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>> GOOD MORNING EVERYONE. MY NAME IS PATRICK COSTEGAN,
I'M HERE AT HUD HEADQUARTERS THIS MORNING, WE'RE GATHERED
TODAY WITH FOLKS THAT HAVE JOINED US IN PERSON TO TALK
ABOUT NEW FLEXIBILITIES IN THE RENTAL ASSISTANCE
DEMONSTRATION, SPECIFICALLY CHANGES THAT WE HAVE MADE IN
THE JUST-ISSUED LAST WEEK NOTICE FOR THE RENTAL
ASSISTANCE DEMONSTRATION OR RAD.
OUR PURPOSE TODAY IS REALLY TO OFFER A NUMBER OF WAYS FOR
YOU TO EXPLORE SOME OF THE NUANCES AND THINGS THAT MIGHT
BE TUCKED AWAY IN THOSE 232 PAGES OF THE RAD NOTICE, I
BELIEVE THAT'S THE RED LINE PAGINATION NUMBER, BUT THERE
ARE MANY THINGS WE DID INCLUDE IN THE NOTICE THAT WE
WANT TO TALK ABOUT TODAY. FIRST ON THE AGENDA SHORTLY,
SECRETARY DONOVAN WILL BE ARRIVING AND WILL TALK WITH
US ABOUT HIS OBSERVATIONS ABOUT WHERE WE ARE WITH RAD
ONE YEAR IN AND WHAT WE'RE TRYING TO DO AS WE GO FORWARD
AND PERHAPS WITH THE FUTURE OF RAD.
IT LOOKS LIKE FROM HIS VANTAGE POINT.
THEN AFTER THAT, WE WILL HAVE AN OPPORTUNITY TO BREAK INTO
A COUPLE OF PANELS HERE, FEATURED ON THE WEBCAST
TODAY, THE FIRST PANEL WILL BE LED BY GREG BIRNE, HE WILL
INTRODUCE A NUMBER OF OUR PARTNERS IN THIS, SOME
DIRECTORS OF PUBLIC HOUSING AUTHORITIES.
WE ALSO WILL HAVE ANOTHER PANEL THAT WILL INCLUDE A 3
LENDER AND INVESTOR, AS WELL AS HOUSING AUTHORITIES.
SO WE'LL HAVE AN OPPORTUNITY WITH OUR RAD LEADERSHIP TEAM
REALLY TO EXPLORE SOME OF THOSE NUANCES IN THE CHANGES
OF THE NOTICE THROUGH A COUPLE OF PANELS.
GREG WILLER FIRST, AND WE'LL HAVE A SECOND PANEL SHORTLY
AFTER THE FIRST PANEL IS WRAPPED UP.
EACH PANEL WILL LAST ROUGHLY 15, 20, 25 MINUTES.
THEN AFTER THAT, WE WILL HAVE AN OPPORTUNITY FOR BOTH THE
PARTICIPANTS HERE IN HUD'S MONDALE AUDITORIUM TO BREAK
OUT INTO DISCUSSION GROUPS WHERE WE'LL HAVE MORE OF AN
OPPORTUNITY AROUND LISTED TOPICS TO TALK ABOUT SOME OF
THE CHANGES IN THE RAD NOTICE.
THOSE OF YOU THAT ARE PARTICIPATING VIA THE WEBCAST
THIS MORNING WILL HAVE AN OPPORTUNITY VIA A CALL-IN
NUMBER TO JOIN IN THOSE DISCUSSIONS SO WE ACTUALLY
HAVE RESERVED SEPARATE ROOMS IN THE BUILDING WHERE THERE'S
A FAIRLY DECENT PHONE AND YOU SHOULD BE ABLE TO HEAR WHAT
WE'RE TALKING ABOUT, AND THERE IS CALL-IN INFORMATION
ON TODAY'S AGENDA. NOW, ONE OF THE THINGS TO
POINT OUT, I'VE BEEN ASKED TO MAKE SURE THAT THOSE OF YOU
WHO ARE PARTICIPATING VIA WEBCAST ARE AWARE THAT
TODAY'S AGENDA IS ON OUR RAD WEB PAGE, AND IF YOU HAVE ANY
QUESTIONS ABOUT THAT OR THE CALL-IN NUMBERS FOR THE
DIFFERENT BREAK-OUT SESSIONS, THAT'S ALL ON THE AGENDA AND
THE DETAILS, AND THAT'S ON OUR RAD WEB PAGE, AND THAT IS 4
EASILY FOUND AT WWW.HUD.GOV/-RAD SO, AGAIN,
THOSE OF YOU BY WEBCAST, IF YOU HAVE QUESTIONS ABOUT WHAT
PANEL MIGHT I WANT TO JOIN, HOW TO DO THAT, WHERE'S THE
PHONE NUMBER, THAT'S ON THE WEB PAGE AND WON'T GO THROUGH
THAT NOW. BUT IF THERE ARE QUESTIONS
ABOUT THAT, WE DO HAVE PEOPLE THAT WILL PAY ATTENTION TO
THE E-MAIL AND WE'LL TRY TO ADDRESS ANY QUESTIONS OR
CONFUSION THAT MAY BE OUT THERE ABOUT THAT.
SO, AGAIN, WE'RE VERY PLEASED THAT YOU COULD JOIN US TODAY.
THE REST OF THE SESSION THAT WE HAVE SCHEDULED WILL REALLY
ONLY LOGISTICALLY WORK FOR FOLKS THAT ARE HERE IN PERSON
TODAY. WE'LL HAVE A LUNCH BREAK, AND
THEN WE WILL HAVE AN OPPORTUNITY TO SIT DOWN AND
HAVE -- WE'RE THINKING OF IT AS JUST OFFICE HOURS.
WE'LL BE BREAKING OUT IN THE CAFETERIA AREA, IN SMALL
GROUPS, AND FOLKS THAT WANT TO SIT DOWN AND TALK ABOUT
ANY PARTICULAR QUESTION OR ISSUE RELATED TO YOUR DEAL,
SOMETHING THAT YOU'RE WONDERING ABOUT IN THE
NOTICE, WHATEVER, WE'RE HAPPY TO DO THAT.
THAT WILL, UNFORTUNATELY, NOT BE ACCESSIBLE TO THOSE OF YOU
THAT ARE TUNED IN NOW BY WEBCAST, BUT WE DO PLEDGE
THAT WE WILL HAVE FURTHER WEBCASTS OR CALL-IN SESSIONS,
AND I THINK THAT WE'RE ALWAYS HAPPY TO TAKE YOUR QUESTIONS,
AS SOON AS WE CAN GET TO THEM, IF YOU JUST SEND US A
NOTE, TO RAD AT HUD.GOV. IT'S AS SIMPLE AS THAT. 5
THAT LOGS A QUESTION IN, WE GET IT TO THE APPROPRIATE
STAFF. OFTEN TIMES RAD AT HUD.GOV
HAS BEEN BUSY, BUT SOME OF US ARE TRYING TO HELP OUT WITH
THAT TASK. SO THAT'S BASICALLY THE DAY'S
EVENTS FROM OUR PERSPECTIVE OF THE THINGS THAT WE'RE
TRYING TO DO, AND THROUGH THE COURSE OF THE DAY, WE ARE
VERY HAPPY AND INTERESTED TO GET YOUR THOUGHTS AND IDEAS
ON WHAT WE MIGHT DO AS WE GO FORWARD IN HAVING A CHANCE TO
GO THROUGH AND MAKE SURE THAT EVERYONE UNDERSTANDS THE
NOTICE. SO THAT'S TODAY.
SO WHERE ARE WE IN RAD, BEFORE THE SECRETARY COMES.
LET ME TAKE A MINUTE TO RECAP.
AND I SEE THAT THE SECRETARY IS HERE, SO I'M NOT GOING TO
-- I'M NOT GOING TO FILL THAT SPACE.
WE'LL LET HIM TAKE IT AWAY. I DON'T THINK THAT THERE'S
REALLY ANY NEED IN THIS AUDIENCE, OR REALLY, ANY
AUDIENCE THAT DEALS WITH HUD TO INTRODUCE THE SECRETARY.
I'LL JUST MAKE ONE COMMENT ABOUT THE SECRETARY, AND HIS
INVOLVEMENT IN RAD. A FEW WEEKS AGO WHEN WE WERE
PLANNING OUT TODAY'S SESSION, SOMEONE SAID OH, PAT, YOU
PROBABLY SHOULD BE SURE TO TELL THE SECRETARY THAT WE'RE
GOING TO HAVE A WEBCAST AND THAT WE'RE GOING TO HAVE
FOLKS INTO THE MONDALE AUDITORIUM, WE'RE GOING TO
HAVE BREAK-OUT SESSIONS, I SAID YEAH, I'LL BE SURE TO DO
THAT, AND I'M THINKING TO MYSELF, I THINK THAT THE 6
SECRETARY WILL PROBABLY BE A LITTLE MORE INTERESTED THAN
JUST BEING TOLD THAT WE'RE GOING TO BE DOING THIS, AND
SURE ENOUGH, AFTER WORKING WITH HIM A FEW YEARS, I
FIGURED OUT THAT HE ACTUALLY DID WANT TO COME AND TALK
WITH US TODAY, SO SECRETARY DONOVAN, CAN YOU PLEASE JOIN
US, THANK YOU. >> [APPLAUSE]
>> >> THANK YOU SIR.
>> GOOD MORNING TO ALL OF YOU.
I WAS HIDING BACK THERE. I THOUGHT THE REMARKS WERE
WONDERFUL, PAT, CAUGHT THEM ALL.
AND I DO WANT TO START BY SAYING THANK YOU TO EVERY ONE
OF YOU FOR JOINING US TODAY TO TALK ABOUT THE CHANGES TO
THE RAD NOTICE. AND I PARTICULARLY
APPRECIATE, AS I LOOK AROUND THE AUDIENCE, I KNOW MANY OF
YOU HAVE COME FROM SOME DISTANCE TO BE HERE TODAY,
AND I KNOW THAT ACROSS THE COUNTRY, WE HAVE FOLKS
JOINING US BY WEBCAST, AND SO THIS IS REALLY ABOUT
ACCOMPLISHING TWO THINGS: FIRST, WE WANT TO MAKE SURE
THAT YOU UNDERSTAND, AND THAT WE COMMUNICATE AS CLEARLY AS
POSSIBLE, WHAT WE'RE TRYING TO DO IN ADVANCING RAD.
BUT AT THE SAME TIME, WE WANT TO MAKE SURE THAT WE LEARN
FROM YOU WHAT'S WORKING, WHAT'S NOT.
AND THE GOAL IS VERY SIMPLE. WE WANT RAD TO BE AN
EFFECTIVE TOOL IN HELPING YOU CONTINUE TO BE THE CRITICAL
COMMUNITY-BASED, AFFORDABLE HOUSING OWNERS, MANAGERS, AND 7
DEVELOPERS, THAT YOU ARE IN RESPONDING TO THE NEEDS OF
YOUR RESIDENTS AND YOUR COMMUNITIES.
YOU KNOW, AND THIS IS THE REASON THAT I'M HERE TODAY, I
SEE, AND ALL OF US AT HUD, SEE RAD AS A CRITICAL PART OF
THE OBAMA ADMINISTRATION'S BROADER COMPREHENSIVE
STRATEGY TO PRESERVE PUBLIC AND AFFORDABLE HOUSING WELL
INTO THE FUTURE. WE HOPE THAT IT WORKS NOT
ONLY TO RECAPITALIZE THE NATION'S STOCK OF AFFORDABLE
HOUSING BUT THAT IT PROMOTES EFFICIENCIES WITHIN AND
ACROSS HUD'S PROGRAM. AND MOST IMPORTANTLY, THOSE
BUILD STRONG, STABLE COMMUNITIES OF OPPORTUNITY.
YOU JOINED US TODAY BECAUSE YOU'RE THE EARLY ADOPTERS OF
RAD AND I WANT TO, AGAIN, SAY THANK YOU FOR THAT, THANK YOU
FOR BEING LEADERS IN YOUR COMMUNITIES, AND WE ALL
RECOGNIZE, WE HAVE A LOT OF WORK TO DO IN FULLY ACHIEVING
THE GOALS, THE SHARED GOALS, THAT WE SET OUT FOR RAD.
BUT YOU ARE THE EARLY ADOPTERS, YOU ARE THE LEADERS
IN THIS FIRST PART, WHICH IS THE NO ADDITIONAL COST
DEMONSTRATION. THIS IS A VITALLY IMPORTANT
FIRST STEP, PARTICULARLY IN THE VERY TOUGH BUDGET
ENVIRONMENT THAT WE HAVE. BY TALKING TO YOUR BOARDS AND
RESIDENTS, MEETING WITH LENDERS, INVESTORS AND
DEVELOPERS, AND SHARING YOUR POSITION FOR REPOSITIONING
THE HOUSING ASSETS, AS OUR ADOPTERS, WE TRULY BELIEVE
THAT YOU'RE THE VANGUARD OF A NEW AND, FRANKLY, MORE 8
POLITICALLY VIABLE WAY OF FUNDING PUBLIC HOUSING FOR
GENERATIONS TO COME. AGAIN, THANK YOU FOR THAT
LEADERSHIP. YOU'RE PUSHING US TO DO MORE,
YOU'RE PULLING US ALONG IN SOME CASES, AND YOUR ABILITY
TO EXECUTE ON A VISION THAT IS NOW UNFOLDING AS THE NEW
LEADING EDGE OF PRACTICE FOR PUBLIC HOUSING.
NOW, WE'RE WELL AWARE THAT THE INITIAL RAD NOTICE
CONSTRAINED SOME OF YOUR AMBITIONS.
FRANKLY, FOR STATUTORY REASONS, AND TO BE SURE THAT
WE WERE MAKING RAD ACCESSIBLE TO AS MANY HOUSING
AUTHORITIES AND OWNERS AS POSSIBLE, THE INITIAL 30 DAY
COMPETITIVE APPLICATION PERIOD WAS ORIENTED TO SINGLE
OR A SMALL NUMBER OF HOUSING PROPERTIES PER HOUSING
AUTHORITY. GENERALLY, WE SATISFIED WHAT
WE WANTED TO ACCOMPLISH, AND WE GOT IMPORTANT FEEDBACK
FROM THAT APPLICATION PERIOD THAT LETS US NOW TAKE RAD TO
THE NEXT LEVEL. MOST IMPORTANTLY, WE GOT
PROOF OF CONCEPT FROM RAD'S EARLY ADOPTERS.
