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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 options offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP contracts. The info offered here is not detailed and rather is intended to assist owners browse the choices offered to them. For full directions and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.
   
   For particular question about a task's eligibility to restore a HAP contract, please call your local HUD Multifamily Account Executive.
   
   Option 1: to Market
   
   Eligibility: This alternative is available to owners whose contract rents are below comparable market rents as identified by a rent comparability research study. An owner may ask for that their qualified current HAP contract be ended and renewed under this option.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market equivalent levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills specific 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 alternative is available to owners whose agreement rents are below or equivalent to similar market leas. An owner may reduce their leas to market levels to participate under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved project budget. These rents might not surpass market comparable levels, as demonstrated by a rent comparability research study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement rents are changed to current market levels. The owner must send a lease comparability research study which is used to set the rents on the 5th, 10th, and 15th anniversaries of the HAP contract.
   
   Forms and files for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This choice is readily available to specific tasks whose leas surpass market equivalent levels as figured out by a lease comparability study. Typically, this uses 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 minimized to a level that can be supported by market comparable levels. If tasks can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, rents are minimized to a market equivalent level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner might ask for that their qualified mortgage be reorganized into a primary mortgage and subordinate financial obligation. The new primary mortgage will be sized so that market equivalent leas suffice to support the financial obligation service on that mortgage. Use limitations will remain in location at the residential or commercial property so long as the secondary debt balance remains. If the project can remain economically practical despite 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 website. All inquiries regarding a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is offered to tasks which are exempt from reorganizing under MAHRA. This normally suggests 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 20 years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved spending plan (capped by market rents as identified by a Rent Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The agreement leas will be adjusted upward each year by the Operating expense Adjustment Factor released for the locality. This multiplicative lease change is released by HUD in October of each year and is reliable in February of the list below year. The OCAF is based upon a range of market indicators and is meant to catch the effects of inflation and other market factors on the cost of operating rental housing.
   
   Forms and documents for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain projects subject to a long-lasting HUD use contract are required to renew under this Option. This usually includes jobs with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
   
   Term: Varies depending on HAP agreement requirements.
   
   Rent Increase at HAP Renewal: The rents upon HAP renewal depend upon each job's specific HAP agreement, Use Agreement and, if suitable, Plan of Action. Please evaluate those files and contact your HUD Account Executive with concerns regarding choices for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent modification systems are offered to your job differ depending on the HAP agreement, Use Agreement, and Plan of Action. Please examine those documents and call your HUD Account Executive with concerns relating to choices for your residential or commercial property. Many Preservation jobs might ask for a budget-based lease boost to assist with unexpected 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 examined to determine 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 elect to not renew their HAP agreement upon expiration. This does not use to owners based on a legal responsibility to renew the HAP agreement arising from an Use Agreement that is connected to the residential or commercial property.
   
   An owner must offer HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible tenants will be issued boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to choose out of restoring their HAP contract 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 ability to opt-out of renewing their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their commitments under these laws.
   
   If you are planning to pull out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program enables HUD to guarantee that affordable housing stays readily available in your community 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 qualified to renew their HAP agreement under Option 1 or 2 may likewise take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides incentives for the project of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs provide a range of benefits to owners who want to ensure long-lasting preservation of the housing help at their residential or commercial property.
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