Recently closed RAD conversion transaction supports affordable rental homes across three properties in southwest Little Rock, AR
The U.S. Department of Housing and Urban Development’s Office of Multifamily Housing recently closed a Rental Assistance Demonstration (RAD) transaction with the Housing Authority of the City of Little Rock, AR, to preserve and rehabilitate 87 affordable rental homes across three of the housing authority’s properties: Sunset Terrace, Stephens Apartment Homes, and Central High Apartment Homes. The transaction includes a construction budget of $15 million to renovate the three properties, and the conversion of the rental assistance at the properties to HUD’s Section 8 project-based voucher program. The three properties are all located southwest of downtown Little Rock.
“With this step, HUD is investing in affordable rental housing in Little Rock, Arkansas to ensure it’s maintained and improved over time,” said HUD Secretary Marcia Fudge. “The improvements we are making will update HVAC systems, improve accessibility, and modernize the properties to provide families with safe, well-maintained homes.”
Sunset Terrace was built in 1942 as housing for military and manufacturing families during World War II. Due to the property’s age, it has unmet capital needs, limited amenities, undersized homes, and Americans with Disabilities Act non-compliance. The property will be completely renovated using part of the $15 million in renovation funding leveraged through RAD. The rehabilitation will include the replacement of windows, flooring, cabinetry, and HVAC systems, and will expand kitchens, dining areas, bedrooms, and bathrooms. Homes will also be renovated to meet accessibility, mobility, and vision requirements. Exterior work will include replacement of roofing, siding, walkways, curbs, parking, plumbing, and utilities (sewer, electrical, gas, and water), and the addition of urban gardens and updated playground areas. The roof lines will be altered from 1940s architectural features to a more modern style.
Rehabilitation at the Central and Stephens properties will be less extensive due to their recent construction in 2011 and will include replacement of HVAC, lighting fixtures, flooring, interior and exterior doors, bathroom vanities and sinks, kitchen cabinetry, countertops and appliances, asphalt pavement, parking, and striping.
The transformation in Little Rock is made possible through a RAD program component that blends its use with Section 18 of the National Housing Act that allows for the disposition of obsolete public housing properties. A RAD/Section 18 Blend allows for the preservation and rehabilitation of affordable public housing rental homes that would otherwise become unavailable. Since its creation in 2018, over 60 Public Housing Authorities have completed almost 100 transactions using the RAD/Section 18 Blend. Through these conversions, PHAs were able to invest over $4 billion to substantially rehabilitate or redevelop approximately 25,000 public housing homes, providing significantly improved housing conditions for low-income families.
The Housing Authority of the City of Little Rock leveraged RAD to fully financing their $15 billion construction budget through several sources:
- Commercial Mortgage
- Public Housing Capital Funds
- HOME Funds
- National Housing Trust Funds
- 4% Low-Income Housing Tax Credits
RAD was designed to help address the multi-billion-dollar nationwide backlog of deferred maintenance in the public housing portfolio and to stem the loss of affordable housing that could no longer be kept to decent standards. From the program’s inception through November 1, 2022, the Rental Assistance Demonstration has facilitated more than $15 billion in capital investment to improve or replace nearly 185,000 deeply rent-assisted homes, most of which house extremely low-income families, seniors, and persons with disabilities.
Under RAD, projects funded under the public housing program convert their public housing assistance to project-based Section 8 rental assistance. Under Section 8, residents continue to pay 30% of their income towards rent and the housing must continue to serve those with very low and extremely low incomes, as was the case when the property was assisted through the public housing program. Residents must be notified and consulted prior to conversion, are given a right to return to assisted housing post-construction so that the same tenants can enjoy these newly preserved and improved apartments and maintain the same fundamental rights they had as public housing residents.
View photo essays and read case studies where RAD is working to successfully preserve and improve public housing for low-income families