SINCE OPENING RAD APPLICATION PERIODS LAST SUMMER, HUD HAS
APPROVED OR GIVEN INITIAL APPROVAL TO NEARLY 20,000
UNITS OF PUBLIC AND ASSISTED HOUSING IN 180 DIFFERENT
PROJECTS AROUND THE COUNTRY. THROUGH THESE AWARDS, YOU'VE
PROPOSED TO GENERATE $816 MILLION IN PRIVATE DEBT
AND EQUITY INVESTMENTS TO REDUCE THE CAPITAL BACKLOG IN
PUBLIC HOUSING PROPERTIES WHICH WILL PRESERVE OR 9
REPLACE DISTRESSED UNITS AND SUPPORT LOCAL JOBS IN YOUR
COMMUNITIES, ALL WITHOUT ANY ADDITIONAL OPERATING
SUBSIDIES FROM THE FEDERAL TAXPAYER.
I THINK A REALLY REMARKABLE ACHIEVEMENT.
SO WE KNOW THAT RAD CAN GENERATE ADDITIONAL CAPITAL
FOR PUBLIC AND ASSISTED HOUSING.
BUT HERE'S WHAT YOU ALSO SHOWED US IN THE EARLY
RETURNS ON RAD. RAD SEEMS TO WORK FOR PHAS OF
VARIOUS SIZES. BUT MOSTLY, MEDIUM AND SMALL
PHAS HAVE PARTICIPATED SO FAR.
SOMETHING I THINK THAT SURPRISED A LOT OF FOLKIES.
OF THE 78 PHAS THAT HAVE BEEN AWARDED SO FAR, 35 PERCENT
ARE SMALL OR HAVE 250 UNITS OR LESS, 50 PERCENT ARE
MEDIUM-SIZED PHAS, 12 PERCENT ARE LARGE.
YOU'RE INTERESTED IN CONVERTING ASSISTANCE TO BOTH
THE PROJECT-BASED VOUCHER AND THE PROJECT-BASED RENTAL
ASSISTANCE PLATFORMS IN ALMOST EQUAL NUMBERS.
49 PERCENT OF PROJECTS ARE CONVERTING TO PBRA AND 51
PERCENT TO PBV. INTERESTINGLY IF WE LOOK AT
THE BREAKDOWN BY NUMBER OF UNITS, 53 PERCENT CONVERTING
TO PBRA, 47 PERCENT TO PBV. YOU'RE PROPOSING TO USE A
RANGE OF FINANCING SOURCES. 39 PERCENT OF PROJECTS ARE
PLANNING TO USE 4 PERCENT TAX CREDITS, 24 PERCENT PLAN TO
LEVERAGE 9 PERCENT TAX CREDITS, WHILE 37 PERCENT ARE
USING A DEBT-ONLY MODEL. ALL OF THIS LEADS US TO 10
BELIEVE THAT RAD IS HELPING TO GO IN THE ABSOLUTELY
POSITIVE DIRECTION. BUT PERHAPS WHAT'S MOST
EXCITING ABOUT WHAT WE'VE SEEN IN THE FIRST PHASE OF
RAD IS THE RANGE OF ACCOMPLISHMENTS, THE LOCAL
OBJECTIVES, WHAT YOU WANT TO GET DONE FOR YOUR
COMMUNITIES, A BROAD RANGE OF THINGS THAT ARE BEING
ACCOMPLISHED. SUBSTANTIAL REHAB THAT
ENABLES SIGNIFICANT ENERGY IMPROVEMENTS.
REPLACING SEVERELY DISTRESSED UNITS THROUGH NEW
CONSTRUCTION. MAKING AGING IN PLACE
IMPROVEMENTS FOR THE ELDERLY. AND WORKING WITH YOUR LOCAL
SCHOOL DISTRICTS TO ENSURE THAT WHERE THE TRANSFER OF
ASSISTANCE IS NECESSARY, THE NEW SITE WHERE WE'RE MOVING
ASSISTANCE HELPS PROVIDE GREATER OPPORTUNITIES FOR
EXISTING RESIDENTS AND FAMILIES.
ALL OF THOSE HAVE BEEN ACCOMPLISHED AND MORE UNDER
THIS FIRST PHASE. I WOULD ALSO SAY THAT WHILE
TODAY'S FOCUS IS ON THE FIRST COMPONENT OF RAD, THAT IS,
FOR PUBLIC HOUSING AS THE MAIN FOCUS, LET'S NOT FORGET
THAT THE SECOND COMPONENT OF RAD ALSO AFFORDS PRIVATE
OWNERS OF CERTAIN TYPES OF EXPIRING-ASSISTED HOUSING,
WHAT I SOMETIMES CALL THE ORPHAN PROGRAMS HERE AT HUD,
AN OPTION TO CONVERT TO NEW LONG-TERM CONTRACTS TO
PRESERVE AND RECAPITALIZE THIS VALUED FORM OF HOUSING.
TO DATE, IN EXTENDING SUCH ASSISTANCE, HUD HAS PRESERVED 11
OVER 5000 UNITS OF PRIVATELY OWNED ASSISTED HOUSING AND
EXPECTS TO PRESERVE AN ADDITIONAL 2000 UNITS BY THE
END OF THE FISCAL YEAR FROM OWNERS THAT HAVE SUBMITTED
CONVERSION REQUESTS. WE'RE ALSO MAINTAINING A CUE
OF ADDITIONAL PROPERTIES TO PRESERVE IF ADDITIONAL
AUTHORITY BECOMES AVAILABLE. SINCE THIS COMPONENT AND
DEMONSTRATION ENDS WITH THE CLOSING OF THIS FISCAL YEAR.
SO, ALL OF THESE EARLY RESULTS, THESE INITIAL
RESULTS FROM RAD, ARE INCREDIBLY PROMISING.
A BIG REASON FOR THIS IS YOUR WILLINGNESS TO ROLL UP YOUR
SLEEVES ALONGSIDE OUR TEAM. AND I HOPE YOU'VE SEEN THAT
WE'VE TRIED TO WORK COLLABORATIVELY WITH YOU IN
DEVELOPING RAD SO FAR. WE REMAIN ABSOLUTELY
COMMITTED. TODAY IS JUST ANOTHER EXAMPLE
OF THAT. WORKING TOGETHER TO, BUILD ON
RAD'S SUCCESS AND TAKE IT TO THE NEXT LEVEL.
IN THE REVISED NOTICE, WE'VE DONE OUR BEST TO BE
RESPONSIVE TO THE FEEDBACK YOU'VE GIVEN US, AND, IN
FACT, THE CHANGES IN THE REVISED RAD NOTICE ARE VERY
MUCH BUILDING ON THAT SPIRIT OF COLLABORATION THAT WE'VE
BUILT THROUGH THIS WHOLE PROCESS.
WE BELIEVE THE CHANGES WILL EXPAND THE FLEXIBILITIES FOR
BOTH NEW APPLICANTS AND CURRENT PARTICIPANTS.
OUR AGENDA TODAY WILL GO INTO CONSIDERABLE DETAIL, AS PAT
SAID, ON THE CHANGES WITH PANELS AND BREAK-OUT 12
SESSIONS, THAT I LOOK FORWARD TO JOINING A LITTLE BIT LATER
THIS MORNING, AND WITH THESE RAD OFFICE HOURS IN THE
AFTERNOON. BUT LET ME HIGHLIGHT SOME OF
WHAT I THINK ARE THE MOST IMPORTANT CHANGES THAT WE
ANNOUNCED LAST WEEK, WHICH MIGHT BE A HELPFUL CRIB SHEET
TO THE RAD NOTICE. THINK OF IT AS THE CLIFF
NOTES, IF YOU WILL, GIVEN THAT IT IS 230 PAGES.
PAT DID A MASTERFUL JOB OF GETTING THROUGH THE PAPERWORK
REDUCTION ACT REQUIREMENTS AT OMB.
STILL KEEPING WITH THE NO COST LIMITATION OF THE
DEMONSTRATION, THESE CHANGES OFFER PHAS EXPANDED
FLEXIBILITIES IN PLANNING FOR REHABILITATION AND ACQUIRING
FINANCING FOR CONVERSIONS FROM PUBLIC HOUSING
ASSISTANCE TO THE PROJECT-BASED SECTION EIGHT
PLATFORM. THE CHANGES ALSO EXTEND
OPPORTUNITIES AND FLEXIBILITIES TO MOD REHAB
OWNERS SO I ENCOURAGE THE PRESERVATIONISTS AMONGST YOU
TO PAY ATTENTION TO THE MOD REHAB NOTICE.
ONE OF THE THINGS WE HEARD MOST CLEARLY FROM YOU,
ESPECIALLY IN RESPONSE TO SEQUESTRATION, WAS THE NEED
TO BE ABLE TO KNOW AND DEFINE YOUR RENTS IN ORDER TO DO THE
REST OF THE WORK IN PUTTING TOGETHER A RAD APPLICATION.
YOU ALSO ASKED FOR SOME FLEXIBILITY WITH THE NO COST
PARAMETERS TO THE RAD STATUTE.
BACK IN MARCH, WE ANNOUNCED THAT WE WOULD ALLOW HOUSING 13
AUTHORITIES TO LOCK IN RAD CONTRACT RENTS AT FISCAL YEAR
2012 LEVELS FOR ALL APPLICATIONS SUBMITTED PRIOR
TO THE END OF CALENDAR YEAR 2013.
THIS SERVES TO ESTABLISH PREDICTABLE RENT LEVELS FOR
BOTH PHAS AND FOR FINANCING PARTNERS AND IS NOW CODIFIED
IN THE NOTICE. WE'RE ALSO ALLOWING PHAS TO
BUNDLE OR ADJUST CURRENT ALLOCATIONS OF CAPITAL
OPERATING FUNDS IN SETTING INITIAL CONTRACT RENTS ACROSS
MULTIPLE PROJECTS, SO YOU'RE NOT LOCKED INTO WHAT THOSE
CURRENT CAPITAL OPERATING FUNDS ARE DIRECT TO THAT
SINGLE PROJECT. THIS WILL MEET THE NEEDS OF A
PROJECT AND FACILITATE FINANCING.
INSTEAD OF REQUIRING THAT YOU SET RADS RELATIVE TO THE
CAPITAL OPERATING FUND ALLOCATIONS FOR THE SPECIFIC
PROJECT, AS I JUST SAID. WE'RE ALSO ALLOWING PHAS TO
AUGMENT THEIR RAD CONTRACT RENTS BY CONVERTING FUTURE
REPLACEMENT HOUSING FACTOR FUNDING INTO RAD RENT LEVELS.
WHILE RETAINING THE ABILITY TO DEPLOY RHFF INTO THE
FINANCING STRUCTURE, IF THAT WORKS BETTER FOR YOU.
FINALLY, WE'RE ALLOWING MOVING TO WORK AGENCIES WHO
ARE APPLYING FOR TWO OR MORE PROJECTS TO USE THE NTW BLOCK
GRANT FLEXIBILITY IN SETTING INITIAL CONTRACT RENTS WITHIN
RAD PBV OR PBRA REPRESENT CAPS, SO LONG AS YOU
EFFECTIVELY DEMONSTRATE THAT YOU MAINTAIN YOUR MTW SERVICE
LEVEL AGREEMENTS. WITHIN EACH OF THESE 14
ADJUSTMENTS SHOULD ALLOW FOR THAT BALANCE OF
PREDICTABILITY AND FLEXIBILITY THAT YOU AND YOUR
PARTNERS NEED IN ORDER TO PUT TOGETHER THE STRONGEST
PROPOSALS POSSIBLE WITHIN THE FUNDING CONSTRAINTS WE'RE ALL
LIVING WITHIN. WE'RE ALSO HOPING IT WILL
ENABLE SOME CREATIVE FINANCIAL STRUCTURING IN YOUR
RAD TRANSACTIONS. NOW, A SECOND THING THAT WE
HEARD FROM YOU OVER THE PAST SEVERAL MONTHS IS THAT YOU
NEED MORE TIME AND OPPORTUNITIES TO PLAN FOR
CONVERTING LARGER PROJECTS AND RATIONAL GROUPINGS OF
PROJECTS AS A MEANS TO STRATEGICALLY POSITION YOUR
PUBLIC HOUSING AUTHORITY, WITH THAT IN MIND, WE'RE
ELIMINATING THE CAP ON UNIT THAT IS CAN BE GIVEN TO A PHA
OR MOD REHAB OWNER, THIS ALSO MEANS WE'RE OPENING THE
ONGOING APPLICATION PERIOD TO MOD REHAB OWNERS UNDER THE
FIRST COMPONENT, WE'RE ALSO PROVIDING AWARDS FOR PUBLIC
HOUSING PROJECTS REQUIRING MULTIPHASE DEVELOPMENTS TO
FACILITATE FINANCING BY ALLOWING PHAS AND MOD REHAB
OWNERS TO RECEIVE PORTFOLIO AWARDS FOR A SET OF PROJECTS,
PROVIDED THE PHA SUBMITS INDIVIDUAL APPLICATIONS FOR
AT LEAST HALF OF THE PROJECTS AT THE TIME OF THE REQUEST
AND APPLICATIONS FOR ALL PROJECTS WITHIN A YEAR.
AND WE'RE ALSO ALLOWING PHAS TO USE THE CHOICE
NEIGHBORHOODS IMPLEMENTATION OF FUNDING AVAILABILITY TO
APPLY FOR A JOINT RAD AND CHOICE NEIGHBORHOODS AWARD. 15
WE HOPE THAT THESE CHANGES -- WE HOPE WITH THESE CHANGES,
YOUR COMMUNITY AND LARGER PORTFOLIO NEEDS AND NOT HUD
RULES GUIDE YOUR STRATEGIC PLANNING EFFORTS.
