Overview
The largest RAD development in Texas
The El Paso RAD I project stands as the largest Rental Assistance Demonstration (RAD) Program in the state of Texas to-date and represents the Housing Authority of the City of El Paso's (HACEP) effort to renovate its stock of aging public housing. Completed in 2017, the initial phase leveraged both public and private resources to rehabilitate 1,590 public housing apartment homes within HACEP's entire 6,100-unit portfolio, helping to improve the quality of housing for hundreds of El Paso households.
Project Details
Location
El Paso, TX
Size
1,590 homes
Tenancy
Families
Total Project Cost
$241 million
Total LIHTCs
$80.8 million in 4% Federal
Total Other Tax Credits
$2.2 million in 45L
Project Amenities
Energy Star-rated Appliances
Community Room
Playground
Energy Efficient Systems
Xeriscape Yards
Basketball Court
Gymnasiums
Awards & Recognition
The Bond's Buyer 2015 Award Recipient
Small Issuer Financing Deal of the Year
01
Challenge
Addressing Public Housing Maintenance Shortages
Public housing across the country faced a backlog of deferred maintenance, reaching an estimated $26 billion according to a 2011 survey from the United States Department of Housing and Urban Development (HUD). The primary issue was the lack of funding for public housing, where federal subsidies were often insufficient to meet the growing maintenance and repair needs of its aging public housing stock.
In response to these challenges, HUD introduced the RAD Program in 2012 as a solution to help address the nationwide public housing capital improvement shortfall, allowing housing authorities to move their properties to a more stable funding platform. RAD became an imperative initiative for HUD as the United States lost, on average, 10,000 public housing units annually to demolition and disposition due to poor conditions.
02
Solution
Public-Private Partnerships are Pivotal
Not long after HUD launched the RAD Program, HACEP fully embraced it and showed how housing authorities can work through public-private partnerships, which included El Paso-based Hunt Companies and its affiliates, to revitalize its existing public housing stock. HACEP sought to transform its entire public housing portfolio, beginning with El Paso RAD I – a project that involved the renovation of 1,590 public housing units across 13 properties, under the RAD Program.
The project was financed, in part, with $80.8 million in 4% Low-Income Housing Tax Credits (LIHTCs) syndicated by Hunt Capital Partners and $32 million in bond and loan financing provided by HACEP. Other Hunt Companies affiliates participated in the transaction: Hunt Development Group as the developer, Moss & Associates as the construction manager, and Hunt Mortgage Group as the lender.
03
Result
A Blueprint for Public Housing Revitalization
The RAD Program enabled HACEP to convert the operating subsidies of all 13 properties to long-term project-based Section 8 rental assistance contracts, thereby increasing rents to levels that would generate positive cash flow while simultaneously lifting the public housing restrictions on the underlying real estate. The combination of these two factors allowed the properties to obtain allocations of LIHTCs, bringing in private equity and debt partners to finance the renovation of all 13 properties. The development allowed for significant improvements of what amounted to just over 25% of HACEP's portfolio; rehabilitating the properties with new floors, kitchens, windows and bathrooms, as well as upgrading community amenities such as basketball courts, playgrounds, gymnasiums, and community rooms.
El Paso RAD I serves as an exemplary model that housing authorities across the country can emulate to preserve and improve its stock of public housing. Through the RAD program, renovations to public housing help enhance the living environment for low-income families and further extends the life of these properties.
