In a new Housing Huddle, I sat down with Katie Stuckemeyer Berler, Lead Repositioning Advisor at Dominion Due Diligence Group (D3G), to discuss a topic dear to us both: the evolving landscape of public housing repositioning.
From Section 18 to RAD blends and Restore/Rebuild strategies, we discuss how housing authorities can preserve and expand affordable housing. Katie also discusses the impact of her previous experience working for HUD on the work she’s doing now.
What are the most common repositioning options you see public housing authorities using?
Repositioning typically falls into two main categories. First, there’s Section 18, which involves demolition and/or disposition of public housing properties. Interestingly, Section 18 is increasingly being used as a preservation tool—often through disposition to a tax credit entity for substantial rehabilitation, allowing units to remain in affordable housing stock.
Then there’s the Rental Assistance Demonstration (RAD) program. We’re seeing innovative approaches here, especially with transfers of assistance. Moving assistance to another site can help consolidate scattered properties, improve maintenance and management, and address density or environmental challenges.
What do you ask housing authorities to consider when evaluating repositioning strategies?
Start by envisioning your ideal future state. What do you want your portfolio to look like in ten years? Consider which assets to preserve, opportunities for expansion, and how many hard units you want to maintain. Think strategically and holistically. And don’t commit to one tool too early—there are many options available. Evaluate your situation and choose the tools that best fit your goals.
Can you elaborate on the repositioning “toolbox?”
The RAD/Section 18 blends are particularly powerful. They allow PHAs to maximize cash flow by combining fair market-based voucher rents with the flexibility to choose between PBV and PBRA (Project-Based Rental Assistance). Previously, RAD blends only allowed PBVs, but now PHAs can select the option that best suits their needs. This change has streamlined administration and made the process much more efficient.
What about Restore/Rebuild? Are you seeing movement in that area?
Restore/Rebuild is a newer tool, but it’s gaining traction. In most markets, the demand for affordable housing far exceeds supply. When repositioning through Section 18 or a RAD/Section 18 blend, PHAs retain their Faircloth authority, which allows them to build new units under existing assistance caps.
We’re seeing creative applications—mixed-income developments, acquisitions, and fully subsidized projects. HUD is still refining this tool, but it’s a promising way to expand affordable housing options.
We both enjoy advising clients on complex repositioning strategies, including RAD/Section 18 blends. What emerging trends do you see?
I expect increased use of RAD/Section 18 blends, especially now that PHAs can choose between PBV and PBRA. This flexibility will benefit small and rural housing authorities that previously struggled with repositioning.
Opportunity Zones 2.0 will also favor rural areas, offering rent augmentation opportunities. Additionally, we’re seeing a trend toward combining preservation with new development. Loosening zoning and parking requirements is enabling increased density, which means more affordable housing units in communities that need them.
What components should PHAs evaluate when considering repositioning?
There are several key factors:
- Land: What land do you control, and where might excess land be available for development?
- Rent Potential: Understand your area’s fair market rents and RAD rents to optimize cash flow.
- Funding Sources: Look at your state’s Qualified Allocation Plan for low-income housing tax credits. Are your sites competitive for 9% credits? What’s your state’s bond cap for 4% credits? How compelling are your projects for attracting financial support?
As a fellow HUD expat, how has your experience shaped your work at D3G?
My time at HUD gave me a deep understanding of repositioning and the inner workings of the agency. I worked with incredibly smart and dedicated people, which helped me build a strong knowledge base. Now, I use that experience to help clients navigate HUD processes more effectively. I can offer insights that demystify HUD and provide realistic expectations for timing and approvals.