YOU ALSO TOLD US THAT WE NEEDED TO ALLOW FOR A BETTER
WAY FOR MIXED FINANCE PROJECTS TO BE ABLE TO USE
AND CAPITALIZE ON THE OPPORTUNITIES PRESENTED
THROUGH RAD. SO WE'RE FIRST ELIMINATING
THE CAP ON UNITS THAT CAN BE AWARDED TO MIXED FINANCE
PROJECTS, WE'RE ALLOWING FINANCIALLY STRESSED HOPE SIX
PROJECTS TO CONVERT TO RAD REGARDLESS OF HOW LONG THE
PROJECT HAS BEEN IN SERVICE, AND WE THINK THESE CHANGES
WILL HELP YOU STABILIZE COMPLEX FINANCIAL
TRANSACTIONS WITH A PREDICTABLE SECTION EIGHT
SUBSIDY STREAM UNDERPINNING THEM GOING FORWARD.
FINALLY, YOU ASKED US TO ELIMINATE SOME OF THE SMALL
BARRIERS THAT MAY NOT HAVE PREVENTED YOU FROM APPLYING
BUT ARE MAKING IT DIFFICULT TO MEET OTHER GOALS
ADMINISTRATIVELY AS YOU PROGRESS THROUGH YOUR
CONVERSIONS TO SECTION EIGHT. SO IN RESPONSE TO THAT, WE'RE
NOW EXEMPTING AWARDED PROJECTS FROM THE FAS, PUBLIC
HOUSING ASSESSMENT SYSTEM, TO SUPPORT REDEVELOPMENT
PLANNING AND TEMPORARY RELOCATION DURING
CONSTRUCTION, AND WE'RE GIVING PHAS ADDITIONAL
FLEXIBILITY IN EXPENDING PUBLIC HOUSING FUNDS THEY'RE
USING TO FILL GAPS IN DEALS. WE HOPE THAT THESE CHANGES 16
WILL MAKE CONVERSION EASIER AND MORE FLEXIBLE FOR YOUR
NEEDS. AS I SAID EARLIER TODAY, THE
REST OF TODAY'S AGENDA WILL BE DEVOTED TO DELVING INTO
THE NUANCES AND POSSIBILITIES OF HOUSING AUTHORITIES AND
ALL OF YOUR PARTNERS HERE TODAY AND ACROSS THE COUNTRY.
WITH THESE CHANGES, THE ANNOUNCEMENT BACK IN MARCH
ABOUT BEING ABLE TO SET PROJECT RENTS IN 2012 LEVELS
AND THE VARIOUS CONVERSATIONS OUR TEAM HAS BEEN HAVING WITH
MANY OF YOU, WE'RE NOW LOOKING AT A DATA BASE OF
EXPECTED APPLICATIONS FOR THIS YEAR TO BE WELL NORTH OF
RAD'S CURRENT CAP OF 60,000 UNITS.
OUR BEST PREDICTIONS, WHICH ARE INDICATED ON THE CHARTS
ON THE SCREEN YOU'RE SEEING NOW, SUGGEST THAT IS HOUSING
AUTHORITIES AND THEIR PARTNERS ARE WORKING ON
APPLICATIONS IN EXCESS OF 70,000 UNITS, AND THAT'S
BEYOND THE 15,000 UNITS THAT WE'VE ALREADY GIVEN INITIAL
APPROVAL TO FOR HOUSING AUTHORITIES.
WHILE WE REQUESTED THE ABILITY TO RAISE THE CAP,
ALONG WITH SOME OTHER FLEXIBILITIES FOR RAD IN OUR
2014 FISCAL YEAR BUDGET REQUEST, THE STATUS OF WHICH
PAT IS GOING TO SPEAK ABOUT A LITTLE BIT LATER TODAY, RIGHT
NOW, WE ARE CONSTRAINED BY THIS 60,000 UNIT CAP.
AFTER THAT, WE'LL HAVE TO START A WAITING LIST, AND WE
WILL NOT HAVE THE ABILITY TO LOCK IN RENT LEVELS OR MAKE
FORWARD COMMITMENTS OF AUTHORITY WITHOUT AN APPROVED 17
RAD APPLICATION. UNFORTUNATELY, EVEN WITH OUR
BEST EFFORTS, IN AN UNCERTAIN BUDGET ENVIRONMENT, THE ONLY
CERTAINTY THAT WE HAVE RIGHT NOW IS THE REMAINING
AUTHORITY UNDER THE RAD CAP THAT CURRENTLY EXISTS IN LAW.
SO I WANT TO EMPHASIZE TODAY THE BEST THING THAT YOU CAN
DO IS GET YOUR APPLICATIONS IN AS SOON AS POSSIBLE TO
TAKE ADVANTAGE OF THESE NEW FLEXIBILITIES THAT WE'RE
TALKING ABOUT TODAY WITHIN RAD.
I WANT TO ALSO EMPHASIZE THAT THE MORE DEMAND WE HAVE, THE
MORE WE SHOW THE INTEREST IN USING RAD, THE MORE WE WILL
GET YOUR HELP IN DEMONSTRATING ON CAPITOL HILL
THAT WE NEED THIS ADDED AUTHORITY, THAT WE NEED TO BE
ABLE TO EXPAND RAD AND GO TO THE NEXT LEVEL.
SO WHILE WE ANTICIPATE THAT WE DO NEED TO GO BEYOND THOSE
60,000 UNITS VERY SOON FOR THE COST-NEUTRAL CONVERSIONS,
WE ALSO KNOW THAT THE CURRENT FUNDING APPROACH TO RAD WILL
NOT WORK IN EVERY MARKET ACROSS THE COUNTRY.
WE KNOW HOW IMPORTANT IT IS TO CONTINUE TO PUSH NOT JUST
FOR THE EXPANSION ON THE UNIT CAP BUT FOR OTHER STATUTORY
CHANGES TO RAD AND WE PLAN TO DO JUST THAT.
NOW, I'M SURE MOST OF YOU HAVE SEEN IN OUR 2014 BUDGET
REQUEST THAT WE'VE ASKED FOR INITIAL FUNDING FOR RAD, AND
WE WERE ENCOURAGED BY HOW THE SENATE RESPONDED IN THEIR
RECENT MARK-UP. WE'RE ALSO OPTIMISTIC ABOUT
WORKING WITH THE HOUSE FINANCIAL SERVICES COMMITTEE 18
AND APPROPRIATORS WHO ARE ORIGINAL SUPPORTERS OF THE
IDEAS WITHIN RAD AND GETTING CHANGES THAT WE NEED FROM
THEM. I ALSO WANT TO POINT MORE
BROADLY TO THE IMPORTANCE OF SECTION EIGHT REFORM.
NOT ONLY DOES THE LONGER TERM AUTHORIZATION FOR RAD REST
WITHIN THE SECTION EIGHT REFORM PROPOSALS THAT ARE
BEING CONSIDERED BY THE AUTHORIZING COMMITTEES ON
BOTH SIDES OF CONGRESS, BUT IT WOULD ALSO PROVIDE FOR
MANY FLEXIBILITIES THAT YOU ALL HAVE BEEN ASKING FOR FOR
YEARS, FRANKLY, THAT ALLOW YOU TO DO MORE WITH LESS IN
THESE TOUGH BUDGET TIMES AND TO BE THE BEST POSSIBLE
STEWARDS OF AFFORDABLE HOUSING IN YOUR COMMUNITIES.
WE ARE WORKING VERY VERSION CLOSELY -- IN FACT, I WAS UP
WITH THE HOUSE FINANCIAL SERVICES COMMITTEE YESTERDAY
TALKING ABOUT THIS. WE ARE WORKING EVERY DAY,
BOTH WITH THE HOUSE AND THE SENATE, IN CRAFTING A SECTION
EIGHT REFORM BILL THAT CAN BE TAKEN UP AND PASSED IN THIS
SECTION. AND I WANT TO EMPHASIZE THAT.
WE'VE BECOME VERY CLOSE IN PAST YEARS.
WE NEED TO PUSH THIS ACROSS THE FINISH LINE, THIS YEAR,
AND WE NEED YOUR HELP IN DOING THAT, AND WE ARE GOING
TO BE CALLING ON ALL OF YOU EARLY AND OFTEN TO BE ABLE TO
HELP US GET THIS ACROSS THE FINISH LINE.
FINALLY, I WANT TO SAY, THERE'S ANOTHER MATTER THAT
IS OF GREAT IMPORTANCE THAT IS BEING TAKEN UP BY THE 19
SENATE APPROPRIATIONS COMMITTEE THIS WEEK WHICH IS
TO INCREASE THE APPROPRIATION FOR OUR CHOICE NEIGHBORHOODS
INITIATIVE TO $250 MILLION. A SUBSTANTIAL INCREASE.
MORE THAN DOUBLING. THIS FUNDING IS A CRITICAL
LINCHPIN IN SUPPORTING PRESIDENT OBAMA'S CALL TO
CREATE NEIGHBORHOODS OF OPPORTUNITY IN THE
ADMINISTRATION'S PROMISE ZONES INITIATIVE.
AS YOU REMEMBER FROM THE PRESIDENT'S STATE OF THE
UNION, HE ELOQUENTLY TALKED ABOUT THE FACT THAT WE HAVE
TOO MANY NEIGHBORHOODS IN THIS COUNTRY WHERE A CHILD'S
LIFE CHANCES, EVEN A CHILD'S LIFE SPAN, IS DETERMINED BY
THE ZIP CODE THEY GROW UP IN. THAT IS NOT ACCEPTABLE IN THE
UNITED STATES OF AMERICA. AND WE NEED TO KEEP PUSHING
FOR ALL OF THESE SECTION EIGHT REFORMS AND TO GET
PROMISE ZONES DONE THIS YEAR IN APPROPRIATIONS.
WE NEED YOUR HELP. WE NEED YOUR SUPPORT.
AND WE CAN GET IT DONE. FINALLY, I WANT TO SAY, ON
BEHALF OF THE ENTIRE RAD TEAM AT HUD, AGAIN, TO COME BACK
TO THANKING YOU AND, IN FACT, CONGRATULATING YOU, FOR
STEPPING UP AS LEADERS IN MAKING RAD A VALUABLE NEW
TOOL IN PRESERVING AND REDEVELOPING OUR NATION'S
PUBLIC AND AFFORDABLE HOUSING.
YOU ARE THE PATH BREAKERS IN YOUR COMMUNITIES AND ACROSS
OUR COUNTRY. MILLIONS OF RESIDENTS WHO
NEED DECENT, SAFE, AFFORDABLE HOUSING DEPEND ON YOU, AND 20
THIS PROMISING NEW TOOL, IF WE CAN TAKE IT TO THE NEXT
LEVEL WITH THE NOTICE, WITH THE WORK THAT WE'RE DOING, IF
WE CAN GET EXPANDED AUTHORITY IN THE APPROPRIATIONS PROCESS
THIS YEAR, THERE ARE MILLIONS OF RESIDENTS WHO STAND TO
BENEFIT ACROSS THIS COUNTRY: THEY -- EVEN IF THEY WILL
NEVER KNOW YOUR NAMES, IF THEY'RE NOT HERE TODAY, THEY
SALUTE YOU, AND I SALUTE YOU ON BEHALF OF THEM TODAY, FOR
THE WORK THAT YOU ARE DOING. THANK YOU FOR THAT
LEADERSHIP. THANK YOU FOR WHAT YOU'VE
ALREADY ACCOMPLISHED. AND THANK YOU FOR THE
ACCOMPLISHMENTS THAT ARE AHEAD OF US, IF WE KEEP GOING
IN PARTNERSHIP. I WANT TO NOW TURN IT OVER TO
GREG BIRNE, AND JUST WANT TO SAY HERE, BOTH TO GREG AND TO
PAT, AS WELL AS TO THE ENTIRE TEAM HERE AT HUD THAT'S BEEN
WORKING ON THIS, ONE OF THE THINGS THAT HAS BEEN SO
SATISFYING TO ME AS WE'VE WORKED THROUGH THIS PROCESS
ON RAD IS I KEEP HEARING ACROSS THE COUNTRY THAT THE
WAY THAT HUD HAS PARTNERED WITH YOU HAS BEEN REMARKABLE.
AND ONE OF THE THINGS, WHEN I CAME INTO THIS AGENCY THAT I
KNEW, HAVING BEEN HUD'S BIGGEST CUSTOMER IN NEW YORK,
IS THAT WE NEEDED TO BE MORE OF A PARTNER.
WE NEEDED TO FIGURE OUT WAYS TO GET TO BE FLEXIBLE, TO BE
INNOVATIVE AND I WILL SAY, PAT, GREG, THE ENTIRE TEAM
THAT'S WORKED ON RAD HAS BEEN IN MY MIND JUST ABSOLUTELY
OUTSTANDING IN TERMS OF BRINGING THAT SPIRIT. 21
THESE CHANGES IN THE NOTICES REALLY DO COME FROM YOU, AND
IT'S A SIGN OF THE FACT THAT THEY ARE WORKING WITH YOU
EVERY DAY AND LISTENING, AND I THINK REALLY DOING
REMARKABLE WORK. SO PAT, GREG, THANK YOU FOR
YOUR LEADERSHIP, THANK YOU FOR EVERYTHING THAT YOU'VE
DONE. >> [APPLAUSE] LADIES AND
GENTLEMEN, GREG BIRNE. >> THANK YOU MR. SECRETARY.
SO KEEPING WITH THE THEME OF TODAY, WHICH IS REALLY WHAT
ARE OUR FLEXIBILITIES, ONE OF THE THINGS THAT HAVE ALLOWED
HOUSING AUTHORITIES UNDER THIS NOTICE TO EXPAND THE
PROGRAM, THAT THIS PANEL RIGHT NOW IS ABOUT INVENTORY
-- PUBLIC HOUSING INVENTORIES, NOT JUST A
SINGLE PROJECT, BUT OVER THE PAST SIX OR NINE MONTHS,
HOUSING AUTHORITIES HAVE COME UP AND SAID BUT I'M
INTERESTED IN DOING MANY PROJECTS AND SOME OF THE
RULES UNDER THE EXISTING NOTICE MADE IT DIFFICULT FOR
ME TO SORT OF GO IN IN A BIG WAY.
SO WHAT ARE SOME OF THE THINGS THAT WE DID?
WE DECIDED TO LIFT THE CAP OF 1000 UNITS.
WE DECIDED TO LIFT THE CAP ON MIXED FINANCE PROJECTS.
WE PROVIDED MORE FLEXIBILITY FOR HOPE SIX PROJECTS.
