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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 website. This resource consists of descriptions of alternatives available to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP agreements. The info supplied here is not extensive and rather is meant to help owners navigate the options available to them. For complete directions and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.
   
   For specific question about a job's eligibility to renew a HAP agreement, please call your local HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This choice is readily available to owners whose agreement rents are listed below comparable market leas as identified by a lease comparability research study. An owner might ask for that their qualified current HAP contract be terminated and restored under this choice.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner meets particular requirements to certify under the discretionary criteria explained 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 readily available to owners whose agreement rents are below or equivalent to comparable market rents. An owner might decrease their rents to market levels to take part under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved task budget plan. These leas may not go beyond market comparable levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract rents are gotten used to current market levels. The owner must submit a rent comparability study which is used to set the leas 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 available to specific projects whose rents exceed market equivalent levels as identified by a lease comparability research study. Typically, this uses to projects whose mortgages are insured by the Federal Housing Administration. Congress gave 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 equivalent levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are reduced to a market comparable level as shown by a rent comparability research study.
   
   Mortgage Restructuring: The owner might request that their eligible mortgage be restructured into a primary mortgage and secondary debt. The new main mortgage will be sized so that market equivalent rents 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 subordinate financial obligation balance remains. If the project can stay financially viable despite a rent 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 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is readily available to projects which are exempt from reorganizing under MAHRA. This normally means that the task is not subject to an FHA-insured mortgage, but rather has a standard mortgage or is tax-credit funded.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, leas are either adjusted by the Operating expense Adjustment Factor or by a HUD-approved spending plan (capped by market leas as determined by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be changed up each year by the Operating expense Adjustment Factor released for the area. This multiplicative rent modification is published by HUD in October of each year and works in February of the following year. The OCAF is based on a range of market signs and is meant to capture the impacts 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 agreement are needed to restore under this Option. This normally consists of tasks with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
   
   Term: Varies depending upon HAP agreement requirements.
   
   Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each job's specific HAP agreement, Use Agreement and, if appropriate, Strategy. Please review those documents and call your HUD Account Executive with questions concerning options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change systems are available to your task vary depending on the HAP contract, Use Agreement, and Plan of Action. Please examine those documents and call your HUD Account Executive with questions concerning options for your residential or commercial property. Many Preservation projects may request a budget-based lease increase to assist with unforeseen scenarios at a residential or commercial property or to resolve physical conditions requires.
   
   Forms and documents for Option 5:
   
   - The project's Use Agreement need to be examined to figure out 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
   propertyshark.com
   
   Option 6: Opt-out
   
   Eligibility: An owner might elect to not restore their HAP contract upon expiration. This does not use to owners based on a legal commitment to renew the HAP contract resulting from an Use Agreement that is connected to the residential or commercial property.
   
   An owner should offer HUD and tenants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified occupants will be released improved coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to choose out of renewing their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws might affect an owner's ability to opt-out of restoring their HAP contract. 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 preparing to pull out of HAP contract renewal, please review 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 contract.
   
   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 restore their HAP contract under Option 1 or 2 might likewise 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 assignment of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs supply a range of advantages to owners who want to make sure long-lasting conservation of the housing support at their residential or commercial property.