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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 alternatives available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The information provided here is not extensive and rather is meant to help owners browse the options readily available to them. For full instructions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
   
   For specific question about a job's eligibility to renew a HAP contract, please contact your regional HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This alternative is available to owners whose agreement leas are listed below equivalent market rents as identified by a rent comparability research study. An owner may request that their eligible existing HAP contract be ended and renewed under this option.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market equivalent levels, as identified 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 explained 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: Mark up to Budget
   
   Eligibility: This choice is readily available to owners whose agreement leas are listed below or equivalent to comparable market leas. An owner might lower their rents to market levels to take part under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved job spending plan. These rents may not go beyond market similar levels, as shown by a rent comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract leas are adjusted to present market levels. The owner should submit 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 documents for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This option is readily available to particular projects whose leas surpass market similar levels as by a rent comparability study. Typically, this applies to tasks whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to reorganize an owner's mortgage so that debt service is lowered to a level that can be supported by market equivalent levels. If projects can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are minimized to a market equivalent level as shown by a rent comparability study.
   
   Mortgage Restructuring: The owner might ask for that their eligible mortgage be reorganized into a primary mortgage and subordinate financial obligation. The brand-new primary mortgage will be sized so that market equivalent leas are enough 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 subordinate financial obligation balance stays. If the project can remain financially feasible in spite of a lease decrease to market levels, then no mortgage restructuring may be needed.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All inquiries concerning a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is readily available to projects which are exempt from reorganizing under MAHRA. This generally indicates that the project is exempt to an FHA-insured mortgage, however instead has a conventional mortgage or is tax-credit funded.
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating expense Adjustment Factor or by a HUD-approved spending plan (topped by market leas as figured out 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 published for the area. This multiplicative lease modification is released by HUD in October of each year and works in February of the list below year. The OCAF is based on a range of market signs and is intended to record the effects of inflation and other market factors on the cost of operating rental housing.
   
   Forms and files for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain projects subject to a long-term HUD usage arrangement are needed to restore under this Option. This normally includes projects 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 contract, Use Agreement and, if applicable, Plan of Action. Please evaluate those documents and contact your HUD Account Executive with concerns relating to options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change mechanisms are readily available to your project differ depending on the HAP agreement, Use Agreement, and Plan of Action. Please review those files and call your HUD Account Executive with questions regarding alternatives for your residential or commercial property. Many Preservation jobs may ask for a budget-based rent boost to help with unexpected scenarios at a residential or commercial property or to address physical conditions requires.
   
   Forms and files for Option 5:
   
   - The job's Use Agreement ought 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 may elect to not restore their HAP contract upon expiration. This does not apply to owners subject to a legal responsibility to renew the HAP agreement resulting from an Use Agreement that is connected to the residential or commercial property.
   
   An owner must offer HUD and tenants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible renters will be provided improved coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to pull out of renewing their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws may 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 encourage an owner of their responsibilities under these laws.
   
   If you are preparing to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to make sure that cost effective housing stays offered 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
   vrbo.com
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is qualified to restore their HAP contract under Option 1 or 2 might also take part 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 not-for-profit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs offer a range of advantages to owners who want to ensure long-term conservation of the housing help at their residential or commercial property.