San Diego, CA. Nixon Peabody LLP recently advised St. Stephens Retirement Center, Inc., and CRP Affordable Housing and Community Development LLC on a complex financing transaction and status conversion that will provide decades of financial certainty as well as funding to rehabilitate the property.
A U.S. Department of Housing and Urban Development (HUD) program—informally known as RAD for PRAC—can help owners of eligible seniors housing properties convert existing rental assistance contracts to enable access to private capital for conducting repairs and improvements, as well as maintaining ownership in affordable housing properties.
“This is a transformational deal for St. Stephens, and we are thrilled to see the impact it will continue to have for years to come,” said Monica Sussman, senior counsel with Nixon Peabody’s Affordable Housing & Real Estate practice. “We are also proud to have worked on the first RAD for PRAC transaction in California, and only the fifth such project in the country.”
The St. Stephens project is a joint venture between St. Stephen’s Retirement Center, a 501(c)(3) organization, and CRP Affordable Housing and Community Development, LLC. It is being financed with 4% low-income housing tax credits, tax-exempt bonds, and a seller loan. As a result, the parties will complete approximately $6 million in rehabilitation to the retirement center.
Nixon Peabody served as special HUD counsel on the transaction. Employing HUD’s Rental Assistance Demonstration (RAD) program, the 60-unit seniors housing facility converted from an annually renewed Project Rental Assistance Contract (PRAC) to a 20-year Project-Based Rental Assistance (PBRA) Section 8 Housing Assistance Payment (HAP) contract.
“The RAD program gives these senior properties a powerful tool to stabilize their financing, leverage their subsidy, address capital backlogs, and ensure their long-term preservation,” said Kathie Soroka, counsel in Nixon Peabody’s Affordable Housing & Real Estate practice. “The conversion to long-term contracts provides much-needed financial security for St. Stephens and its residents.”
In addition to Monica Sussman and Kathie Soroka, Affordable Housing & Real Estate associate Brendan Cardella-Koll worked on the transaction.