On May 15, 2026, HUD issued a letter to all Public Housing Authorities (“PHAs”) entitled Updates to the Restore-Rebuild Initiative (the “Letter”) ending the Restore-Rebuild Initiative (formerly known as “Faircloth-to-RAD”) that has been helping PHAs and their development partners build and acquire new public housing units and convert them to RAD through a streamlined process that provided underwriting certainty.
The Letter provides that as of May 15, 2026, no new requests for a Notice of Anticipated RAD Rents (“NARR”) will be accepted by HUD. HUD will continue to process requests for NARRs that have been received as of May 12, 2026. Further, all NARRs will expire in 90 days (August 11, 2026) unless one of the below conditions has been met:
- The PHA has received HUD approval for mixed-finance development or public housing acquisition under applicable regulations;
- The PHA has submitted a substantially complete mixed-finance development proposal or public housing acquisition proposal to HUD for the proposed project; or
- The PHA has demonstrated that an application for Low-Income Housing Tax Credits has been submitted and is under review or has been approved.
HUD will continue issuing RAD Conversion Conditional Approvals (“RCCA”) for proposed projects that satisfy one of the above conditions, and those projects may continue towards acquisition or the completion of construction and RAD conversion in accordance with the existing Restore-Rebuild Guidance. NARRs for projects that do not meet one of the above conditions will expire and be of no further effect.
HUD’s actions to end the Restore-Rebuild Initiative were expected after the President’s budget proposal for FY2027 proposed to eliminate PHAs’ Faircloth cap as of October 1, 2027. Under current law, PHAs that have demolished or disposed of public housing units can restore those units – and under Restore-Rebuild they could count on a streamlined way to convert those units to RAD. There is no indication that Congress has accepted the budget’s proposal to reset Faircloth limits, and there has been no change to PHAs’ authority to acquire or construct public housing units through available development methods, including mixed-finance. Accordingly, unless and until there is congressional action on the budget proposal, PHAs still have statutory authority to acquire or construct mixed-finance public housing units and to later convert those units to RAD. Going forward, however, they will have to do so through two separate HUD submissions and approvals: one to build or acquire the public housing units, and a second (after completion or acquisition) to convert those units to RAD.
While the Letter removes the administrative efficiencies developed over the past few years to support the construction and conversion of Faircloth units with greater underwriting certainty, the underlying authority for PHAs to construct and convert units with their Faircloth authority currently remains in place.
For additional information, or assistance on projects that are pursuing Restore-Rebuild or want to pursue a mixed-finance development on its own or with plans to convert to RAD, please contact Sarah Molseed or Emily Blumberg.
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