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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 includes descriptions of choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP contracts. The info provided here is not comprehensive and instead is planned to help owners browse the choices offered to them. For complete instructions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For specific question about a job's eligibility to renew a HAP contract, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This alternative is readily available to owners whose agreement rents are below comparable market rents as figured out by a rent comparability study. An owner might ask for that their qualified current HAP agreement be terminated and restored under this alternative.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills certain 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 available to owners whose agreement rents are below or equal to equivalent market leas. An owner might decrease their leas to market levels to get involved under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved job budget plan. These leas may not go beyond market equivalent levels, as demonstrated by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the agreement rents are gotten used to current market levels. The owner should send a lease comparability research study which is utilized 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 option is available to specific projects whose rents go beyond market comparable levels as determined by a lease comparability research study. Typically, this uses to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress gave HUD the authority to reorganize an owner's mortgage so that debt service is lowered to a level that can be supported by market comparable levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are decreased to a market comparable level as shown by a rent comparability research study.
   
   Mortgage Restructuring: The owner may ask for that their qualified mortgage be restructured into a main mortgage and subordinate debt. The brand-new primary mortgage will be sized so that market equivalent leas are sufficient to support the debt service on that mortgage. Use constraints will stay in location at the residential or commercial property so long as the secondary financial obligation balance remains. If the project can remain economically viable despite a lease decrease to market levels, then no mortgage restructuring may be required.
   
   More Information for Option 3: Information about Option 3 can be discovered 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 alternative is available to tasks which are exempt from restructuring under MAHRA. This typically means that the task is exempt to an FHA-insured mortgage, but instead has a standard mortgage or is tax-credit financed.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, leas are either by the Operating expense Adjustment Factor or by a HUD-approved spending plan (topped by market leas as determined by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The agreement rents will be adjusted upward each year by the Operating expense Adjustment Factor released 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 indications and is meant to record the impacts 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 jobs based on a long-term HUD usage agreement are needed to renew under this Option. This typically includes jobs 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 leas upon HAP renewal depend upon each task's particular HAP agreement, Use Agreement and, if appropriate, Plan of Action. Please examine those files and contact your HUD Account Executive with concerns concerning alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease modification systems are readily available to your task vary depending on the HAP agreement, Use Agreement, and Strategy. Please examine those files and contact your HUD Account Executive with questions concerning alternatives for your residential or commercial property. Many Preservation jobs may request a budget-based lease boost to help with unpredicted situations at a residential or commercial property or to resolve physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The task's Use Agreement need to be reviewed to identify 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 agreement upon expiration. This does not use to owners based on a contractual responsibility to renew the HAP contract arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner needs to offer HUD and tenants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible renters will be provided boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to choose out of restoring 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 might impact an owner's ability 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 commitments under these laws.
   
   If you are planning to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to ensure that economical housing stays readily 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
   bloglines.com
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is qualified to renew their HAP contract under Option 1 or 2 may likewise get involved in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies rewards for the assignment of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs supply a variety of benefits to owners who want to ensure long-term conservation of the housing help at their residential or commercial property.