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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 contains descriptions of alternatives available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The details provided here is not detailed and instead is meant to assist owners browse the options available to them. For full directions and requirements for renewal of a HAP agreement, please refer to 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 offered to owners whose contract leas are below comparable market leas as figured out by a rent comparability study. An owner might ask for that their eligible present HAP agreement be ended and restored under this choice.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills particular 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 files
   
   Option 2: Increase to Budget
   
   Eligibility: This choice is readily available to owners whose contract rents are listed below or equal to equivalent market rents. An owner might reduce their rents to market levels to take part under Option 2.
   
   Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved job budget. These rents might not go beyond market equivalent levels, as demonstrated by a lease comparability study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the contract rents are adapted to present market levels. The owner must submit a rent comparability study which is used to set the rents 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 alternative is readily available to particular projects whose leas go beyond market similar levels as figured out by a lease comparability research study. Typically, this uses to tasks whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that financial obligation service is reduced to a level that can be supported by market similar levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are lowered to a market equivalent level as demonstrated by a lease comparability study.
   
   Mortgage Restructuring: The owner may ask for that their eligible mortgage be restructured into a primary mortgage and secondary financial obligation. The new main 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 remain financially feasible despite a rent to market levels, then no mortgage restructuring may be required.
   
   More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market website. All inquiries concerning a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is available to projects which are exempt from restructuring under MAHRA. This generally indicates that the task is exempt to an FHA-insured mortgage, but instead has a traditional mortgage or is tax-credit funded.
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, leas are either adjusted 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 leas will be adjusted up each year by the Operating Cost Adjustment Factor published for the area. This multiplicative rent modification is published 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 planned 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 jobs subject to a long-lasting HUD usage contract are needed 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 contract requirements.
   
   Rent Increase at HAP Renewal: The rents upon HAP renewal depend on each project's particular HAP agreement, Use Agreement and, if appropriate, Strategy. Please examine those documents and call your HUD Account Executive with concerns concerning choices for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change systems are offered to your project differ depending on the HAP agreement, Use Agreement, and Plan of Action. Please examine those documents and contact your HUD Account Executive with questions concerning choices for your residential or commercial property. Many Preservation projects might request a budget-based rent increase to assist with unforeseen situations at a residential or commercial property or to attend to physical conditions needs.
   
   Forms and files for Option 5:
   
   - The project's Use Agreement need to be reviewed to identify 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, Chapter 7
   
   
   Option 6: Opt-out
   
   Eligibility: An owner might elect to not renew their HAP contract upon expiration. This does not use to owners subject to a legal commitment to restore the HAP contract resulting from an Usage Agreement that is attached to the residential or commercial property.
   
   An owner should offer HUD and occupants notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible renters will be provided 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 regional laws may affect 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 recommend an owner of their obligations under these laws.
   
   If you are preparing to choose out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program permits HUD to make sure that affordable housing remains available in your community even if you do not want to restore your HAP agreement.
   
   Forms and files 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 contract under Option 1 or 2 may likewise get involved in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies incentives for the assignment of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs provide a range of advantages to owners who want to make sure long-lasting preservation of the housing help at their residential or commercial property.