THERE'S MORE FLEXIBILITY FOR MULTI-PHASE PROJECTS.
AND WE ALSO CREATED THIS NEW THING CALLED THE PORTFOLIO
AWARD, WHICH THE SECRETARY MENTIONED, WHERE A HOUSING
AUTHORITY CAN DEFINE ITS OWN PORTFOLIO, WHETHER IT'S FOR 22
THE ENTIRE AGENCY OR A SUBSET, AND AS LONG AS THEY
GIVE US APPLICATIONS FOR HALF OF THAT PORTFOLIO, WE WILL
RESERVE RAD AUTHORITY FOR THE REMAINING UNITS AND GIVE YOU
ANOTHER 365 DAYS TO COME IN AND PUT IN YOUR APPLICATION
FOR THOSE. SO THOSE ARE SOME OF THE BIG
PICTURE THINGS THAT WE'VE DONE TO SORT OF ADDRESS THIS
NOTION OF INVENTORY SORT OF APPROACH TO RAD, AND SO OUR
PANEL TODAY, WE'VE GOT THREE LARGER AGENCIES, WE'VE GOT
THOMAS COLEMAN, PAUL GRAZIANO, BALTIMORE CITY AND
JAMES ***, AND THOMAS WITH 1200 UNITS, PAUL WITH 15,000
JAMES, WITH 2600 UNITS AND WE WANT TO DO IS HEAR FROM THEM
WHAT THIS NOTICE NOW PROVIDES IN TERMS OF NEW POSSIBILITIES
AND HOW THEY'RE APPROACHING RAD WITH IT.
SO I'M GOING TO PUT MY FIRST QUESTION TO THOMAS, AND SO
THOMAS, WE KNOW THAT IN THE EARLY SORT OF STAGE OF RAD,
THAT YOUR AGENCY HAS EXPRESSED SOME INTEREST, BUT
THEN YOU SAT OUT IN THE FIRST ROUND, BUT NOW YOU'VE HAD
SORT OF BEEN BACK IN TOUCH WITH US AND SAY HEY, THERE
ARE SOME THINGS ABOUT THE NOTICE, THAT NOW MAKE IT
POSSIBLE OR INCREASE THE INTEREST FOR MY AGENCY.
SO WHAT'S CHANGED? >> WELL, THE CHANGE IS THE
BUNDLING AND THE CAP REMOVED, BUT LET ME GO BACK, AND WE'RE
AN AGENCY OF 1250 UNITS, LOCATED IN NORTHEAST
MISSISSIPPI, WITH THE -- >> WAIT A MINUTE, MAYBE THE
MIC. PRESS THE MIC ON. 23
IS IT ON? THERE YOU GO.
>> IS IT ON? >> NOW IT'S ON.
I'M SORRY. >> I'M SORRY.
>> WE'RE AN AGENCY IN NORTHEAST MISSISSIPPI,
REGIONAL HOUSING AUTHORITY, 1250 UNITS, AND WE WERE
DIVIDED UP INTO 10 APPS IN 2006 AS A RESULT OF ASSET
MANAGEMENT. WE WERE INTERESTED ESPECIALLY
WHEN WE HEARD THAT WE WERE GOING TO BE ABLE TO USE THE
FMRS AS OUR BASIS FOR THE RENT CALCULATION, BUT OF
COURSE, AS YOU KNOW, THAT CHANGED, AND THEN THE FIGURES
GOT TIGHTER AFTER THE 12 APPROPRIATIONS, I BELIEVE.
SO WE'VE PREPARED TWO APPLICATIONS, AN APPLICATION
FOR TWO OF OUR APPS, ABOUT A YEAR AGO, AND THEN WE DECIDED
NOT TO SUBMIT THOSE APPLICATIONS BECAUSE OF THE
PUSHBACK FROM STAFF BECAUSE WE WERE GOING TO BE OPERATING
TWO AUTHORITIES WITH ONE SET OF RULES, AND EIGHT WITH
ANOTHER. SO THERE WAS A PUSHBACK, AND
SO WHEN I HEARD ABOUT THE CAP BEING REMOVED, WHICH WOULD
ALLOW US TO APPLY FOR THE ENTIRE 1200 UNITS, PLUS THE
BUNDLING, BECAUSE WE HAD AT LEAST TWO OF OUR APPS THAT
WOULD NOT WORK FINANCIALLY, BUT PROBABLY WILL WORK WITH
THE BUNDLING, SO AT THIS POINT WE ARE IN THE PROCESS
OF PREPARING THE APPLICATION. IT APPEARS THE NUMBERS WILL
WORK WITH THE BUNDLING, AND WE ARE JUST HAPPY THAT HUD
HAS SEEN FIT TO AT LEAST CHANGE THOSE TWO ITEMS THAT 24
WILL AFFECT THE REGIONAL HOUSING AUTHORITY.
>> THANK YOU THOMAS. SO YOU WILL GO IN FOR THE
WHOLE KIT AND CABOODLE. >> YES, ALONG WITH AN AGENCY
THAT WE MANAGE, A SMALL AUTHORITY THAT --
>> PUT IN APPLICATIONS FOR BOTH AGENCIES.
>> YES, SO THAT EVERYTHING WE WILL BE DOING WILL BE EITHER
PROJECT BASED VOUCHER OR PROJECT-BASED ANALYSIS.
>> THANK YOU. PAUL, PROBABLY YOU'RE NOT
COMING IN FOR 14, 15,000 UNITS.
>> NO. >> THAT'S A BIG THING TO
SWALLOW. BUT OUR NOTICE PROVIDES SOME
ADDITIONAL FLEXIBILITIES, AND SO HOW ARE YOU APPROACHING
THIS WITH A REALLY EXTRA LARGE HOUSING AUTHORITY?
>> WELL, YES. LET ME TURN THAT ON WHERE HE
DEFINITELY NOT GOING IN FOR THE ENTIRE INVENTORY.
BUT IT'S NOT MERELY BECAUSE OF THE SIZE.
WE'VE DONE AN ANALYSIS AND SORT OF CATEGORIZED OUR
INVENTORY BY DIFFERENT GROUPINGS AND WE THINK THAT
SOME OF THE TYPES OF HOUSING WE HAVE ARE MUCH MORE
CONDUCIVE TO THIS PROGRAM NOW THAN OTHERS.
OVER TIME, THERE MAY BE OTHERS THAT WE HAVE THAT
COULD BE IN A POSITION TO MOVE INTO RAD AS WELL.
BUT, FOR INSTANCE, WE HAVE 46 AMPS TOTAL.
OUR MENTIONED POPULATION, WE HAVE 15 AMPS, 13,031 UNITS
THERE. WE THINK AS A GROUP, THOSE 25
DEVELOPMENTS WOULD BE IDEAL FOR RAD, AND SO RIGHT OFF THE
TOP, WE'RE LOOKING AT THOSE AS ONE PACKAGE, AND
OBVIOUSLY, THEY MAY BE BROKEN UP INTO DEVELOPMENT GROUPS.
BUT I SHOULD SAY, WE'VE GOT AN RFQ ON THE STREET RIGHT
NOW FOR DEVELOPERS, INVITING THEM TO COME IN, THE
PROPOSALS ARE DUE THE END OF THIS MONTH.
WE'RE GOING TO REALLY FAST TRACK -- WE'VE DONE A LOT OF
INTERNAL ANALYSIS. WE WANT THE DEVELOPERS TO
GIVE US THEIR SENSE. BUT WE BELIEVE THAT THE MIXED
POPS ARE A VERY, VERY GOOD STARTING POINT.
SO THAT'S ABOUT 3100 OF OUR UNITS.
WE ALSO HAVE HOPE SIX TYPES THAT ARE FEEL SOMETHING
FINANCIAL DISTRESS WITH THE REDUCED PRORATED PUBLIC
HOUSING OPERATING SUBSIDY. AND SO THERE ARE TECHNICAL
QUESTIONS WE HAVE THERE. WE KNOW THAT THESE ARE --
MOST OF THESE HOPE SIXES ARE WITH TAX CREDIT DEALS WITH
TAX CREDIT COMPLIANCE PERIODS AND SO FORTH.
SO PART OF WHAT WE WANT TO LEARN TODAY IS HOW DO WE KIND
OF SORT OUT THOSE ISSUES, HOW DO WE MOVE FORWARD WITH A
RAD, WITHOUT UPSETTING SOME OF THE COMPLIANCE RULES AND
OBLIGATIONS THAT GO WITH A TAX CREDIT DEAL.
AND OBVIOUSLY YOU'VE GOT TO MAKE ALL THOSE INVESTORS
HAPPY, ALTHOUGH I WOULD SAY PARENTHETICALLY I WOULD
ASSUME THEY WOULD BE INTERESTED IN A DEAL WITH A
MORE STABLE RENT SUBSIDY. SO WE HAVE CLOSE TO 1000 26
UNITS IN THE HOPE SIX, JUST THE ACC UNITS, IN FIVE DEALS.
SO THAT'S ANOTHER GROUP WE WANT TO LOOK AT VERY CLOSELY.
WE'VE GOT SIX SMALLER MIXED FINANCE DEALS WITH 167 UNITS.
SOME OF THOSE OWNERS HAVE COME TO US ASKING FOR THE
SAME REASONS, FINANCIAL STRESS, AND THE UNCERTAINTY
ABOUT THE SUBSIDY LEVELS. WE HAVE A CURRENT SITE WE'RE
REDEVELOPING, WE'VE DEMOLISHED TWO-THIRDS OF THE
TIME, WE'RE REBUILDING IN PHASES.
RIGHT NOW OUR THINKING IS TO DO THAT WITHOUT RAD, BUT
WE'RE KIND OF INTRIGUED BY THE IDEA OF MAYBE WHETHER
THERE COULD BE AN OVERLAY THERE.
THERE WERE TECHNICAL ISSUES RELATE TO A DISSENT DECREE
WHICH HAVE NOW BEEN ADDRESSED AND SO WE MIGHT LOOK AT THAT
SITE. IT WOULD DEFINITELY BE A
MULTI-PHASE SITE. WE ALSO HAVE A COUPLE OF
SITES THAT WE'RE LOOKING AT FOR CHOICE NEIGHBORHOODS.
REALLY NOT THIS YEAR, BECAUSE THERE'S ANOTHER PROJECT IN
THE CITY WE'RE WORKING ON WHEN IS NOT PUBLIC HOUSING,
BUT NEXT YEAR. AND SO I DON'T KNOW THAT -- I
THINK WE'RE SORT OF SEPARATING THE CHOICE
NEIGHBORHOOD PROCESS FROM RAD RIGHT NOW, BUT WE HAVE TO GO
THROUGH A PLANNING EXERCISE WITH AT LEAST ONE OF THESE
MAJOR FAMILY SITES. SO IT'S POSSIBLE DOWN THE
ROAD WE'D LOOK AT THAT. BUT I NEED TO REALLY HAVE US
DELVE INTO MORE THE BENEFITS OF PIGGYBACKING RAD ON CHOICE 27
NEIGHBORHOODS, SO WE'RE NOT OPPOSED TO THE IDEA BUT RIGHT
NOW WE THINK IT'S A SEPARATE PIECE.
AND THEN OVERALL, ON THE CONVENTIONAL FAMILY SITES, WE
ARE -- THE CHALLENGE THERE, THEY TEND TO BE LARGER SITES,
THERE ARE SOME SMALLER FAMILY SITES THAT WE THINK WOULD
FALL INTO RAD VERY NICELY. THE PROBLEM WITH THE VERY
LARGE SITES FOR US, AND YOU HAVE GIVEN US THE LEAP IN
TERMS OF THE MULTI-PHASE DEVELOPMENT AND THE
FLEXIBILITY, BUT WE'RE ALSO CHALLENGED WITH SOME BROADER
PLANNING ISSUES OF WE WANT TO CONVERT THESE TO AS MANY AS
POSSIBLE, TO MIXED INCOME COMMUNITIES, AND WE HAVE,
OBVIOUSLY -- THERE'S A ONE FOR ONE REPLACEMENT THERE,
WHICH WE'RE CERTAINLY SUPPORTIVE OF.
WE'RE NOT IN A POSITION IN OUR MARKET RIGHT NOW WHERE
INCREASED DENSITY IS A HIGH SELLING POINT FOR MOST OF
THOSE SITES. SO THE REAL QUESTION IS HOW
DO YOU WORK A LARGE FAMILY SITE INTO THE JOINT
OBJECTIVES OF RECAPITALIZATION AND STEADY
STREAM OF REVENUE, WHILE AT THE SAME TIME, CREATING MIXED
INCOME OPPORTUNITIES. SO I WOULD SAY WE'RE GOING TO
TAKE A VERY CLOSE LOOK AT THOSE, WE'LL PROBABLY
HAND-PICK A FEW OUT OF THERE, PUT THEM IN OUR INITIAL
BUNDLE. BUT THERE ARE GOING TO BE
SOME OTHERS WE WANT TO LOOK AT DOWN THE ROAD.
SO I GUESS THE POINT I'M MAKING OVERALL IS THAT 28
BECAUSE OUR INVENTORY IS SO WIDE AND BECAUSE THERE ARE
OTHER CONSIDERATIONS, WE ARE CATEGORIZING AND
PRIORITIZING, AND THERE ARE SOME THAT ARE JUST SORT OF
VERY OBVIOUS, AND WE'VE ACTUALLY DONE ANALYSIS OF ALL
OUR SITES, AND WE HAVE EVERYTHING FROM A $47 MILLION
SURPLUS ON A RAD DEAL TO A $102 MILLION GAP.
$102 MILLION GAP WOULD BE THE ONE WE'RE LOOKING AT CHOICE
NEIGHBORHOOD. SO THERE'S A HUGE RANGE HERE.
BUT WE HAVE -- EVEN IF YOU TAKE OUT THE VERY, VERY LARGE
PROJECTS, WE HAVE ABOUT 5000 UNITS THAT WOULD INDICATE A
SURPLUS, A VERY POSITIVE CASH FLOW RIGHT OFF THE TOP.
