From legislation to renovation: How the 2024 Appropriations Act is transforming public housing

By Kaitlin Konyn
Affordable Housing and Repositioning Senior Manager at Baker Tilly

The Consolidated Appropriations Act of 2024 is great news for public housing authorities (PHAs). The act, which passed in March, allows the U.S. Department of Housing and Urban Development (HUD) to extend the date for PHAs to apply for participation in the Rental Assistance Demonstration (RAD) to Sept. 30, 2029, extending the current provisions by five years. The act also streamlines the process for the RAD/Section 18 blends.

Why is RAD important to public housing in Wisconsin?

To understand RAD’s benefits, one needs to look at the history of public housing. The U.S. Housing Act of 1937 established the country’s first public housing system, allowing federal subsidies to local housing authorities. Today, according to HUD, there are just under a million units of public housing, operated by more than 3,300 local public housing agencies, serving more than 1.2 million households.

Not surprisingly, many of these units are aging infrastructure. RAD was created in 2012 to allow PHAs to convert from public housing to long-term project-based Section 8 assistance. RAD is a more reliable tool for leveraging private capital. The RAD statute requires converting properties to be owned or controlled by a public or non-profit entity, enforced through perpetual use agreements that get recorded between HUD and the owner entity.

RAD also allows for strong resident rights and protections. All residents of properties converted with RAD have a right to return to their home, and any temporary relocation is covered by the Uniform Relocation Act. RAD also requires significant resident input, ensuring they are an active part of the process. One public housing project in Wisconsin, for example, held over five public meetings, soliciting input on amenities, units, and services, before any updates were implemented.

One of RAD’s most important benefits is that it helps avoid financial rollercoasters, and instead provides a stable platform of funding. This allows for more predictable financial planning with long-term subsidy contracts and automatic rent adjustment factors.

The impact of RAD in Wisconsin

Over the last decade, RAD has been used to make significant updates to living units, including kitchens, bathrooms, and even community areas, like playgrounds. Sometimes, RAD is even used to demolish and build brand new units.

Statistics from the RAD Resource Desk show Wisconsin Public Housing Authorities have converted 32 projects covering 2,985 housing units under the RAD program. Approximately 6,770 people have had their assisted housing secured and preserved for the long-term on the Section 8 platform.

Under RAD, the physical condition of these properties is improved, and capital needs for the next 20 years will be accounted for, ensuring that these homes remain affordable. The Resource Desk statistics indicate these transactions have secured $280,658,191 in construction investment, including initial reserve deposits, equating to $94,023 per unit built or rehabbed. They estimate about 5,339 direct and indirect jobs have been created in Wisconsin through RAD. To date, Wisconsin ranks 21 in the country for the percentage of former public housing units that have been preserved.

Streamlining the process of RAD/Section 18 blends in 2024

The Consolidated Appropriations Act also streamlined the process of RAD/Section 18 blends. These new blends assist PHAs with preserving public housing projects so they can get fair market rents while tenants still pay the same amount. Under the blends, RAD and Section 18 work together behind the scenes to obtain up to 20% RAD funding, 80% funding under Section 18.

The new act streamlines management for PBRA conversations by allowing for one HAP contract to manage both the RAD units and the Section 18 units, instead of requiring two separate contracts. Submission requirements include the RAD application, the PHA Plan, a concept call with the HUD Office of Recapitalization, a plan for project-based vouchers assistance, a financing plan and an application for tenant protection vouchers. We expect to see more details in early 2025 on the updated streamlined process.

Best practices for RAD

Several best practices stand out. Robust resident engagement is not only required, but critical for success. HUD requires PHAs to provide adequate notice of meetings and work to reduce barriers to resident participation. For example, resident meetings could include childcare and refreshments, and should be in a convenient place and time for residents, and accessible to people with disabilities.

Coordination among the planning team is also critical. PHAs should work closely with the developer to ensure things like zoning are accurately addressed, saving time and money. It’s also important to have an experienced attorney who is familiar with the RAD program and closings. Applications, including RAD/Section 18 blends, require forms, time and effort. Within 30 days of recording, all financial transaction documents must be uploaded. Because of the complexities and paperwork involved, many PHAs work with a consultant who specializes in RAD conversions.

While the documentation needed for successful RAD conversions and RAD/Section 18 blends may seem daunting, the long-term benefits outweigh the upfront time investment. Indeed, the federal government granted Wisconsin PHAs a gift in March by extending RAD participation by five years, offering them a powerful tool to preserve and improve public housing properties.