The RAD Financing Plan, item by item
The RAD Financing Plan is due within 270 days of the CHAP, or within 60 days after HUD invites it following the Concept Call. It must carry firm-enough financing terms, a scope that covers the capital needs assessment, Part 50 environmental documents and a pro forma that passes Supplemental 4C's tests, such as 1.11 coverage over ten years.
The RAD Financing Plan is due within 270 days of the CHAP, or within 60 days after HUD invites it following the Concept Call. It has to carry financing terms close enough to final that the RCC can be conditioned on them, a scope of work that answers the capital needs assessment, the Part 50 environmental documents, and an operating pro forma that passes Supplemental 4C’s feasibility tests, including 1.11 debt service coverage over ten years for a deal with debt.
The housing authority submits the plan, but most of what is in it comes from outside parties. The checklist below maps each item to the party that produces it and the rule it answers to. HUD’s own submission list in the RAD Resource Desk governs; this is the working version a deal team uses to assign tasks.
The deadlines
| Clock | Rule | Source |
|---|---|---|
| CHAP to Financing Plan | 270 days, unless HUD sets a project-specific date or extends | RAD notice 1.12 |
| Extension over six months | Requires another resident meeting | RAD notice 1.12 |
| Concept Call to Financing Plan | 60 days after HUD’s invitation | RAD notice 1.12 |
| Environmental documents | No later than the Financing Plan | Supplemental 4C section X |
| RCC to signature | 30 days | RAD notice 1.13 |
| RCC to closing | 90 days from issuance | RAD notice 1.13 |
| Firm commitment vs plan | Coverage may fall no more than 0.05; same amortization and term | RAD notice, RCC footnote |
| HAP effective date | First day of either of the two months after closing, at the owner’s choice | RAD notice |
The Concept Call is requested through the RAD Resource Desk and must happen before the plan is submitted. The conversion steps guide covers the full sequence from application to closing.
The checklist
| # | Item | Produced by | What HUD checks |
|---|---|---|---|
| 1 | Sources and uses and development budget | Developer partner or RAD consultant, with lender and syndicator figures | Every source committed or credibly pending; uses tie to the scope |
| 2 | Operating pro forma | Developer partner or consultant | 4C tests: 1.11 coverage over 10 years at 2% revenue and 3% expense growth; or OER of 80% or less for 5 years without debt |
| 3 | Debt term sheet or commitment | Lender (FHA MAP lender, agency lender, bank or bond underwriter) | Amount, rate basis, coverage, amortization and term that the RCC can lock |
| 4 | Equity letter of intent | Tax credit syndicator or investor | Credit pricing, pay-in schedule, investor conditions |
| 5 | Credit award or bond inducement | State allocating agency; bond issuer | 9% reservation or bond cap and inducement, and the bond test for 4% deals |
| 6 | Appraisal | Lender’s appraiser | On FHA 221(d)(4) substantial rehab, CHAP rents per MAP Guide 7.13.6 |
| 7 | Capital needs assessment and scope of work | CNA provider; architect | All items rated critical, immediate or required within 2 years addressed; 20-year needs funded |
| 8 | Environmental review package | Environmental consultant; HUD or the FHA underwriter reviews under Part 50 | Phase I ESA (ASTM E1527-21) for substantial rehab or new construction, transaction screen (E1528-22) otherwise; radon testing to ANSI-AARST MAMF-2017 |
| 9 | Floodplain and resilience | Environmental consultant; architect | FFRMS floodplain and substantial improvement test (work above 50% of market value, or 20% more units); climate resilience plan (4B section III) |
| 10 | Ownership and control structure | Counsel | Public or nonprofit ownership or control (notice 1.4.A.11); PHA or nonprofit interest preserved in a for-profit-controlled tax credit entity |
| 11 | Developer fee calculation | Developer partner | RAD notice 1.14 limits and the allocating agency’s limit |
| 12 | Reserves | Developer partner; lender | Replacement reserves for 20-year needs; six-month operating reserve when no credits and no commercial debt |
| 13 | Rent schedule | PHA, with HUD | CHAP rents, plus any blend, bundling or amended CHAP |
| 14 | Section 18 application (blends) | PHA; counsel | Blend tier and unit split under PIH 2021-07 as amended by 4B and 4C |
| 15 | Relocation plan | PHA; relocation consultant | H-2016-17 and the Uniform Relocation Act; right to return |
| 16 | Unit count and configuration | PHA; architect | No loss beyond the de minimis amount (greater of 5 units or 5%, plus long-vacant units and approved reconfigurations) |
| 17 | Davis-Bacon and Section 3 | PHA; general contractor; counsel | Davis-Bacon for development work started within 18 months of the HAP effective date on 9+ assisted units |
| 18 | Resident engagement record | PHA | Meetings the notice requires, including any extension meeting |
Items 3, 4 and 6 are where the deal team’s lender and syndicator drive the timeline. A term sheet that expires before the RCC, or an appraisal ordered after the plan is drafted, can squeeze the 270-day clock.