>> GREAT. >> SO WHEN YOU START LOOKING
AT ALL THOSE OTHER ISSUES, WE THINK THAT CAN GROW OVER
TIME. SO I THINK WHAT'S REALLY
IMPORTANT IS THAT WE GET INTO THIS THING AS BIG AS WE CAN
IN A WAY THAT WE CAN RESPONSIBLY DO IT OVER THE
NEXT COUPLE OF YEARS. I LIKE THE 50 PERCENT, THE
PORTFOLIO, 50 PERCENT THIS YEAR, 50 PERCENT NEXT, BUT
I'M OBVIOUSLY CONCERNED, AS I KNOW YOU ARE, ABOUT HAVING A
PROGRAM WE CAN COUNT ON DOWN THE ROAD, SO AS WE EXPAND
THAT RAD INVENTORY. >> RIGHT.
>> SO PAUL, JUST TO FOLLOW UP BEFORE I GO TO JAMES --
>> YES. >> AS YOU LAID OUT, THERE'S
THREE, FOUR, 5000 THAT RIGHT NOW PENCIL OUT PRETTY WELL.
>> VERY WELL. >> SO IT LOOKS LIKE YOU WILL 29
TAKE ADVANTAGE OF OUR PORTFOLIO AWARD PROVISION,
WHICH WILL GO INTO THE FIRST GROUPING OF PROPERTIES BUT I
MAY ALSO BE ASKING FOR HUD TO RESERVE AWARDS FOR ANOTHER
SET OF PROPERTY THAT IS I NEED A YEAR TO REALLY PLAN
FOR. >> YEAH, A LOT OF THAT IS
GOING TO COME OUT OF THE DISCUSSIONS WE HAVE WITH THE
DEVELOPERS. WE HAD A PRE-DEVELOPMENT
MEETING YESTERDAY AND WE HAD A LARGE NUMBER OF VERY
EXPERIENCED DEVELOPERS COME IN.
SO WE WANT TO DO THE REALITY CHECK WITH THEM AS WELL, AND
WHAT IS THE CAPACITY. WE ARE ASSUMING 4 PERCENT TAX
CREDITS WITH BONDS AND SO FORTH.
>> OKAY. GREAT.
>> WE'RE NOT TRYING TO COMPETE IN THE 9 PERCENT POOL
HERE. >> JAMES, SO YOU'RE KIND OF
IN BETWEEN, WITH THE SIZE OF AGENCY, AND WHATNOT, 2600
UNITS IN GREENSBORO, AND YOU'VE GOT SOME UNIQUE
CHALLENGES THERE. SO HOW ARE THE NEW INVENTORY
OPTIONS WE HAVE AVAILABLE, WHAT'S HAPPENING IN YOUR
AGENCY? >> A NUMBER OF THINGS ARE
HAPPENING. WE ARE CURRENTLY -- STEP
BACK, TO REALLY TAKE A LOOK AT THE RAD PROGRAM, AND
REALLY GO PAST ONE THRESHOLD, WHETHER RAD OR NO RAD, IN OUR
INITIAL ANALYSIS AS A BASELINE THRESHOLD, AND THEN
WE'VE TAKEN ADVANTAGE OF PROGRAMS BEFORE, CAPITAL FUND 30
FINANCING, ENERGY, PERFORMANCE-BASED CONTRACTS,
AND SO FORTH, AND THEY HAVE PRESENTED SOME CHALLENGES, OR
ADDITIONAL THRESHOLDS, THAT WE MUST MOVE PAST.
AND SO WE'VE SYSTEMATICALLY LOOKED, RAD, NO RAD, AND THEN
NOW, ADDRESSING THE CAPITAL FUND FINANCING THRESHOLD.
AND WITH THAT, IT HAS PRESENTED SOME CHALLENGES
THAT WE'RE GOING TO HAVE TO REALLY LOOK AT A TIMING ISSUE
AS FAR AS ANALYZING THE PORTFOLIO, LOOKING AT THE
AMOUNT OF DEBT OF CAPITAL FUND FINANCING, SEEING NOW
WHAT ARE SOME OF THE RESTRICTIONS OF THE PROGRAM,
WHICH RIGHT NOW IS BASED UPON WE CAN ALL USE CAPITAL FUNDS
TO ACTUALLY PAY DOWN THAT DEBT.
WE'RE CURRENTLY LOOKING TO SEE HOW WE CAN ALLOCATE
RESOURCES TO BALANCE OUT DOLLARS THAT WE WOULD HAVE TO
SET ASIDE TO PAY DOWN THAT DEBT.
SO THAT HAS PRESENTED SOME BARRIERS IN WHICH WE ARE
SYSTEMATICALLY WORKING THROUGH.
ONE OF THE THINGS ABOUT THE NEW CHANGES FOR US IS THAT
AFTER GOING THROUGH THAT INITIAL THRESHOLD, WE FIRST
HAD TO -- WE'RE STARTING TO REALLY LOOK GLOBALLY TO SEE
IF THE DEAL WOULD ACTUALLY WORK ACROSS THE ENTIRE
PORTFOLIO AND TO ADDRESS INTERNALLY SOME OF OUR
PHYSICAL NEEDS TO SEE WHICH PROPERTIES NEED THE MOST
WORK, AND TO ACTUALLY RUN THROUGH A GLOBAL ANALYSIS AND
SEE IF IT'S A GO OR NO GO FOR THE PORTFOLIO GROUP. 31
AS HE MENTIONED, SOME OF THE DISEASE, SOME OF THE -- SOME
HAVE SURPLUS CASH AND SOME ARE IN THE RED, SO MAYBE
BUNDLING RENTS, THOSE TYPES OF THINGS, AND PACKAGING
THROUGH THE NEW NOTICE, HAS REALLY HELPED US AS FAR AS
THE FLEXIBILITY WE SEE AS FAR AS THE INITIAL ANALYSIS.
THEN MOVING FROM THE GLOBAL APPROACH, INTO THE INDIVIDUAL
DEALS, THEN ANALYZING THOSE TO SEE IF SOME OF THOSE DEALS
WOULD REQUIRE MULTIPLE PHASES, BECAUSE OF THE SIZE
OF THE DEAL. WE HAVE ONE PROJECT IN
PARTICULAR THAT WE INITIALLY -- WE DIDN'T REALLY CONSIDER
-- RAD WASN'T THE RIGHT FIT BUT IT'S SOMETHING WE'RE
GOING TO TAKE A LOOK TO SEE IF IT ACTUALLY WILL WORK.
WE'RE CURRENTLY IN THE PROCESS OF MOVING FROM GLOBAL
-- STARTING TO GET INTO INDIVIDUAL ANALYSIS, BUT
REALLY HAVE TO DEAL WITH THE THRESHOLD WITH THE CAPITAL
FUND FINANCING. I KNOW, I'VE SPOKEN WITH
OTHER AGENCIES IN THE COUNTRY, AND THEY'RE DEALING
WITH SOME OF THE SAME ISSUES. >> RIGHT.
>> THAT'S ONE OF THE THINGS HOPEFULLY, AS A PART OF THIS
DIALOGUE, THIS DISCUSSION TODAY, WE CAN REALLY COME TO
A COMMON GROUND AND SEE IF WE CAN APPROACH THAT.
>> I WANT TO PLUG IN AN ADVERTISEMENT FOR OUR
BREAK-OUT SESSIONS LATER TODAY, ONE OF THE BREAK-OUT
SESSION SOCIAL SECURITY ABOUT SOME OF THE COMPLEX
TRANSACTIONS AND AS PART OF THAT, ANY PHAS WHO HAVE 32
CAPITAL FINANCING LOANS THAT THEY'RE TRYING TO
RESTRUCTURE, VICKY FROM OUR GENERAL COUNSEL WILL BE
THERE, SO ANYONE THAT HAS THOSE ISSUES, PLEASE COME TO
THAT SESSION. PAUL.
>> I WANTED TO TOUCH ON THE CAPITAL FUND LOAN ISSUE.
WE'RE IN A CONSORTIUM WITH THE STATE OF MARYLAND.
THEY HAD ASKED US TO JOINT A STATEWIDE CONSORTIUM MANY
YEARS AGO. THERE WAS A LOCKOUT PERIOD,
BUT THEY CAN PREPAY AS OF JULY 1.
SO THEY ARE GOING TO BE REFINANCING THE ENTIRE
PACKAGE. WE ARE THE BIGGEST PART OF
THAT PACKAGE. I THINK WE HAVE ABOUT
50 MILLION LEFT ON OUR LOAN. AND SO WE'RE LOOKING
IMMEDIATELY TO PREPAY 10 -- WELL, IT WOULD BE REFINANCED,
BUT WE WILL PAY DOWN 10 MILLION OF THAT, BUT THERE
WILL ALSO BE, AND THIS IS VERY IMPORTANT TO US WITH
RAD, THERE IS GOING TO BE, WHERE THE OLD ONE HAD A
LOCKOUT PERIOD, THIS IS GOING TO HAVE PREPAYMENT
AUTHORIZATION THROUGHOUT. >> GREAT.
>> SO AS WE DO RAD DEALS, WE WILL LOOK TO SOME KIND OF
PRORATA REDUCTION AND PAYOFF OF THOSE PORTIONS OF THE DEBT
ASSOCIATED ON A PRORATA BASIS.
>> AND I ALSO WANT TO SAY THAT ALL OF THE LENDERS SO
FAR HAVE BEEN TERRIFIC TO WORK WITH.
THEY'VE REALLY STEPPED UP TO THE TABLE. 33
>> THERE'S ONE OTHER THING I WANT TO SAY ABOUT THAT.
THERE WAS A PROVISION WHICH I THINK IS A HUD PROVISION THAT
SAYS NOT ONLY WAS THERE A COVERAGE RATIO ISSUE, BUT
THERE WAS ALSO A MINIMUM NUMBER OF UNITS ISSUE, AND WE
-- IN THE ACC. AND WE THINK THAT HUD NEEDS
TO REALLY LOOK AT THAT PIECE. OBVIOUSLY, UNDERSTAND
UNDERWRITING AND COVERAGE RATIOS AND SO FORTH.
BUT WE THINK THAT THAT SORT OF IS AN UNNECESSARY
RESTRICTION. SO IF WE'RE CONVERTING UNITS
TO RAD WE'RE GOING TO OBVIOUSLY REDUCE THE NUMBER
OF ACC UNITS AND THERE IS AN ABSOLUTE CAP OR MINIMUM
THERE. >> FROM OUR SIDE, ANY OF
THOSE REGULATORY PROVISIONS, WE'RE HAPPY TO WAIVE.
IF IT'S IN THE LOAN DOCUMENTS, IT'S --
>> YEAH. >> AND WE'LL BE REFINANCING,
ANYWAY, SO IT COULD BE STRUCTURED.
>> JAMES, BACK TO YOU FOR A MOMENT.
JUST A COUPLE OF QUESTIONS FOR THIS PANEL.
SO IT LOOKS LIKE YOU MIGHT TAKE ADVANTAGE OF BOTH SORT
OF THE PORTFOLIO SORT OF PROVISION, AS WELL AS MULTI
-- YOU'VE GOT A COUPLE OF FAMILY SITES, SORT OF NEAR
THE DOWNTOWN. >> YES.
>> THAT ARE GOING TO TAKE SEVERAL YEARS TO BUILD OUT.
SO DOES THE MULTIPHASE AWARD SORT OF PROVISION SORT OF
WORK FOR YOU? >> IT WOULD. 34
IT REALLY WOULD. AND TAKING A LOOK AT
RELOCATION ISSUES, AND DEALING WITH SOME OF THE
SITES, WHICH WOULD, YOU KNOW, TEND TO BE A CHOICE
NEIGHBORHOOD OR OTHER RESOURCE, COMPREHENSIVELY
LOOK AT IT, BECAUSE OF THE DENSITY IN THOSE SITES.
BUT WITH A PHASED APPROACH WE COULD ACTUALLY WORK THROUGH
SYSTEMATICALLY THOSE PARTICULAR SITES THAT HAVE
GIVEN US SOME ISSUES AS FAR AS FROM A PLANNING
PERSPECTIVE. AND AS WE MOVE FORWARD, WE
REALLY ARE DELVING INTO THE ACTUAL ANALYSIS TO SEE WHICH
DEALS WE CAN ACTUALLY PACKAGE FOR RENTS, AND WORKING WITH
LENDERS AT SOME POINT TO SEE, YOU KNOW, AS FAR AS
LEVERAGING OUT THE RENTS AND SEE IF SOME OF THE DEALS CAN
ACTUALLY BE PACKAGED UNDER ONE MORTGAGE, THAT TYPE OF
THING. THERE'S A NUMBER OF THINGS
WE'RE LOOKING AT THAT WE HAVE TO CONSIDER.
BUT AGAIN, SOME OF THE THRESHOLD ISSUES WE HAVE TO
WORK THROUGH, AND I APPRECIATE YOUR COMMENT AS
FAR AS HUD, AS FAR AS REGULATION, BECAUSE REALLY,
IT'S COME DOWN TO A TIMING THING, ESPECIALLY IF WE ARE
GOING TO HAVE TO PAY DOWN, WHICH WE WILL HAVE TO PAY
DOWN SOME OF THE CAPITAL FUNDS, FINANCE SOME OF THAT
DEBT, AND LOOK AT MONIES WE HAVE NOW THAT NEED TO BE
OBLIGATED BY A CERTAIN PERIOD WITHIN THIS CALENDAR YEAR,
AND LOOKING AT DIFFERENT ALLOCATIONS AND RECAP, THOSE 35
TYPES OF THINGS, THAT GENERATE THE CASH TO ACTUALLY
PAY DOWN THE DEBT. SO IT'S IMPORTANT TO HAVE
THAT FLEXIBILITY MOVING FORWARD AS WE WORK THROUGH
THAT PARTICULAR THRESHOLD ISSUE.
>> THOMAS, I WANT TO COME BACK TO YOU FOR THE LAST
QUESTION, AND THAT IS YOU MIGHT BE THE FIRST LARGE
AGENCY TO, IF YOU APPLY, TO CONVERT ANYTHING, AND IT
COULD BE AS SOON AS NINE MONTHS OR 12 MONTHS FROM NOW,
YOU WOULD BE OUT OF THE PUBLIC HOUSING PROGRAM,
RIGHT? >> RIGHT.
