The Department of Housing and Urban Development (HUD) broke down how $12 million in new Congressional funding, for which LeadingAge advocated, will increase Section 202 rents as communities with Project Rental Assistance Contracts (PRACs) go through Rental Assistance Demonstration (RAD) conversion. 

• Owners of converting Section 202 PRACs may be eligible to increase the post-conversion Section 8 contract rent by up to either $250 per unit per month or $100 per unit per month, depending on the level of rehab or construction, to be effective upon conversion, provided the work to be performed as part of the RAD Conversion Plan will enhance climate resilience, energy and water efficiency, or appropriate design for elderly residents to age-in-place.
• To receive up to a $250 per unit per month increase, hard construction costs must exceed 60% of the Housing Construction Costs (HCC); to receive up to a $100 per unit per month increase, HCC must exceed 30%.
• Beginning August 22, 2023, converting Section 202 PRAC project owners can formally submit a request for an increase to contract rents by completing the Preservation Rent Increase request in the project conversion application on the RAD Resource Desk.
• For PRAC owners who are contemplating a RAD conversion, HUD has created a “RAD for PRAC: Preservation Rent Increase Eligibility Tool” to determine whether the project will meet the 60% or 30% of HCC threshold based on anticipated rehab or construction costs. In addition, “RAD for PRAC: Preservation Rent Increase FAQs” have also been posted. Visit the RAD Multifamily Document Library to access these tools.
• Owners interested in receiving a rent increase comfort letter from HUD can make an initial request for the rent increase up to six months prior to submission of the full Conversion Plan. HUD will make a preliminary determination of eligibility and of the projected per unit rent increase amount. The Owner will make the final request when the complete Conversion Plan is submitted. Owners can make the initial request by completing the “Preservation Rent Increase” section of the conversion application on the RAD Resource Desk.
• Access the slides and a recording from HUD’s August 9 “Overview RAD Supplemental Notice” webinar under “RAD What’s New.”