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 webpage. This resource contains descriptions of choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP agreements. The information supplied here is not comprehensive and rather is planned to assist owners browse the options available to them. For full directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.

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

    Option 1: Increase to Market

    Eligibility: This option is offered to owners whose agreement rents are listed below equivalent market leas as figured out by a lease comparability study. An owner might request that their eligible existing HAP agreement be terminated and renewed under this choice.

    Term: Between 5 and 20 years.

    Renewal Rent Increase: At HAP renewal, rents are set at market equivalent levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills particular 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 submits

    Option 2: Increase to Budget

    Eligibility: This choice is offered to owners whose agreement leas are listed below or equal to similar market rents. An owner may reduce their rents to market levels to get involved under Option 2.

    Renewal Rent Increase: At HAP renewal, rents are set at a level required to support a HUD-approved project budget. These leas may not surpass market comparable levels, as demonstrated by a rent comparability study.

    Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract rents are gotten used to current market levels. The owner should submit a lease comparability research study which is used to set the leas on the 5th, 10th, and 15th anniversaries of the HAP contract.

    Forms and documents for Option 2:


    Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9


    Option 3: Mark-to-Market

    Eligibility: This choice is readily available to particular jobs whose rents exceed market comparable levels as identified by a rent comparability research study. Typically, this uses to jobs 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 similar levels. If tasks can

    Term: twenty years.

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

    Mortgage Restructuring: The owner might ask for that their eligible mortgage be reorganized into a main mortgage and subordinate financial obligation. The new primary mortgage will be sized so that market equivalent rents suffice to support the financial obligation service on that mortgage. Use limitations will remain in place at the residential or commercial property so long as the subordinate debt balance stays. If the project can remain economically practical in spite of a rent reduction 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 website. All questions relating to a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.

    Option 4: Exception Projects

    Eligibility: This choice is available to projects which are exempt from restructuring under MAHRA. This usually suggests that the project is exempt to an FHA-insured mortgage, however rather has a standard mortgage or is tax-credit financed.

    Term: Between 1 and 20 years.

    Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget (capped by market rents 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 Cost Adjustment Factor published for the area. This multiplicative lease change is published by HUD in October of each year and is efficient in February of the following year. The OCAF is based upon a range of market indications and is meant to record the results of inflation and other market factors on the expense 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-term HUD usage contract are required to renew under this Option. This normally includes tasks 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 job's particular HAP agreement, Use Agreement and, if suitable, Strategy. Please review those documents and contact your HUD Account Executive with questions regarding choices for your residential or commercial property.

    Annual Rent Adjustment: Which lease change systems are offered to your job vary depending on the HAP agreement, Use Agreement, and Strategy. Please review those files and call your HUD Account Executive with concerns concerning alternatives for your residential or commercial property. Many Preservation jobs might request a budget-based rent increase to assist with unforeseen scenarios at a or commercial property or to deal with physical conditions requires.

    Forms and files for Option 5:

    - The job's Use Agreement should be reviewed 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 may choose to not restore their HAP agreement upon expiration. This does not use to owners based on a contractual obligation to renew the HAP agreement resulting from an Usage Agreement that is connected to the residential or commercial property.

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

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

    If you are planning to choose out of HAP agreement renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to make sure that budget-friendly housing stays offered in your community even if you do not wish 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 eligible to restore their HAP contract under Option 1 or 2 may also take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies rewards for the task of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs provide a variety of advantages to owners who want to make sure long-lasting preservation of the housing support at their residential or commercial property.
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