YOU KNOW, LISTENING TO THESE TWO GENTLEMEN, I'M NOT
ENVIOUS OF THEIR SITUATION AS FAR AS PROBLEMS, BECAUSE WE
-- OUR BIG PROBLEM WILL BE WHETHER OR NOT THE PCA WILL
COME IN WITH THE MONEY. BUT YEAH, WE WANT -- IF WE
CONVERT, WE WANT TO CONVERT EVERYTHING SO THAT WE GET OUT
OF THE PUBLIC HOUSING BUSINESS COMPLETELY.
WE GET AWAY FROM AS MANY OF THE REGULATIONS THAT WE'RE
PERMITTED TO GET AWAY FROM, AND GO UNDER, SAY, THE
PROJECT-BASED RENTAL ASSISTANCE, MULTI-FAMILY.
SO WE WILL BE WITH THE PRIVATE SECTOR, SO TO SPEAK,
AS FAR AS OUR SOURCE OF FUNDS.
AND YEAH, THAT'S -- THAT LOOKS GOOD TO US.
>> [LAUGHTER] >> AND HOW -- WHAT DID YOU DO
TO CONVINCE YOUR BOARD? I MEAN, WERE THEY NERVOUS
THAT YOU WERE ABANDONING YOUR MISSION OF BEING A GOOD 36
STEWARD FOR THESE PROPERTY? >> WELL, WE'RE NOT ABANDONING
OUR MISSION OF -- YOU KNOW, WE EXIST BECAUSE OF OUR
RESIDENTS. AND I'M LOOKING AT THIS
CONVERSION AS A MEANS OF CONTINUING TO BE ABLE TO
OFFER SERVICES, OFFER AFFORDABLE HOUSING, TO OUR
RESIDENTS, AND THE FUTURE RESIDENTS.
BUT NO, THE BOARD DID NOT HAVE AN ISSUE, WHEN YOU START
TALKING ABOUT USING THE 12 APPROPRIATIONS, USING THE
CAPITAL AND OPERATING SUBSIDY, FOR FOLKS IN THAT
12, VERSUS LOOKING AT 12, PLUS DOWN THE ROAD.
WHO KNOWS WHAT IT WILL BE DOWN THE ROAD.
SO THAT'S A PRIMARY CONSIDERATION.
AND ALSO, THE EASE OF OPERATING AND MANAGING, AND
EASIER MANAGEMENT SITUATION FOR THE AUTHORITY IN THE
FUTURE. >> THANKS.
WE'LL CLOSE UP. PAUL OR JAMES, ANYTHING YOU
WANT TO ADD? >> YEAH, I JUST WANTED TO --
FIRST OF ALL, I AGREE WITH THE BASIC ASSESSMENT OF IT'S
NOT A LOSS OF PUBLIC HOUSING UNITS.
IT IS THE CHOICE BETWEEN LOSING THE UNITS ALL
TOGETHER. WE HAVE AN $800 MILLION
CAPITAL NEED, AND AFTER WE PAY OFF OUR ANNUAL DEBT
SERVICE ON THE CAPITAL FUND LOAN, WE GOT ABOUT 6 MILLION
BUCKS A YEAR. SO IT'S A NECESSITY FOR
PRESERVATION. THAT'S SOMETHING WE HAVE TO 37
PUSH. BUT WE HAVEN'T TALKED A WHOLE
LOT ABOUT MTW. I WANT TO PUT IN A PLUG
THERE. AS AN MTW AGENCY, I THINK THE
MULTI-PHASING, THE PORTFOLIO CONCEPT, THE BUNDLING, PUT
ALL THOSE TOGETHER, TOGETHER WITH THE FLEXIBILITIES YOU
ARE NOW OFFERING UNDER MTW, BOTH, YOU KNOW, WE CAN LOOK
AT ADDITIONAL CAPITAL INFUSIONS, UP FRONT, OR TO
HELP SUPPLEMENT ON ESTABLISHING RENTS OBVIOUSLY
WITHIN THE LIMITS, BUT PUTTING ALL THAT TOGETHER
MADE IT MUCH, MUCH MORE ATTRACTIVE TO US AND I WOULD
HOPE TO OTHER MTW AGENCY THE AS WELL.
>> JAMES, ANYTHING TO ADD? >> I WAS GOING TO SAY, EVEN
WITH US, AND LIKEWISE, WITH TOM, WE REALIZE THAT WE ARE
IN THE HOUSING BUSINESS, AND AT THE END OF THE DAY, WE
PROVIDE QUALITY HOUSING, AND THIS IS THE TOOL FOR US.
WE ARE CONSTANTLY LOOKING AT DIFFERENT TOOLS THAT WILL
ALLOW US TO PROVIDE THE BEST HOUSING POSSIBLE.
AND WE LOOK AT THIS AS SUCH. I MEAN, BASICALLY, SHIFTING
TO A PRIVATE BUSINESS MODEL IS WHAT WE'RE DOING AND WE
HAVE TO BE VIABLE LONG TERM, SO WHEN YOU SCAN THE HORIZON
AND LOOK AT VARIOUS PROGRAMS, AND WHAT WE ARE CURRENTLY
WORKING WITH, AND POTENTIAL OPTION, THIS SEEMS TO BE A
VIABLE OPTION, AND IS WORTHY OF OUR ANALYSIS AND GOING
THROUGH TO SEE IF IT'S CONCEIVABLE FOR US AS AN
AGENCY AND MAKING A FUNDAMENTAL SHIFT IN THE 38
POTENTIAL LARGE PORTION OF YOUR PORTFOLIO GOING TO THAT
PARTICULAR MODEL. SO WE HAVE TO WORK THROUGH
THOSE LOGISTICS AND WORK WITH OUR BOARD AND AGAIN, WE'RE
STILL IN THE ANALYSIS PHASE, AND EVALUATING IF IT MAKES
SENSE, LIKES I MENTIONED IS IMPORTANT.
BUT WE LOOK AT IT AS A VIABLE OPTION, A TOOL FOR US TO MOVE
FORWARD, TO HAVE SUSTAINED QUALITY HOUSING IN THE
FUTURE. >> THANKS JAMES.
THOMAS? >> OUR ASSESSMENT INDICATES
THAT WE WILL NOT NEED TO BORROW ANY MONEY.
BUT, THE FEAR THAT I HAVE GOING BACK TO THE BOARD IS
WITH A PCA THAT SAYS WE ARE GOING TO HAVE TO BORROW
MONEY, AND I DON'T KNOW HOW MY BOARD WILL REACT TO THAT.
TO BORROWING MONEY. >> BUT AT LEAST YOU'VE GOT
SOME ROOM IN YOUR NLI, IF YOU NEED TO BORROW.
>> YES. >> THOMAS, PAUL, JAMES, THANK
YOU VERY MUCH FOR BEING HERE TODAY AND SHARING YOUR
THOUGHTS WITH US. I'M GOING TO TURN IT OVER NOW
TO MY COMPANION TO RUN THE NEXT PANEL.
WILL? >> [APPLAUSE]
>> THE LINE SHIFT IS COMPLETED.
SO THIS PANEL IS GOING TO FOCUS ON THE CHANGES IN THE
RAD NOTICE RELATED TO HOW WE SET THE INITIAL SECTION EIGHT
CONTRACT RENTS FOR RAD-CONVERTED PROPERTIES.
I'M HAPPY TO INTRODUCE OUR ESTEEMED PAM. 39
FIRST, WE HAVE ASHLEY JOHNSON, WHO'S COME FROM THE
WEST COAST, FROM WASHINGTON STATE, FROM THAT HOUSING
AUTHORITY, SCOTT HOFRAN, ENTERPRISE COMMUNITY
INVESTMENTS, MATT CARTER WITH WHITE PLAINS HOUSING
AUTHORITY FROM NEW YORK. BEFORE I TURN TO THE PANEL
FOR SOME DISCUSSION, I JUST WANT TO REVIEW THE CHANGES
THAT THE SECRETARY WENT OVER. WE WILL JUST GO A COUPLE OF
SLIDES FURTHER. FIRST, THE BASICS.
I ALWAYS LIKE TO REPEAT THIS, BECAUSE THIS IS ABSOLUTELY
FUNDAMENTAL OF HOW WE SET THE INITIAL RENTS.
FOR EVERY PROJECT, BECAUSE RAD DOES NOT HAVE A DEDICATED
APPROPRIATION, WE ARE RELYING ON EXISTING PUBLIC HOUSING
SUBSIDIES, SO FOR EVERY PROJECT WE ADDED, WHAT
THEY'RE GETTING IN THE OPERATING FUND, WHAT THEY GET
IN THE CAPITAL FUND, AND WHAT THEY COLLECT IN TENANT RENTS
TO CREATE THE RAD CONTRACT RENT, AND WE DID FOR EVERY
SINGLE PUBLIC HOUSING PROPERTY IN 2012 WHEN WE WERE
BEGINNING THE DEMONSTRATION AND POSTED THIS ON TWO
PLACES, THE RAD INVENTORY ASSESSMENT TOOL, AND LOADED
IT INTO THE RAD APPLICATION. VERY IMPORTANTLY, WHEN WE
WERE CALCULATING THE OPERATING FUND, WE ADDED THE
OPERATING FUND ALLOCATION ADJUSTMENT BACK IN.
SO IT'S ESSENTIALLY A 95 PERCENT PRORATION LEVEL.
OKAY, SO THAT'S WHERE WE STARTED, THAT'S WHERE THE
APPLICANTS CAME IN WITH. HOWEVER, THEN IN 2013, 2013 40
CAME AND TURNED OUT THE APPROPRIATION BILL WAS GOING
TO BE A CONTINUING RESOLUTION, AND ON TOP OF
THAT, A SEQUESTER, AND THAT CAUSED SOME TROUBLE THAT
WOULD HAVE REDUCED CONTRACT RENTS ACROSS THE COUNTRY.
TWO SLIDES DOWN, PLEASE. -- BY ABOUT 12 PERCENT.
AND FOLKS WERE GETTING VERY WORRIED.
WHAT WOULD THIS MEAN, WHAT WOULD THIS MEAN FOR THE
APPLICATIONS THAT WERE CURRENTLY BEING PROCESSED,
WHAT WOULD THIS MEAN FOR FOLKS CONSIDERING RAD IN THE
FUTURE. SO AS THE SECRETARY
DESCRIBED, WE MADE THE DECISION TO CONTINUE TO HONOR
THE 2012 RENT, NOT ONLY FOR ANY OF THE APPLICATIONS THAT
WE HAD ALREADY RECEIVED, BUT FOR ALL APPLICATIONS WE
RECEIVED BY THE END OF THIS CALENDAR YEAR.
SO IT IS A -- THERE'S A STRONG INCENTIVE FOR FOLKS
CONSIDERING RAD TO BE MOVING WITH THEIR APPLICATIONS IN
THIS CALENDAR YEAR. SO THE OTHER CHANGES WHICH
I'LL JUST REVIEW QUICKLY, THERE IS RENT BUNDLING, WHICH
THE SECRETARY DESCRIBED. SO WE CALCULATED THE RENTS
FOR EVERY PROJECT, BUT REALLY, AT THE END OF THE
DAY, WHAT WE'RE CHARGED WITH IS NOT IMPOSING NEW COSTS ON
THE FEDERAL GOVERNMENT, SO WHILE THE INVENTORY
ASSESSMENT TOOL TELLS YOU WHAT EACH DEVELOPMENT'S
CONTRACT RENTS WOULD BE, IF THOSE RENTS NEED TO BE
CHANGED BECAUSE IT MAKES SENSE FOR ONE PROPERTY TO 41
HAVE A HIGHER RENT AND ANOTHER PROPERTY CAN ALSO BE
PRESERVED AS A LOWER RENT, THEN WE'RE HAPPY, AS LONG AS
IT'S NOT COSTING US ANY MORE. SO WE'LL TALK ABOUT THAT A
LITTLE BIT LATER. AS PAUL GARZIANO MENTIONED,
WE ALLOW MTW AGENCIES TO USE VOUCHER FUNDS TO HAVE SOME
MORE FLEXIBILITY IN HOW THEY SET THE INITIAL CONTRACT
RENTS, SO IF THEIR CONTRACT RENT, ACCORDING TO OUR
CALCULATION, WAS $800, BUT WHAT THEY REALLY NEEDED WAS
$900, THEY COULD DO SO WITH THEIR OWN MONEY, AS LONG AS
THE RENTS DON'T EXCEED MARKET AND WE STILL SUBJECT THEM TO
A SUBSIDY INTERVIEW. FINALLY, THE LAST CHANGE
RELATED TO RENTS WAS A RAD REPLACEMENT HOUSING FACTOR
FUNDS AND THE SECRETARY TOUCHED ON THIS.
A WAY OF COLLATERALIZING WHAT YOU WOULD HAVE GOTTEN IN THE
HOUSING FACTOR FUNDS INTO YOUR RENT.
I REALLY LIKE THIS CASE BECAUSE THIS WAS A SMALL
HOUSING AUTHORITY THAT CAME TO US THAT HAD FOUR YEARS OF
REPLACEMENT HOUSING FACTOR FUNDS COMING TO IT FOR A
PROJECT THAT IT TOOK DOWN A FEW YEARS AGO AND IT WAS
CONVERTING ALL THREE OF THE PUBLIC HOUSING SITES, AND
SAID THESE SITES, I WANT TO CONVERT THEM, THE MARGIN IS A
LITTLE TIGHT, BUT I'M COMING IN, BUT I'M ALSO DUE TO GET
THIS REPLACEMENT HOUSING FACTOR FUNDS, IS THERE ANY
WAY I CAN KEEP THIS, AND WE THOUGHT ABOUT IT, AND WE CAME
UP WITH
THIS IDEA.
>> WE WERE VERY THANKFUL TO PRESIDENT OBAMA FOR THE ERROR
FUNDS AND FOR THE COMPETITIVE FUNDS.
WE UTILIZE THOSE FUNDS THAT WE RECEIVE.
WE DID RECEIVE THOSE AWARDS, AND WE USED IT TO BE ABLE TO UPGRADE
AND REHAB SEVERAL OF OUR BUILDINGS.
OUR RESIDENTS WHAT ARE EARNED LEASE ARE SENIORS.
OUR OBJECTIVE, BECAUSE WE ARE A GRAYING COUNTRY, THAT WE HAVE
GREATER NEEDS FOR OUR SENIORS. SO WE DECIDED THAT WE WANT TO
USE THAT SITE AND HAVE THE R.A.D. AWARD BE DIRECTED TO THAT
SITE TO APPROVE THE AMENITIES OF THAT BUILDING.