Where plans come back
HUD does not publish rejection statistics, but the rules make the pressure points predictable. Plans tend to stall on:
- Coverage that fails in later years. Revenue at 2% and expenses at 3% erode coverage each year when expenses are a large share of income. Model all ten years, not just year one. The RAD debt sizer shows the effect.
- Scope gaps. A scope that leaves a CNA item rated critical, immediate or required within two years unaddressed, or reserves that do not fund the 20-year needs.
- Soft commitments. A lender or investor letter that is not specific on amount and terms, or a pending credit or bond award with no date.
- Environmental documents not in. They are due with the plan, not after it.
- Developer fee over the cap. The RAD limit offsets acquisition payments to the PHA, the fee and reserves; a budget that ignores the offset overstates the allowable fee.
- Ownership and control language. A partnership agreement that gives the for-profit partner control rights the notice does not allow.
- Unit loss. A redesign that drops units beyond the de minimis threshold without an approved reconfiguration.
- Rate drift. If rates rise between the plan and the firm commitment and coverage falls by more than 0.05, the RCC terms no longer match.
Who to line up first
Order the work by lead time. Lender selection and the appraisal and CNA engagement usually come first, since the term sheet, the scope and the pro forma all depend on them. Environmental work can run alongside. Counsel’s ownership structure and the syndicator’s letter follow once the sources are sized. The RAD financing guide compares the debt options, and the sources and uses builder produces the first draft of item 1.
For deals using FHA, see 223(f) for RAD and 221(d)(4) for RAD; for credits, 4% LIHTC and bonds.
Getting the debt piece in
If item 3 is the open one, send the CHAP, the scope and the target dates to Janover Capital LLC, a commercial mortgage advisor, not a lender. Get a financing quote with enough lead time to put terms in the plan.
HUD’s notices and its Financing Plan submission requirements control; nothing here is legal advice.
Sources
- HUD, RAD Notice Revision 4 as amended by Supplementals 4B and 4C: sections 1.4.A.4, 1.4.A.11, 1.4.A.14, 1.12, 1.13 and 1.14.
- HUD, Supplemental Notice 4C, H-2025-01 / PIH-2025-03, sections II and X; Federal Register, June 16, 2025 (FR Doc. 2025-11004), effective date.
- HUD, Supplemental Notice 4B, H-2023-08 / PIH-2023-19, July 27, 2023: radon, Phase I, climate resilience.
- HUD, RAD Fair Housing, Civil Rights and Relocation Notice, H-2016-17 / PIH-2016-17, November 10, 2016.
- HUD, MAP Guide, section 7.13.6.
- 24 CFR Part 50: eCFR.
- RAD Resource Desk: Concept Call requests and submission requirements.
Short answers
When is the RAD Financing Plan due?
Within 270 days of the CHAP unless HUD sets a project-specific date or grants an extension, and within 60 days after HUD invites the submission following the Concept Call. An extension longer than six months requires another resident meeting.
Who prepares the RAD Financing Plan?
The housing authority submits it, but most of its contents come from others: the lender's term sheet and appraisal, the capital needs assessment provider, the environmental consultant, the tax credit syndicator or investor, and counsel for the ownership structure. A RAD consultant or the developer partner usually assembles the package.
What feasibility tests does the Financing Plan have to pass?
Supplemental 4C section X sets them: at least 1.11 debt service coverage over ten years at 2% revenue and 3% expense growth for deals with debt, an operating expense ratio no higher than 80% for the first five stabilized years for deals without, and a six-month operating reserve when there are no tax credits and no commercial debt.
Are environmental documents due with the Financing Plan?
Yes. Every RAD conversion is reviewed under 24 CFR Part 50, and Supplemental 4C requires the environmental documents no later than the Financing Plan. Radon testing applies to all conversions, and substantial rehab or new construction needs a Phase I ESA.
What happens after HUD accepts the Financing Plan?
HUD issues the RAD Conversion Commitment (RCC), which the PHA has 30 days to sign. The RCC allows 90 days from issuance to close, and it is conditioned on a firm financing commitment on substantially the same terms, meaning coverage no more than 0.05 lower and the same amortization and term.