Section 8 Contract Renewal Options
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  1. Multifamily Housing - Section 8 Contract Renewal Options

    Section 8 Contract Renewal Options

    Welcome to the Section 8 Housing Assistance Payment Contract Renewal Options web page. This resource consists of descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP contracts. The information offered here is not thorough and rather is intended to assist owners browse the choices offered to them. For full directions and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.

    For particular concern about a job's eligibility to restore a HAP contract, please contact your regional HUD Multifamily Account Executive.

    Option 1: Increase to Market

    Eligibility: This alternative is readily available to owners whose agreement leas are listed below comparable market rents as determined by a lease comparability research study. An owner may ask for that their qualified present HAP agreement be ended and renewed under this option.

    Term: Between 5 and 20 years.

    Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner satisfies specific criteria to certify under the discretionary criteria described at Section 9-3.

    Forms and documents for Option 1:

    Worksheets for Mark-up-to-Market. Blank worksheets as PDF files


    Sample worksheets as PDF files


    Worksheets as Microsoft Excel submits

    Option 2: Mark up to Budget

    Eligibility: This option is readily available to owners whose contract rents are below or equal to equivalent market rents. An owner may decrease their rents to market levels to participate under Option 2.

    Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved job budget. These leas might not surpass market equivalent levels, as demonstrated by a rent comparability research study.

    Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement leas are gotten used to existing market levels. The owner needs to send a lease comparability study which is utilized to set the leas on the 5th, 10th, and 15th anniversaries of the HAP contract.

    Forms and files for Option 2:


    Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9


    Option 3: Mark-to-Market

    Eligibility: This choice is offered to certain jobs whose rents go beyond market comparable levels as determined by a lease comparability study. Typically, this applies to tasks whose mortgages are guaranteed by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that debt service is minimized to a level that can be supported by market similar levels. If projects can

    Term: 20 years.

    Annual Rent Increase: At HAP renewal, leas are decreased to a market comparable level as shown by a rent comparability research study.

    Mortgage Restructuring: The owner might request that their eligible mortgage be reorganized into a main mortgage and subordinate debt. The brand-new main mortgage will be sized so that market equivalent rents suffice to support the debt service on that mortgage. Use constraints will remain in location at the residential or commercial property so long as the secondary debt balance stays. If the task can stay economically practical regardless of a rent decrease to market levels, then no mortgage restructuring may be needed.

    More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market website. All questions concerning a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.

    Option 4: Exception Projects

    Eligibility: This alternative is readily available to projects which are exempt from restructuring under MAHRA. This generally indicates that the project is exempt to an FHA-insured mortgage, but rather has a standard mortgage or is tax-credit financed.

    Term: Between 1 and 20 years.

    Rent Increase: At HAP renewal, leas are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget plan (topped by market leas as figured out by a Rent Comparability Study), whichever is lesser.

    Annual Rent Adjustment: The agreement rents will be changed up each year by the Operating expense Adjustment Factor released for the region. This multiplicative lease change is by HUD in October of each year and works in February of the following year. The OCAF is based upon a range of market indicators and is intended to capture the results of inflation and other market aspects on the expense of running rental housing.

    Forms and documents for Option 4:


    Section 8 Renewal Policy Guidebook, Chapter 6


    Option 5: Preservation Projects

    Eligibility: Certain projects subject to a long-lasting HUD use agreement are required to renew under this Option. This generally consists of tasks with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.

    Term: Varies depending on HAP agreement requirements.

    Rent Increase at HAP Renewal: The leas upon HAP renewal depend on each project's particular HAP contract, Use Agreement and, if suitable, Plan of Action. Please examine those files and call your HUD Account Executive with questions relating to options for your residential or commercial property.

    Annual Rent Adjustment: Which lease adjustment systems are readily available to your job vary depending on the HAP agreement, Use Agreement, and Plan of Action. Please examine those files and contact your HUD Account Executive with questions regarding choices for your residential or commercial property. Many Preservation jobs may ask for a budget-based rent boost to help with unexpected scenarios at a residential or commercial property or to resolve physical conditions needs.

    Forms and files for Option 5:

    - The task's Use Agreement ought to be evaluated to figure out HAP renewal options.
    HAP Renewal Request Form (HUD-9624)


    HUD Handbook 4350.1 Chapter 7: Processing Budgeted Rent Increases


    OCAF Adjustment Worksheet (HUD-9625)


    Section 8 Renewal Policy Guidebook, Chapter 7


    Option 6: Opt-out

    Eligibility: An owner may elect to not renew their HAP contract upon expiration. This does not apply to owners based on a contractual commitment to restore the HAP contract arising from an Use Agreement that is connected to the residential or commercial property.

    An owner should provide HUD and tenants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible occupants will be released improved coupons pursuant to 42 U.S.C. § 1437f( t).

    Full HUD requirements for an owner who wishes to pull out of renewing their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws may impact an owner's capability to opt-out of renewing their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not advise an owner of their commitments under these laws.

    If you are preparing to choose out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program enables HUD to guarantee that affordable housing remains available in your community even if you do not want to restore your HAP contract.

    Forms and documents for Option 6:

    HAP Renewal Request Form (HUD-9624)


    Enhanced Voucher Fact Sheet


    Section 8 Renewal Policy Guidebook, Chapter 8


    Section 8 Preservation Efforts

    Eligibility: An owner who is eligible to restore their HAP contract under Option 1 or 2 may also take part in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies rewards for the project of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs supply a variety of benefits to owners who want to ensure long-term conservation of the housing assistance at their residential or commercial property.