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1. HUD Partners. 2. 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 includes descriptions of choices offered to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP contracts. The details supplied here is not detailed and rather is planned to assist owners browse the choices available to them. For complete guidelines and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.

For specific question about a task's eligibility to restore a HAP contract, please contact your local HUD Multifamily Account Executive.

Option 1: Mark up to Market

Eligibility: This choice is available to owners whose contract leas are below comparable market rents as determined by a rent comparability research study. An owner may ask for that their eligible current HAP agreement be terminated and renewed under this choice.

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 certain requirements to certify under the discretionary requirements 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 submits

Option 2: Increase to Budget

Eligibility: This alternative is available to owners whose agreement leas are listed below or equivalent to similar . An owner may reduce their leas to market levels to take part under Option 2.

Renewal Rent Increase: At HAP renewal, rents are set at a level required to support a HUD-approved project spending plan. These leas might not go beyond market comparable levels, as shown by a lease comparability study.

Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the agreement rents are adjusted to present market levels. The owner must submit a rent 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 choice is offered to certain tasks whose rents surpass market equivalent levels as determined by a rent comparability research study. Typically, this uses to jobs whose mortgages are insured 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 similar levels. If tasks can

Term: 20 years.

Annual Rent Increase: At HAP renewal, leas are reduced 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 main mortgage and secondary financial obligation. The new main mortgage will be sized so that market equivalent leas are enough to support the financial obligation service on that mortgage. Use constraints will stay in location at the residential or commercial property so long as the secondary debt balance remains. If the job can remain economically viable regardless of a rent decrease to market levels, then no mortgage restructuring might be needed.

More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All queries concerning a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.

Option 4: Exception Projects

Eligibility: This alternative is offered to projects which are exempt from restructuring under MAHRA. This generally implies that the task is not subject to an FHA-insured mortgage, however instead has a conventional mortgage or is tax-credit financed.

Term: Between 1 and twenty years.

Rent Increase: At HAP renewal, leas 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 agreement leas will be adjusted up each year by the Operating expense Adjustment Factor published for the region. This multiplicative rent adjustment is released by HUD in October of each year and is efficient in February of the list below year. The OCAF is based on a range of market indicators and is meant to capture the effects of inflation and other market elements 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 jobs subject to a long-lasting HUD usage contract are needed to restore 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 leas upon HAP renewal depend on each job's specific HAP contract, Use Agreement and, if appropriate, Plan of Action. Please review those files and contact your HUD Account Executive with questions concerning choices for your residential or commercial property.

Annual Rent Adjustment: Which rent adjustment mechanisms are available to your task vary depending upon the HAP contract, Use Agreement, and Strategy. Please evaluate those documents and call your HUD Account Executive with questions relating to choices for your residential or commercial property. Many Preservation projects may request a budget-based lease boost to assist with unpredicted circumstances at a residential or commercial property or to attend to physical conditions needs.

Forms and files for Option 5:

- The job's Use Agreement ought to be reviewed 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 may elect to not renew their HAP contract upon expiration. This does not apply to owners subject to a contractual commitment to renew the HAP contract resulting from an Usage Agreement that is connected to the residential or commercial property.

An owner should provide HUD and renters notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified occupants will be issued boosted coupons 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 local laws may 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 recommend an owner of their obligations under these laws.

If you are planning to decide out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program enables HUD to make sure that inexpensive housing stays readily available in your neighborhood even if you do not want to renew your HAP contract.

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 eligible to renew their HAP agreement under Option 1 or 2 may likewise take part in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides incentives for the project of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs provide a range of benefits to owners who want to guarantee long-lasting conservation of the housing assistance at their residential or commercial property.