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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 consists of descriptions of alternatives available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The details provided here is not detailed and instead is planned to assist owners browse the choices readily available 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 job's eligibility to restore a HAP contract, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This choice is offered to owners whose contract leas are listed below equivalent market rents as determined by a lease comparability research study. An owner might 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 equivalent levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner satisfies specific criteria to qualify under the discretionary criteria described at Section 9-3.
   
   Forms and files for Option 1:
   
   Worksheets for Mark-up-to-Market. Blank worksheets as PDF files
   
   
   Sample worksheets as PDF files
   
   
   Worksheets as Microsoft Excel files
   
   Option 2: Increase to Budget
   
   Eligibility: This choice is available to owners whose agreement rents are listed below or equivalent to comparable market leas. An owner might reduce 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 project budget plan. These rents may not exceed market similar levels, as demonstrated by a lease comparability research study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the agreement rents are adjusted to existing market levels. The owner needs to submit a lease comparability research study which is used to set the rents on the 5th, 10th, and 15th anniversaries of the .
   
   Forms and files for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This alternative is offered to specific tasks whose rents surpass market similar levels as identified by a lease comparability study. Typically, this applies to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that financial obligation service is lowered to a level that can be supported by market equivalent levels. If jobs can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, leas are lowered to a market equivalent level as demonstrated by a rent comparability study.
   
   Mortgage Restructuring: The owner may request that their eligible mortgage be reorganized into a main mortgage and subordinate debt. The new primary mortgage will be sized so that market equivalent leas suffice to support the financial obligation service on that mortgage. Use restrictions will stay in location at the residential or commercial property so long as the secondary debt balance remains. If the job can stay economically practical in spite of a rent decrease to market levels, then no mortgage restructuring might be required.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market site. All inquiries concerning a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is offered to projects which are exempt from reorganizing under MAHRA. This normally suggests that the job is exempt to an FHA-insured mortgage, however rather 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 Cost Adjustment Factor or by a HUD-approved budget plan (topped by market rents as determined by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract leas will be changed up each year by the Operating expense Adjustment Factor released for the locality. This multiplicative rent adjustment is released by HUD in October of each year and works in February of the list below year. The OCAF is based upon a range of market signs and is intended to catch the impacts of inflation and other market factors on the cost of running rental housing.
   
   Forms and documents for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain tasks subject to a long-lasting HUD use arrangement are required to renew under this Option. This usually includes 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 project's specific HAP contract, Use Agreement and, if suitable, Plan of Action. Please review those documents and call your HUD Account Executive with questions regarding options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease adjustment mechanisms are available to your job vary depending on the HAP agreement, Use Agreement, and Strategy. Please examine those files and call your HUD Account Executive with concerns regarding alternatives for your residential or commercial property. Many Preservation jobs may request a budget-based rent increase to help with unexpected circumstances at a residential or commercial property or to address physical conditions needs.
   
   Forms and files for Option 5:
   
   - The task's Use Agreement ought to be examined to figure out HAP renewal choices.
   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 elect to not renew their HAP contract upon expiration. This does not apply to owners based on a legal responsibility to renew the HAP agreement resulting from an Use Agreement that is connected to the residential or commercial property.
   
   An owner should offer HUD and occupants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible occupants will be issued boosted coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to pull out of restoring their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws might affect an owner's ability to opt-out of renewing their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their obligations under these laws.
   
   If you are planning to pull out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program allows HUD to ensure that cost effective housing stays available in your community even if you do not want to renew 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 restore their HAP agreement under Option 1 or 2 may likewise participate in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides rewards for the project of a HAP contract 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 ensure long-term preservation of the housing support at their residential or commercial property.