Could RAD Spell the Beginning of the End for Your Housing Authority?

New RAD Developments Carry Hidden Risks for Public Housing Authorities

The Rental Assistance Demonstration (RAD) program, introduced by HUD in 2012, was heralded as a lifeline for struggling housing authorities nationwide. Designed to address the dire need for public housing capital repairs, RAD allows housing authorities to convert their public housing units to Section 8 funding. This shift opens the door to private investment, making it easier to finance long-overdue renovations. But as RAD reshapes the landscape of affordable housing, many are left asking: Is it a solution, or could it signal the beginning of the end for your housing authority?

The Promise of RAD

RAD was created to solve a well-documented problem: public housing in the United States is severely underfunded. Decades of declining federal investment left local housing authorities grappling with a backlog of repairs. RAD offers a way out by transforming public housing into properties eligible for private funding. The program allows housing authorities to modernize buildings, improve living conditions, and preserve affordable housing stock—all while retaining public control.

On paper, RAD offers tremendous benefits:

• Access to Capital: Housing authorities can secure financing from private and public sources.

• Preservation of Units: RAD conversions ensure that units remain affordable, with strict rent caps for tenants.

• Operational Flexibility: The shift to Section 8 often gives housing authorities more leeway in property management.

It’s no wonder that over 200,000 units have been converted since the program’s inception, with more authorities lining up for their turn.

The Risks Beneath the Surface

Despite its potential, RAD is not without controversy. Critics argue that the program may inadvertently weaken the core mission of public housing authorities. Here’s why:

1. Net Decrease in Revenue: While most housing authorities receive 25% to 40% of cash flow from redeveloped properties, Tax Credit properties are not designed to produce large amounts of revenue. Many PHA's are surprised to discover that after the cash flow waterfall, 40% of revenue can be just a few thousand dollars a year after turning over several hundred thousand in HUD subsidies.

   
   

2. Loss of Public Ownership: While RAD maintains public oversight, it often transfers ownership or operational control to private developers or management companies. Many of these private companies have very different standards for admission of new residents. This raises concerns about accountability and the potential for mission drift.

   
   

3. Financial Risks: Leveraging private capital means taking on debt. Housing authorities that miscalculate funding or face unforeseen financial pressures may find themselves in precarious positions.

   
   

4. Displacement Concerns: Although RAD includes protections for tenants, the temporary relocation process during renovations can disrupt lives. Mismanagement of these transitions can erode trust between housing authorities and their residents.

   
   

5. Erosion of Public Housing: Critics worry that RAD accelerates the privatization of public housing, effectively dismantling the traditional model. If RAD replaces public housing entirely, what happens to the mission of providing housing as a public good?

   
   

6. Capacity Challenges: Housing authorities must navigate complex financial deals and partnerships, a steep learning curve for organizations historically focused on public administration rather than real estate development.

   
   

Will Your Housing Authority Survive RAD?

For some housing authorities, RAD has been transformative. Success stories showcase aging properties turned into vibrant, livable communities. But for others, the program has introduced new challenges. The deciding factor often lies in how well the housing authority prepares for and manages the transition.

Strategies for Success

1. Plan Strategically: Conduct thorough feasibility studies before committing to RAD. Understand your housing stock, financial capacity, and community needs.

   
   

2. Engage Stakeholders: Residents, staff, and community partners must be part of the process from day one. Transparency and communication are key to building trust.

   
   

3. Strengthen Capacity: Invest in staff training or partner with experienced consultants to navigate the complexities of financing and redevelopment.

   
   

4. Choose Development Partners Carefully: Do your due diligence on potential developers and check references regarding past projects.

   
   

5. Protect Residents: Ensure that relocation plans prioritize resident well-being, minimizing disruptions, and demand that admission standards align with your agency's mission and values.

   
   

6. Monitor and Evaluate: Post-conversion, maintain oversight to ensure properties meet affordability and quality standards.

   
   

A Fork in the Road

RAD represents a fork in the road for housing authorities. It’s an opportunity to modernize and preserve affordable housing stock, but it also comes with risks that could fundamentally alter the mission and operations of public housing. The key question isn’t just whether RAD will work—but whether your housing authority is prepared to make it work for your community.

So, will RAD be the beginning of the end for your housing authority, or the start of a much-needed renewal? The answer lies in how you navigate this complex and transformative journey.

Let’s start a conversation. How is your housing authority approaching RAD? What successes or challenges have you faced? Share your experiences in the comments below!