TFG Housing Resources

    Resource · Comparison Guide

    RAD vs. Section 18: The Comparison Guide

    A plain-English, side-by-side technical comparison for Public Housing Authorities evaluating Rental Assistance Demonstration (RAD) conversions against Section 18 Demolition/Disposition. Built for boards, executive directors, and development teams in the research phase.

    How this page differs: this is a decision-framework resource, not a service page. For RAD execution specifically, see RAD Consulting Services.

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    RAD Consultants

    Rental Assistance Demonstration (RAD)

    RAD converts public housing operating and capital subsidy into a long-term Section 8 contract — typically Project-Based Voucher (PBV) or Project-Based Rental Assistance (PBRA). Properties exit the public housing program permanently and gain access to private debt and LIHTC equity while preserving affordability for current residents.

    Best for stable, occupied portfolios with moderate rehabilitation needs where preserving long-term affordability is the primary goal.

    Section 18 Consultants

    Section 18 Demolition / Disposition

    Section 18 of the U.S. Housing Act of 1937 allows a PHA to remove obsolete or distressed units from public housing inventory. Displaced residents receive Tenant Protection Vouchers (TPVs), and replacement housing can be redeveloped using LIHTC, mixed-finance, or partner-developer structures.

    Best for properties failing the obsolescence or cost test — where FMR-level voucher rents unlock the debt capacity needed for full redevelopment.

    Decision Framework

    Which path fits your portfolio?

    Each program serves a distinct strategic purpose. The right choice depends on property condition, resident profile, and your long-term capital plan.

    Preservation Path

    RAD Conversion

    Strengths

    • Permanent affordability via long-term HAP contract
    • Streamlined application via HUD Resource Desk
    • Strong fit for occupied portfolios with moderate rehab
    • Predictable PBV/PBRA subsidy structure

    Trade-offs

    • Initial contract rents capped at current funding
    • Lower debt capacity vs. Section 18
    • Right to Return adds relocation complexity

    Redevelopment Path

    Section 18 Demo/Dispo

    Strengths

    • FMR-based rents unlock significantly higher debt
    • Stronger developer cash flow and fee potential
    • Best path for obsolete or distressed properties
    • Flexible reuse of land — including mixed-income

    Trade-offs

    • Longer approval timeline (9–18 months for letter)
    • Obsolescence/cost test required
    • Resident relocation under URA — higher friction

    Side-by-Side Comparison

    Workflow, timeline, and financial implications

    A technical breakdown across the dimensions that drive board decisions and developer underwriting.

    AttributeRAD ConversionSection 18 Demo/Dispo
    Program Basics
    Statutory AuthorityConsolidated Appropriations Act, 2012 (as amended)Section 18 of the U.S. Housing Act of 1937
    Primary PurposeConvert public housing subsidy to long-term Section 8 (PBV or PBRA)Remove obsolete units from inventory; replace with TPVs
    Resident Subsidy AfterProject-Based Voucher (PBV) or Project-Based Rental Assistance (PBRA)Tenant Protection Vouchers (TPVs) — tenant- or project-based
    Workflow
    Application VehicleRAD CHAP application via HUD Resource DeskDemo/Dispo application via IMS-PIC and HUD Field Office
    Required StudiesPCNA, market study, environmental review, financing planObsolescence determination OR cost test (>57.14% TDC)
    Resident EngagementTwo formal meetings + ongoing notices; Right to Return requiredTwo formal meetings; URA relocation benefits triggered
    Timeline
    CHAP / Approval Letter6–12 months from application9–18 months from application
    Closing / Conversion18–30 months total (CHAP → RCC → Closing)24–36 months total (approval → relocation → disposition)
    Financial
    Initial Contract RentsCapped at current public housing funding (operating + capital)Set at Section 8 FMR or SAFMR — typically higher
    LIHTC CompatibilityExcellent — designed for 4% / 9% LIHTC pairingExcellent — TPVs underwrite cleanly for LIHTC
    Debt CapacityModerate — limited by capped contract rentsHigher — FMR-level rents support more debt
    Developer Fee PotentialStandard LIHTC developer feeStandard LIHTC developer fee + stronger cash flow
    Regulatory
    Long-Term Use Restrictions20-year initial HAP, automatic renewals; permanent affordabilityTied to TPV contract and any LIHTC LURA on replacement units
    Right to ReturnMandatory for all in-place residentsNot statutorily required (but often offered)
    Faircloth LimitProperty removed from Faircloth countProperty removed from Faircloth count
    Best Fit
    Ideal Property ProfileStable, occupied properties with moderate rehab needsObsolete, distressed, or vacant properties needing redevelopment
    Ideal Agency ProfilePHAs preserving long-term affordable inventoryPHAs replacing inventory or pivoting to mixed-finance

    Timelines and financial outcomes vary by property, market, and HUD Field Office. Figures reflect typical TFG engagements and are not guarantees.

    6–12 mo

    RAD CHAP timeline

    9–18 mo

    Section 18 approval

    FMR / SAFMR

    Section 18 rent basis

    Mandatory

    RAD Right to Return

    How TFG Helps

    Application Assistance & Financial Modeling

    Two engagements that compress the decision and execution cycle — whether you're preparing a RAD CHAP or running a Section 18 obsolescence analysis.

    Application Assistance

    End-to-end preparation of RAD CHAP and Section 18 demo/dispo applications — including PCNA coordination, financing plans, environmental review, and HUD negotiations.

    • RAD CHAP & Financing Plan packaging
    • Section 18 obsolescence & cost-test analysis
    • Resident notice & engagement compliance
    • HUD Field Office liaison & response management
    Discuss this engagement

    Financial Modeling

    Underwriting-grade pro formas that compare RAD vs. Section 18 outcomes side-by-side — including LIHTC equity, debt sizing, developer fee, and 20-year operating projections.

    • RAD vs. Section 18 side-by-side scenarios
    • 4% & 9% LIHTC equity sizing
    • Permanent debt sizing at HAP- or FMR-level rents
    • 20-year operating pro forma & DSCR stress tests
    Discuss this engagement
    Decision Memo

    Still weighing RAD vs. Section 18?

    Send us your property profile and we'll return a one-page decision memo — indicative rents, debt capacity, and recommended path — within five business days.

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