WE ORIGINALLY, AGAIN, THE ERROR FUNDS, COMPETITIVE FUNDS.
WE USE THOSE FUNDS TO IMPROVE THE INFRASTRUCTURE.
WE CREATED A NEW KITCHEN, A NEW COMMUNITY ROOM.
WE CREATED A FACILITY FOR NURSES AND DOCTORS IN THAT FACILITY.
WE CREATED A RECREATION ROOM, A PROPERTY MANAGEMENT OFFICE SO
THAT WE COULD BEGIN TO SHOW AND MARKET THAT FACILITY WITH THE
REST OF THE COMMUNITY. SO AFTER DOING THAT, THERE'S NO
MONEY LEFT. WE REALIZED WHEN WE SAW THE
R.A.D. NOTICE THAT PROBABLY FOR US THE ONLY GAME IN TOWN, SO WE
APPLIED FOR IT AND WE WERE AWARDED IT AND WE'VE BEEN MOVING
AHEAD WITH THE PROGRAM. IT'S BEEN RUNNING VERY, VERY
WELL UTILIZING 4% TAX CREDITS. OBVIOUSLY, WE HAVE NOT CLOSED AS
OF YET, BUT WE CONTINUE TO GO THROUGH THE PROCESS.
THAT WAS OUR IMPETUS FOR THAT ONE PARTICULAR SITE.
WE HAVE SITE NUMBER TWO. IT'S A FAMILY FACILITY.
167 UNITS OF PUB †-- PUBLIC HOUSING.
WE'RE GOING TO REHAB THAT BUILDING.
BOTH OF THOSE BUILDINGS ARE ABOUT 40 YEARS OLD, AND I†-- AND
WE HAVE CONSTANT, CONSTANT PROBLEMS AT LEAST FROM THE
INFRASTRUCTURE AND CAPITAL NEEDS.
SO THE MONIES THAT WE'RE GOING TO USE WILL BE, AGAIN, TO REHAB
AND UPGRADE THOSE FACILITIES. WE WANT TO CREATE AN ENVIRONMENT
THAT'S COMPETITIVE TO OUR NEIGHBORS WITHIN THE COMMUNITY.
IN THE FIRST FACILITY BACK AT LAKEVIEW, WE ALSO CREATED A
CONCIERGE SERVICE. WE HAVE 24 HOURS, NOT SECURITY,
24 HOURS CONCIERGE. BASICALLY TO HELP TO ASSIST THE
RESIDENTS ON A 24-HOUR-A-DAY BASIS, AND WE WANT TO CREATE
THAT SAME ENVIRONMENT FOR THE OTHER FACILITY.
>> WHEN THE 2013 APPROPRIATIONS BILL WAS PASSED AND IT WAS A
CONTINUING RESOLUTION, THE SEQUESTER PASSED, DID THAT MAKE
YOU A LITTLE BIT NERVOUS†-- >> NOT A LITTLE BIT.
VERY NERVOUS. >> AND WERE YOU THINKING OF
PULLING OUT AT THAT POINT, OR YOU JUST CONTINUING TO WORK WITH
HUD TO FIGURE OUT HOW TO MAKE IT WORK?
>> NOT AT ALL. BOTH OUR CITY OF WHITE PLAINS,
OUR MAYOR, OR COMMON COUNCIL AND THE BOARD OF COMMISSIONERS ARE
FIRMLY BEHIND PRESERVING PUBLIC HOUSING IN OUR CITY.
GIVEN THE SEQUESTER, WE FELT THAT WE STILL HAD AN OPPORTUNITY
TO UPGRADE OUR BUILDINGS FOR THE PRESERVATION WITHIN OUR CITY.
>> YOU MUST HAVE BEEN PRETTY RELIEVED TO LEARN THAT WE WOULD
CONTINUE TO HONOR THE 2012 RENTS?
>> ABSOLUTELY. AGAIN, OUR DECISIONS WERE NOT
JUST POLITICAL OR ADMINISTRATIVE.
OUR DECISIONS WERE IN PARTNERSHIP WITH OUR RESIDENTS.
WE'VE HAD THREE MEETINGS, PRELIMINARY MEETINGS BEFORE THE
BOARD'S MADE ITS FINAL DECISION. WE'VE HAD ONGOING MEETINGS WITH
OUR CONSULTANTS AND RESIDENTS AND TOLD THEM EVERYTHING WE PLAN
TO DO IN BOTH OF THOSE SITES, AND THEY HAVE SUPPORTED IT
1,000%. >> GREAT.
THAT'S GREAT. >> I'LL TURN TO SCOTT FOR A
SECOND. BEFORE I DO SO, SO, SCOTT IS
FROM ENTERPRISE COMMUNITY INVESTMENTS, WHICH PAST CREDITS
INDICATE ARE A MORTGAGE LENDER. ALSO WANT TO TAKE A MOMENT TO
RECOGNIZE THE SIX YEAR OR MONTH LENDERS OR INVESTORS.
CAN WE DECREASE THE FONT A LITTLE SMALLER?
THEY'RE ALREADY PARTICIPATING IN THIS PROGRAM TO HELP TO GENERATE
THE CAPITAL TO MAKE THE IMPROVEMENTS TO THIS PROJECT.
THANK YOU. NOW I TURN BACK TO SCOTT.
SCOTT, WHAT HAS BEEN ENTERPRISE'S INVOLVEMENT IN
R.A.D. SO FAR? >> WELL, WE HAVE A NUMBER OF
PROJECTS IN OUR PIPELINE FOR FINANCING, BOTH FOR MORTGAGE
FINANCING AS WELL AS FOR TAX CREDIT SYNDICATIONS THAT ARE
R.A.D. DEALS AT VARIOUS STAGES. I THINK THAT FOR THOSE OF YOU
WHO ARE ON THE HOUSING AUTHORITY'S SIDE, YOU KNOW THAT
WE†-- THAT†-- WE HEARD IT ON THE FIRST PANEL.
THAT THERE'S A PROCESS HERE OF BRINGING DEVELOPERS INTO THE
PROCESS AND FAMILIARIZING THEMSELVES WITH THIS PROGRAM AND
HOW IT WOULD WORK AND HOW THEY CAN HELP YOU GET IT DONE.
THEN THERE'S ANOTHER PROCESS OF PARTICULARLY IF YOU'RE GOING TO
USE TAX CREDITS IN YOUR R.A.D. CONVERSION OF BRINGING THE TAX
CREDIT INVESTMENT INTO THE DEAL, INTO THE PROJECT, AND I WOULD
SAY THAT THERE'S†-- WE'RE SORT OF MIDSTREAM AT THIS POINT IN
TERMS OF BRINGING THE LONG COMMODITY TASK CREDIT IN THE
COMMUNITY TO BRING THEM UP TO SPEED ON WHAT IT IS AND HOW IT
WORKS. MANY OF THE TASK CREDIT
INVESTORS AND SYNDICATORS HAVE BEEN QUITE INVOLVED OVER THE
YEARS WITH THE PROJECTS. SO THEY'RE FAMILIAR WITH
DEVELOPMENT PROJECTS THAT INVOLVE PARTNERING WITH HOUSING
AUTHORITIES AND WITH JOINT VENTURES AMONG HOUSING
AUTHORITIES AND NONPROFIT AND FOR-PROFIT DEVELOPERS.
THEY'RE FAMILIAR WITH PUBLIC HOUSING UNIT.
THEY'RE FAMILIAR WITH MIXED-INCOME.
THEY'RE FAMILIAR WITH REDEVELOPMENT OF PUBLIC HOUSING
SITES, AND SO THERE'S A†-- BUT NOW THERE'S A LEARNING CURVE IN
TERMS OF WHAT DOES IT MEAN NOW THAT WE'RE SAYING LET'S†-- WE'RE
GOING TO CONVERT EXISTING PUBLIC HOUSING UNDER R.A.D. OR PERHAPS
PROPOSE MIXED FINANCE PROJECTS UNDER R.A.D. SO THAT UNITS THAT
WOULD HAVE BEEN SUBSIDIZED WITH SECTION IX NOW GOING TO BE
SECTION VIII. I THINK THAT HUD HAS DONE A GOOD
JOB TO EXPLAIN TO ALL OF US THROUGHOUT THE COMMUNITY WHY
THIS IS IMPORTANT, WHY IT MAKES SENSE AND WHY IT'S A BETTER WAY
TO GO LONG TERM TO MAKE THESE CONVERSIONS.
THERE'S A PROCESS OF THEN BRINGING ALONG THE INVESTMENT
COMMUNITY TO UNDERSTAND THAT AND TO UNDERSTAND THEIR RISKS AND
JUST GENERALLY THE TASK CREDIT INVESTORS ARE NERVOUS ABOUT
SUBSIDY. WE GET CRITICIZED WHEN WE TAKE
OUT A FUND TO INVESTORS THAT HAS A LOT OF PROJECTS WITH
PROJECT-BASED SUBSIDY IN IT. THAT IS THE WORLD THAT HOUSING
AUTHORITIES AND OTHERS LIVE IN. ALL YOUR PROJECTS HAVE THAT
SUBSIDY, BUT INVESTORS GENERALLY ARE SKEPTICAL BECAUSE THEY'RE
WORRIED ABOUT WHAT WILL HAPPEN IF IT GOES AWAY, IF THE MONEY IS
NOT APPROPRIATED. THEY LOOK†-- THEY LOOK AT THE
BUDGET CONTROL ACT. IT'S TEN YEARS OF CUTS.
THERE HAVE BEEN CUTS. WHAT'S THAT ALL GOING TO MEAN?
EVEN IF WE ARGUE UP AND DOWN THAT SECTION VIII IS GOING TO BE
STABLE AND BE THERE, THEY'RE WORRIED ABOUT IT.
SO BRINGING THEM ALONG IS PART OF THAT PROCESS, AND QUITE
FRANKLY, I†-- I THINK THAT MANY OF US HAVE DONE A GOOD JOB OF
CONVINCING INVESTORS THAT THE CONVERSION MAKES SENSE.
SO THEN WHAT HAPPENS IF WE DON'T GET†-- IF WE USE UP THE 60,000
UNITS AND DON'T GET THE ADDITIONAL AUTHORITY?
NOW WE'VE BASICALLY SAID, YOU KNOW, ACC SECTION 9 IS A BAD
DEAL. SECTION 8 IS A GOOD DEAL.
OH, WELL, WE'RE OUT OF THE AUTHORITY TO DO THESE
CONVERSIONS TO SECTION 8, SO NOW YOU'LL START TO SEE PROJECTS
WITH SECTION 9 AGAIN. IT'S LIKE WHICH IS IT?
THAT'S ONE OF THE CHALLENGES I COULD POTENTIALLY SEE GOING
FORWARD. >> SO WHEN YOU AND YOUR TEAM ARE
LOOKING AT R.A.D. DEALS AND UNDERWRITING GIVEN OUR RENT
SETTING POLICIES, WHAT'S YOUR COMFORT LEVEL, ESPECIALLY
COMPARED TO LOOKING AT A PUBLIC HOUSING PROJECT USED MIXED
FINANCE? >> RIGHT.
WELL, THE R.A.D. DEMONSTRATION HAS THIS CURRENT FUNDING LEVEL,
RIGHT? WE'VE ALL STRUGGLED WITH MAKING
DEALS FEASIBLE, PARTICULARLY AS DEBT DEALS, BECAUSE THE SECTION
8 RENTS ARE NOT HIGH ENOUGH TO SUPPORT A LOT OF DEBT.
FOR THE TAX CREDIT INVESTORS FOR SELLING IT TO THEM THAT'S A GOOD
THING. WHAT INVESTORS FOCUS ON A LOT IS
WHAT WE CALL SUBSIDY OVERHANG. SO HOW MUCH IS THE SECTION 8
R.A.D. ABOVE MARKET AND TAX-CREDIT RENTS?
YOU DON'T HAVE AS MUCH A PROBLEM WITH THAT, BECAUSE THE SECTION 8
RENTS AREN'T THAT HIGH. THAT, ACTUALLY, AS A†-- AS ONE
TRYING TO SELL THESE PROJECTS TO TAX CREDIT INVESTORS, I'D SAY TO
KEEP THIS CURRENT FUNDING LEVEL THE WAY IT IS.
I KNOW THAT THAT'S NOT WHAT ANYBODY WANTS TO HEAR IN TERMS
OF TRYING TO MAKE THE PROJECTS FEASIBLE WITH DEBT ONLY, BUT TO
THE EXTENT WE MAKE TAX CREDIT DEALS, THAT DOES WORK OUT.
YOU DON'T HAVE TO THEN STRUCTURE AS LARGE OF TRANSITION RESERVES
TO ANTICIPATE WHAT WOULD HAPPEN IF THE SECTION 8 WE WANT AWAY
AND YOU HAD TO CONVERT. IN TERMS OF SECTION 8 OF R.A.D.
CONVERSION VERSUS SECTION 9 ACC SUBSIDY, I THINK THE ARGUMENT IS
VERY STRONG IN FAVOR OF DOING THESE PROJECTS AS R.A.D. FOR
SEVERAL REASONS. FIRST OF ALL, IN A LOT OF THE
HOPE 6 OR MIXED FINANCE PROJECTS WE'VE SEEN IN RECENT YEARS, THE
ACC FUNDING LEVEL TO THAT MIXED FINANCE TAX CREDIT PROJECT IS
SUCH THAT THOSE PUBLIC HOUSING UNITS ARE OPERATING AT LESS
THAN†-- ARE PROJECTED TO OPERATE AT LESS THAN BREAK EVEN.
SO THAT'S NOT VERY SUSTAINABLE, WHEREAS, CONVERTING THOSE TO
R.A.D. UNITS RESULTS IN A BETTER FUNDING LEVEL.
