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 website. This resource includes descriptions of choices available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The details supplied here is not detailed and instead is intended to help owners browse the choices offered to them. For full guidelines and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.

    For particular question about a task's eligibility to renew a HAP agreement, please contact your local HUD Multifamily Account Executive.

    Option 1: Mark up to Market

    Eligibility: This choice is available to owners whose agreement rents are below equivalent market rents as identified by a lease comparability study. An owner may request that their eligible current HAP contract be terminated and renewed under this choice.

    Term: Between 5 and 20 years.

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

    Forms and files for Option 1:
    ozarkia.net
    Worksheets for Mark-up-to-Market. Blank worksheets as PDF files


    Sample worksheets as PDF files


    Worksheets as Microsoft Excel submits

    Option 2: Increase to Budget

    Eligibility: This alternative is available to owners whose contract leas are listed below or equal to comparable market leas. An owner may decrease their rents to market levels to participate under Option 2.

    Renewal Rent Increase: At HAP renewal, rents are set at a level required to support a HUD-approved task budget plan. These rents may not go beyond market equivalent levels, as shown by a rent comparability research study.

    Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the agreement rents are adapted to present market levels. The owner must submit a rent comparability research study which is used to set the rents on the 5th, 10th, and 15th anniversaries of the HAP agreement.

    Forms and files for Option 2:


    Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9


    Option 3: Mark-to-Market

    Eligibility: This alternative is readily available to certain jobs whose rents surpass market comparable levels as figured out by a rent comparability study. Typically, this applies to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to reorganize an owner's mortgage so that financial obligation service is reduced to a level that can be supported by market equivalent levels. If tasks can

    Term: twenty years.

    Annual Rent Increase: At HAP renewal, rents are minimized to a market comparable level as demonstrated by a rent comparability study.

    Mortgage Restructuring: The owner may request that their eligible mortgage be restructured into a primary mortgage and subordinate financial obligation. The brand-new main mortgage will be sized so that market similar rents are enough to support the debt service on that mortgage. Use limitations will stay in place at the residential or commercial property so long as the secondary debt balance remains. If the job can stay financially practical in spite of a lease reduction to market levels, then no mortgage restructuring might be needed.

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

    Option 4: Exception Projects

    Eligibility: This choice is offered to tasks which are exempt from restructuring under MAHRA. This normally implies that the project is exempt to an FHA-insured mortgage, but instead has a conventional mortgage or is tax-credit financed.

    Term: Between 1 and 20 years.

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

    Annual Rent Adjustment: The agreement leas will be changed up each year by the Operating Cost Adjustment Factor released for the locality. This multiplicative rent modification is released by HUD in October of each year and is efficient in February of the list below year. The OCAF is based upon a range of market signs and is meant to record the impacts of inflation and other market elements on the cost of running rental housing.

    Forms and files for Option 4:


    Section 8 Renewal Policy Guidebook, Chapter 6


    Option 5: Preservation Projects

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

    Term: Varies depending upon HAP agreement requirements.

    Rent Increase at HAP Renewal: The leas upon HAP renewal depend on each job's particular HAP contract, Use Agreement and, if appropriate, Strategy. Please review those documents and contact your HUD Account Executive with concerns concerning choices for your residential or commercial property.

    Annual Rent Adjustment: Which lease adjustment systems are available to your task vary depending upon the HAP contract, Use Agreement, and Strategy. Please review those files and call your HUD Account Executive with questions regarding options for your residential or commercial property. Many Preservation projects may request a budget-based lease increase to help with unpredicted scenarios at a residential or commercial property or to attend to physical conditions needs.

    Forms and files for Option 5:

    - The task's Use Agreement must be examined to identify 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 might choose 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 needs to supply HUD and occupants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible renters will be issued boosted coupons to 42 U.S.C. § 1437f( t).

    Full HUD requirements for an owner who wants to pull out of restoring their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws might affect an owner's capability to opt-out of restoring their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their responsibilities under these laws.

    If you are planning to pull out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program permits HUD to make sure that affordable housing remains offered in your community even if you do not wish to restore your HAP agreement.

    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 qualified to renew their HAP contract under Option 1 or 2 might likewise take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program offers rewards for the assignment of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs supply a range of advantages to owners who wish to guarantee long-term conservation of the housing assistance at their residential or commercial property.