The Rental Assistance Demonstration (RAD) program has generated $2 billion in private investment to make critical improvements to more than 30,000 former public housing units, reported the Department of Housing and Urban Development (HUD).

Half of the units at the 60-unit Arbor Ridge Assisted Living development in Vancouver, Wash., will receive subsidies from the Rental Assistance Demonstration program.
Half of the units at the 60-unit Arbor Ridge Assisted Living development in Vancouver, Wash., will receive subsidies from the Rental Assistance Demonstration program.

RAD is the centerpiece of HUD’s strategy to preserve at-risk public and assisted-housing developments. The first component allows public housing and Sec. 8 Mod-Rehab properties to convert to long-term Sec. 8 rental-assistance contracts.

“Our RAD initiative is an innovative option for housing authorities looking to keep pace with their capital needs in this challenging budget climate,” said HUD Secretary Julián Castro in a statement. “Crossing the $2 billion mark represents the critical need to maintain and expand affordable housing stock to expand opportunity for more Americans seeking a quality and affordable place to live.”

While most conversions involve the modernization and stabilization of existing properties, in 17% of completed RAD conversions, public housing authorities (PHAs) have been able to demolish distressed properties and replace them with new, permanently affordable housing, according to HUD. In 30 conversions, PHAs converted and moved the assistance out of blighted or isolated locations and into neighborhoods of greater opportunity.

For example, in Lexington, Ky., Centre Meadows was of one of the first RAD transactions to close with a Federal Housing Administration-insured mortgage. The 206-unit apartment complex is undergoing substantial rehabilitation by the Lexington Housing Authority (LHA) involving 11 buildings. Centre Meadows was developed in the early 1970s in the southeastern portion of the city. LHA’s capital funds were insufficient to meet the property’s significant needs. The project was in such deteriorated shape that at the time of the RAD application, it was thought to be housing of last resort for people who had no other housing options. Without RAD, it was likely that the project would have been demolished, according to federal officials.

HUD shared another example: In DeKalb County, Ga., Tobie Grant Manor was built in the late 1960s and became functionally obsolete by 2013. Concrete walls, small rooms, and tiny closets made the buildings feel extremely outdated and expensive to maintain. RAD allowed the Housing Authority of DeKalb County (HADC) to access outside capital to rehabilitate and rebuild their properties, providing long-term financial stability needed to maintain, preserve, and even add units. In addition to the equity brought in through federal and state tax credits, this project was made feasible with conventional mortgages and federal HOME funds allocated by the state of Georgia. The conversion doubles the number of units at Tobie Grant and financially positions HADC favorably for future redevelopments.

HUD has made awards to public housing authorities across the country for all 185,000 units authorized to participate in RAD and estimates over $6 billion in new, largely privately funded construction investments will be made in those authorized units.

The federal agency has asked Congress to eliminate the current cap of 185,000 units so that any public housing property that can be preserved and improved through RAD is eligible.

Each year, roughly 10,000 units of public housing are lost due to disrepair—a supply-side crisis that’s compounded by increasing demand for quality affordable housing, according to HUD.