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1. HUD Partners. 2. 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 contains descriptions of options offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP contracts. The info supplied here is not comprehensive and instead is meant to help owners browse the options readily available to them. For full instructions and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.

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

Option 1: Increase to Market

Eligibility: This choice is available to owners whose contract leas are listed below comparable market leas as figured out by a rent comparability study. An owner may ask for that their eligible existing HAP contract be terminated and restored under this alternative.

Term: Between 5 and 20 years.

Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner fulfills particular criteria to certify under the discretionary requirements explained 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: Increase to Budget

Eligibility: This choice is readily available to owners whose agreement leas are below or equivalent to equivalent market rents. An owner may decrease their rents to market levels to get involved under Option 2.

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

Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the agreement leas are adjusted to existing market levels. The owner should submit a rent comparability research study which is utilized to set the leas 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 choice is offered to certain jobs whose leas exceed market comparable levels as figured out by a lease comparability research study. Typically, this applies to tasks whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to restructure an owner's mortgage so that financial obligation service is decreased to a level that can be supported by market equivalent levels. If tasks can

Term: twenty years.

Annual Rent Increase: At HAP renewal, leas are lowered to a market equivalent level as demonstrated by a rent comparability research study.

Mortgage Restructuring: The owner may ask for that their qualified mortgage be reorganized into a main mortgage and secondary debt. The brand-new main mortgage will be sized so that market equivalent leas are adequate to support the debt service on that mortgage. Use limitations will stay in place at the residential or commercial property so long as the subordinate debt balance stays. If the job can remain economically feasible despite a lease decrease to market levels, then no mortgage restructuring may be needed.

More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All queries relating to a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.

Option 4: Exception Projects

Eligibility: This choice is available to tasks which are exempt from reorganizing under MAHRA. This normally means that the task is exempt to an FHA-insured mortgage, however rather has a conventional mortgage or is tax-credit financed.

Term: Between 1 and twenty 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 identified by a Rent Comparability Study), whichever is lesser.

Annual Rent Adjustment: The contract rents will be adjusted upward each year by the Operating Cost Adjustment Factor published for the region. This multiplicative lease change is released by HUD in October of each year and works in February of the following year. The OCAF is based upon a range of market signs and is planned to record the effects 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 projects based on a long-lasting HUD usage contract are needed to renew under this Option. This normally includes jobs with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.

Term: Varies depending on HAP contract requirements.

Rent Increase at HAP Renewal: The leas upon HAP renewal depend on each project's particular HAP contract, Use Agreement and, if applicable, Plan of Action. Please review those documents and contact your HUD Account Executive with questions regarding choices for your residential or commercial property.

Annual Rent Adjustment: Which rent modification systems are available to your job vary depending on the HAP contract, Use Agreement, and Plan of Action. Please evaluate those documents and contact your HUD Account Executive with concerns relating to alternatives for your residential or commercial property. Many Preservation jobs may ask for a budget-based rent increase to help with unpredicted situations at a residential or commercial property or to deal with physical conditions requires.

Forms and documents for Option 5:

- The project's Use Agreement ought to be evaluated to determine HAP renewal alternatives.
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, 7

Option 6: Opt-out

Eligibility: An owner might choose to not restore their HAP contract upon expiration. This does not apply to owners subject to a contractual commitment to restore the HAP agreement resulting from an Use Agreement that is attached to the residential or commercial property.

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

Full HUD requirements for an owner who wishes to pull out of renewing their HAP agreement can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws may affect an owner's ability to opt-out of restoring their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not recommend an owner of their obligations under these laws.

If you are preparing to pull out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program enables HUD to ensure that inexpensive housing remains offered in your neighborhood even if you do not want 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 eligible to renew their HAP agreement 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 provides incentives for the task of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs supply a variety of advantages to owners who wish to guarantee long-lasting preservation of the housing support at their residential or commercial property.