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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 choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The information provided here is not extensive and instead is meant to assist owners navigate the choices readily available to them. For complete instructions and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.
   
   For specific concern 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 offered to owners whose agreement rents are below comparable market rents as identified by a lease comparability research study. An owner may request that their qualified existing HAP contract be terminated and renewed under this alternative.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market equivalent levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner fulfills specific criteria to qualify under the discretionary requirements 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: Mark up to Budget
   
   Eligibility: This choice is readily available to owners whose agreement leas are below or equivalent to comparable market leas. An owner may reduce their leas to market levels to get involved under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved project spending plan. These rents may not surpass market comparable levels, as shown by a lease comparability study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the contract leas are adapted to existing market levels. The owner should send a rent comparability study which is used to set the rents on the 5th, 10th, and 15th anniversaries of the HAP agreement.
   
   Forms and documents for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This alternative is available to specific tasks whose rents exceed market comparable levels as identified by a rent comparability research study. Typically, this uses to jobs whose mortgages are insured by the Federal Housing Administration. Congress approved HUD the authority to restructure an owner's mortgage so that debt service is reduced to a level that can be supported by market equivalent levels. If projects can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, rents are lowered to a market equivalent level as shown by a lease comparability research study.
   
   Mortgage Restructuring: The owner might ask for that their eligible mortgage be restructured into a primary mortgage and secondary financial obligation. The new main mortgage will be sized so that market comparable rents suffice to support the debt service on that mortgage. Use limitations will stay in place at the residential or commercial property so long as the subordinate debt balance remains. If the job can stay financially viable regardless of a lease reduction 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 site. All inquiries concerning a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is offered to projects which are exempt from reorganizing under MAHRA. This usually suggests that the task is not subject to an FHA-insured mortgage, however instead has a conventional mortgage or is tax-credit funded.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget (topped by market rents as determined by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be adjusted up each year by the Operating Cost Adjustment Factor published for the region. This multiplicative lease modification is published by HUD in October of each year and works in February of the following year. The OCAF is based on a variety of market signs and is intended to record the effects of inflation and other market factors on the cost of running rental housing.
   
   Forms and documents for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain jobs based on a long-lasting HUD use agreement are required to restore under this Option. This usually consists of 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 leas upon HAP renewal depend on each project's specific HAP contract, Use Agreement and, if appropriate, Plan of Action. Please review those files and call your HUD Account Executive with questions concerning options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease adjustment mechanisms are available to your job differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please evaluate those documents and call your HUD Account Executive with questions concerning options for your residential or commercial property. Many Preservation projects might ask for a budget-based lease boost to help with unpredicted situations at a residential or commercial property or to attend to physical conditions needs.
   
   Forms and files for Option 5:
   
   - The task's Use Agreement must 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 choose to not restore their HAP agreement upon expiration. This does not apply to owners based on a legal commitment to renew the HAP agreement resulting from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner should provide HUD and tenants notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified occupants will be provided enhanced coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to pull out of restoring their HAP contract can be found 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 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 planning to choose out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program enables HUD to guarantee that affordable housing stays offered in your neighborhood even if you do not wish 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 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 agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs provide a variety of advantages to owners who want to guarantee long-lasting preservation of the housing support at their residential or commercial property.