserve affordable housing in Philadelphia and will help create more job opportunities in construction, including opportunities for residents.”
If PHA wins entry into the program, affiliated nonprofit organizations, similar to those that own the agency’s newer, tax credit housing developments, will own the public housing buildings designated for repairs and upgrades. The agency will maintain ownership of the land under those buildings and RAD developments will remain heavily regulated, so that residents have protections similar to those residing in traditional public housing. Residents will retain the right to return to sites under repair, the right to organize, hold elections, provide input on housing operations and receive funds for community activities and programs.
RAD also requires that rent remain no more than 30 percent of adjusted household income. PHA may request approval to continue to utilize its Moving to Work rent simplification process as part of any future RAD conversions.