SECONDLY, THE WAY A REGULATORY AND OPERATING AGREEMENT IS
STRUCTURED AND THAT'S THE CONTRACT BY WHICH THE SECTION 9
SUBSIDY FLOWS INTO THE TAX CREDIT PARTNERSHIP, I THINK
THAT†-- WE'VE SEEN THAT MAKES IT†-- THE STRUCTURE OF THAT
CONTRACT, THAT AGREEMENT MAKES IT QUITE EASY FOR THE HOUSING
AUTHORITY TO PASS ON THE CUTS TO THE MIXED FINANCE PROJECT,
WHEREAS A SECTION 8 CONTRACT BOTH FOR THE HOUSING AUTHORITY
AND THE PROJECT, I THINK, AND HUD HAS SENT ALL THE RIGHT
SIGNALS, THAT'S A CHAPEL HILL. YOU CAN TAKE IT TO THE BANK, IF
YOU WILL. SO FOR ALL THOSE REASONS, YOU
KNOW, IT'S A 20-YEAR CONTRACT. HUD HAS TO RENEW AND THE OWNER
HAS TO ACCEPT THE RENEWAL. I THINK THAT ULTIMATELY IF WE
CAN HOPEFULLY MAKE THIS THE WAY THESE PROJECTS ARE FINANCED AND
NOT KIND OF BOUNCE BACK AND FORTH, I THINK THAT THIS WILL BE
A MORE SECURE AND STABLE AND BANKABLE SUBSIDY PLATFORM FOR
TAX CREDIT INVESTORS AS WELL AS FOR THE LENDING COMMUNITY.
>> THANK YOU, SCOTT. ASHLEY, TURNING TO YOU, AGAIN,
THANKS FOR COMING ALL THE WAY FROM WASHINGTON STATE.
I KNOW YOU'RE A LITTLE BIT NEARER TO R.A.D.
WE'VE ONLY TALKED OVER THE PAST MONTH ABOUT YOUR HOUSING
AUTHORITY. WHAT GOT YOU INITIALLY
INTERESTED IN THE R.A.D. PROGRAM?
>> WELL, WE HAVE JUST OVER 600 PUBLIC HOUSING UNITS.
WE HAVE A HIGH-RISE THAT HAS SIGNIFICANT NEEDS AND JUST NOT
THE INCOME TO BE ABLE TO ADDRESS THE CAPITAL NEEDS OF THAT
BUILDING. SO R.A.D. IS A GOOD OPTION FOR
US TO LOOK INTO. SO WE DID BEGIN TO ANALYZE THE
FEASIBILITY OF OUR HIGH-RISE. IT'S A 150-UNIT HIGH-RISE UNDER
R.A.D., AND WHILE IT PENCILED OUT IN TERMS OF A TAX CREDIT
DEAL, IT DIDN'T RAISE ENOUGH CAPITAL FOR US TO BE ABLE TO
ADDRESS ALL THE PHYSICAL NEEDS. WE HAVEN'T DONE THE FORMAL
ANALYSIS, BUT WE THINK IT'S PROBABLY AROUND 40,000 PER UNIT.
THEN WE PURSUED THE ADDITIONAL OPTION PROVIDED BY THE BUNDLING
OF RENTS THAT IS CURRENTLY AVAILABLE.
>> AND SO YOU'RE THINKING OF TAKING THAT SITE AND BUNDLING
IT, COMBINING IT WITH ANOTHER ONE OF YOUR SITES IN YOUR
PROGRAM? >> WHAT WE WOULD REALLY LIKE TO
BUNDLE IS BUNDLE OUR RENT FOR THAT WITH BALTIMORE'S RENT.
>> YOU GUYS SHOULD TALK, YEAH. >> SO IT JUST†-- FOR THE
HIGH-RISE, THE PER UNIT PER MONTH RENT IS 519, WHICH DOESN'T
GET US A LOT. SO WE HAVE ANOTHER SITE, A
FAMILY SITE OF ABOUT 150 UNITS WITH A HIGHER RENT LEVEL, AND SO
THAT OPTION INCREASES THE AVAILABILITY IF BY BUNDLING BY
RENTS TO LEVERAGE DEBT SO THAT WE CAN INVEST MORE IN THE
HIGH-RISE. THE NEEDS OF THE FAMILY SITE,
THE OTHER SITE IS NOT AS HIGH. SO THE BUNDLING OF RENTS DOES
INCREASE OUR ABILITY TO ADDRESS THE PHYSICAL NEEDS OF THE
HIGH-RISE. WE'RE PURSUING A THIRD OPTION
RIGHT NOW, BECAUSE WE WOULD STILL COME SHORT, WE THINK,
UNDER THE BUNDLING OF RENTS OPTION.
>> OKAY. AND THE†-- I UNDERSTAND THAT THE
DEAL HAS EVOLVED A LITTLE FURTHER THAT YOU ACTUALLY WANT
TO TAKE THE TWO SITES AND DO ONE POSSIBLE TRANSACTION WITH IT?
>> RIGHT. SO THE BUNDLING OF RENTS IDEA
KIND OF MORPHED INTO A THIRD OPTION, WHICH WAS TO COMBINE THE
TWO SITES UNDER ONE TAX CREDIT DEAL WITHOUT BUNDLING OF RENTS
THAT WOULD SIGNIFICANTLY INCREASE OUR ABILITY TO LEVERAGE
DEBT IN ADDITION TO THE TAX CREDIT EQUITY THAT WE CAN RAISE.
SO WHILE THE ONE SITE, YOU KNOW, THE NEEDS PER UNIT MAY BE ABOUT
$15,000, THE OTHER SITE IS AROUND $40,000.
THIS WOULD ALLOW US, IN FACT, TO BE ABLE TO INVEST A WHOLE LOT
MORE IN THE ONE SITE THAN THE OTHER SITE BUT ADDRESS THE
LONG-TERM PHYSICAL NEEDS AND VIABILITY OF BOTH SITES AT THE
SAME TIME. >> SO YOU'RE PRESERVING TWO
SITES, WHEN INITIALLY YOU CAME IN THINKING ABOUT ONE SITE, NOW
YOU'RE ABLE TO PUT BOTH SITES TOGETHER TO ADDRESS THE CAPITAL
NEEDS AND STABILIZE BOTH OF THEM MOVING FORWARD?
>> AND OFFERING THIS UNDER ONE TAX CREDIT DEAL JUST INCREASES
THE DEAL FROM A $20 MILLION DEAL TO A $40 MILLION DEAL.
SO IT MAKES IT MORE ATTRACTIVE FOR INVESTORS AS WELL AS PRIVATE
LENDERS. >> OKAY.
THANK YOU. I THINK WE'RE RUNNING OUT OF
TIME. IF ANYONE ON THE PANEL HAS ANY
FINAL COMMENTS, OTHERWISE†-- >> I'D JUST LIKE TO SAY I THINK
MOST OF US WHO ARE PROVIDERS IN PUBLIC HOUSING REALLY APPRECIATE
THE FLEXIBILITY THAT THE SECRETARY AND HUD HAS GIVEN US
IN ORDER TO FIND THE MEANS TO UPGRADE OUR FACILITIES.
LIKE I SAY, IT'S CURRENTLY THE ONLY GAME IN TOWN.
NOT JUST THE ONLY GAME IN TOWN, BUT ONE OF THE MEANS BY WHICH WE
COULD PRESERVE PUBLIC HOUSING. I THINK THAT'S REALLY IMPORTANT
AS PART OF OUR MISSION. WE APPLAUD AND APPRECIATE HUD
FOR TO GO THAT. >> OKAY.
>> THANK YOU TO OUR PANEL. >> LET ME ADD OUR THANKS AGAIN,
AND NOW IS THE TIME FOR US TO APOLOGIZE TO THOSE OF YOU WHO
HAVE FIGURED OUT OUR LINK TO THE WEBCAST.
WE REALIZED EARLY ON THAT THERE WAS SOME MISINFORMATION ABOUT
HOW TO ACCESS THE LINK THIS MORNING.
I THINK WE'VE GOT PEOPLE UP, BUT WE WILL MAKE SURE WE'LL SEND OUT
INFORMATION. IT IS WEBCAST.
WE WILL ARCHIVE IT AND PUT IT UP AND MAKE IT ASSESS I BELIEVE SO
YOU HEAR EVERYTHING YOU MAY HAVE MISSED.
WE'LL SPREAD THAT WORD. IT'S MY UNDERSTANDING FOR THOSE
OF YOU PARTICIPATING ON THE WEBCAST, PLEASE CHECK YOUR
E-MAIL. WE SENT OUT CORRECT INFORMATION,
AND THAT INFORMATION WILL OFFER YOU THE INFORMATION ABOUT THE
BREAKOUT SESSIONS THAT WE TALKED ABOUT BRIEFLY AT THE TOP.
I'M NOT GOING TO GO THROUGH AND OFFER THE CALL-IN NUMBERS AND
THE CODES FOR EVERYBODY, BUT THAT INFORMATION IS NOW IN YOUR
E-MAILS AND YOU SHOULD BE ABLE TO FIND THAT.
THEN IF YOU PICK ONE OF THE BREAKOUT SESSIONS THAT YOU'D
LIKE TO PARTICIPATE IN, JUST FOLLOW THAT CALL-IN INFORMATION
AND HOOK UP BY PHONE. AGAIN, WE APOLOGIZE FOR THAT.
I REALIZE THIS APOLOGY ISN'T GO TO EVERYONE THAT DESERVES IT.
WE'LL WORK ON THAT. THANK YOU FOR YOUR FOREBEARANCE.
SO NOW WHAT WE'LL DO IS WE WILL†-- AS THOSE OF YOU HERE IN
MONDALE HEARD EARLIER THIS MORNING, WE WILL BREAK OUT INTO
SESSIONS, AND I BELIEVE YOUR INFORMATION THAT WE PASSED OUT
TO YOU HAS THE ACTUAL BREAKOUT SESSION ROOM NUMBERS.
FOR THOSE OF WHO HAVE NEVER WANDERED ABOVE THE FIRST FLOOR
AT HUD, IT'S A BIT OF A LABYRINTH.
SO WE RECOMMEND WHEN YOU GET OFF THE ELEVATOR, SORT OF STUDY THE
SIGNS A LITTLE BIT. YOU'LL FIND THE ROOM NUMBERS
EVENTUALLY. LOOK FOR SOME OF OUR HUD STAFF,
AND WE'LL BE HAPPY TO DIRECT YOU TO THEM.
I'LL JUST QUICKLY POINT OUT, AGAIN, ON THIS AGENDA THAT MOST
OF US HAVE A HARD COPY ON, THE BREAKOUT ROOMS ARE AS FOLLOWS.
WE WILL BE TALKING ABOUT THE CONVERSATION THAT WE REALLY
PRETTY MUCH JUST HAD ABOUT RENT SETTING.
THAT WON'T BE EXCLUSIVE TO JUST OUR PANELISTS HERE TODAY, BUT WE
HOPE AND EXPECT THEY'RE GOING TO BE ABLE TO JOIN IN THAT.
WE'LL FOCUS ON SO WHAT DO WE MEAN BY THE CHANGES IN RENT
SETTINGS, THE CY-13, FUNDING, MULTI-PHASE, WHATEVER.
THAT CONVERSATION WILL BE PRINCIPALLY FOCUSED ON THAT.
THAT WILL GO IN MANY DIRECTIONS, AND THAT'S FINE.
IF YOU WANT TO TALK ABOUT RENT SETTING AND SOME OF THE
SPECIFICS, THAT'S IN ROOM 4202. FOURTH FLOOR, LOOK EACH WAY AND
FOLLOW THE SIGNS. IF YOU WANT TO TALK ABOUT
PORTFOLIO CONVERSIONS, LARGE MULTI-PHASE PROJECTS, REALLY
WHAT GREG'S PANEL WAS ALL ABOUT†-- AGAIN, HIS PANEL, THOSE
OF THEM ABLE TO JOIN HIM, WILL JOIN.
OTHER PARTNERS IN THE ROOM WILL JOIN.
GREG WILL BE HOLDING IT AS OUR R.A.D. STAFF WILL AND WE'LL TALK
MORE IN DETAIL HOW THE PORTFOLIO AWARD AND LARGER PROJECT
CONVERSIONS CAN WORK. WE HAVE BEYOND THE TWO PANELS,
WE HAVE A THIRD BREAKOUT SESSION THAT SORT OF COVERS THE REST OF
IT, OTHER CHANGES IN THE NOTICE. WE KNOW THAT THERE'S A FAIR
AMOUNT OF INTEREST IN THE CHANGES TO MIXED FINANCE AND
HOPE 6. MOD REHAB IN PARTICULAR, WE
THINK, IS A GREAT OPPORTUNITY IN THE CHANGES THAT WE'VE MADE.
THAT WILL BE IN ROOM 5202. I DIDN'T SAY BACK TO GREG'S
PANEL, HIS ROOM IS 7202. WE ALSO IN THE OTHER CHANGES
SESSION, MIXED FINANCE, HOPE 6, MOD REHAB, WILL TALK ABOUT SOME
OF THE ISSUES THAT YOU'VE REALLY BEEN STRUGGLING WITH.
CFFP, EPC, HOW DO WE ACCOMMODATE FOR THAT AND HOW DO WE PUSH
CFFP. THOSE ARE IMPORTANT OBJECTIVES
AND WE HAVE FOLKS RIGHT UP TO THE MOMENT ACTIVE IN THOSE KINDS
OF CONVERSATIONS. SO THAT WILL BE IN ROOM 5202.
AGAIN, QUICKLY RENT SETTING IS ROOM 4202, PORTFOLIO CONVERSIONS
AND LARGE PROJECT ROOM 7202, AND EVERYTHING ELSE BUT MORE TOWARDS
SOME OF THE COMPLEXITIES OF R.A.D., IF YOU WILL, ROOM 5202.
THOSE SESSIONS WILL HAVE R.A.D. STAFF THERE AND TALK THROUGH HOW
IT WILL WORK. IT'S REALLY A SESSION FOR YOU
AND A CONVERSATION FOR AND WITH YOU.
WE APPRECIATE YOU DOING THAT. SO LET'S PROCEED TO THE ROOMS,
AND THEN LUNCH ON YOUR OWN. THOSE OF YOU THAT WANT TO COME
BACK AFTER LUNCH, AGAIN, WE HAVE OFFICE HOURS.
WE'RE GOING TO MEET OUTSIDE OF THIS ROOM RIGHT IN THE CAFETERIA
AREA THERE AFTER LUNCH, AND WE'LL SORT OF BREAK OUT INTO
GROUPS FROM THERE. AGAIN, THANK YOU.
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