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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 contains descriptions of alternatives offered to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The details supplied here is not extensive and rather is planned to help owners navigate the alternatives readily available to them. For complete guidelines and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.
   
   For specific concern about a project's eligibility to renew a HAP agreement, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This choice is available to owners whose agreement rents are listed below similar market rents as determined by a rent comparability research study. An owner may request that their qualified current HAP contract be terminated and renewed under this choice.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner meets specific requirements to certify 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 available to owners whose agreement rents are below or equivalent to similar market leas. An owner may decrease their leas to market levels to take part under Option 2.
   kapre.com
   Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved job spending plan. These rents may not go beyond market similar levels, as demonstrated by a rent comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the agreement rents are changed to present market levels. The owner needs to 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 available to specific projects whose rents go beyond market equivalent levels as figured out by a rent comparability study. Typically, this applies to tasks 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 minimized 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 lowered to a market similar level as shown by a lease comparability study.
   
   Mortgage Restructuring: The owner might ask for that their qualified mortgage be restructured into a primary mortgage and secondary debt. The new primary mortgage will be sized so that market similar rents are enough to support the financial obligation service on that mortgage. Use restrictions will remain in location at the residential or commercial property so long as the secondary debt balance remains. If the task can remain economically feasible despite a lease reduction 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 available to jobs which are exempt from restructuring under MAHRA. This normally implies that the task is exempt to an FHA-insured mortgage, but instead has a standard mortgage or is tax-credit .
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved spending plan (capped by market leas as figured out by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The agreement rents will be adjusted upward each year by the Operating Cost Adjustment Factor released for the area. This multiplicative rent change is released by HUD in October of each year and is effective in February of the list below year. The OCAF is based upon a range of market indicators and is planned to capture the results of inflation and other market aspects on the cost of running rental housing.
   
   Forms and files for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain tasks based on a long-term HUD use contract are required to restore under this Option. This normally includes 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 rents upon HAP renewal depend on each project's particular HAP contract, Use Agreement and, if relevant, Strategy. Please examine those documents and contact your HUD Account Executive with concerns concerning alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease modification systems are offered to your job vary depending upon the HAP agreement, Use Agreement, and Strategy. Please evaluate those documents and call your HUD Account Executive with questions relating to alternatives for your residential or commercial property. Many Preservation jobs may ask for a budget-based lease boost to help with unforeseen 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 ought to be reviewed to figure out 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 may choose to not renew their HAP agreement upon expiration. This does not use to owners subject to a legal responsibility to renew the HAP contract arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner should offer HUD and occupants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified tenants will be provided enhanced vouchers 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 discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws may affect 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 recommend an owner of their responsibilities under these laws.
   
   If you are planning 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 remains offered in your neighborhood even if you do not want to restore your HAP agreement.
   
   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 qualified to restore their HAP agreement under Option 1 or 2 might also participate in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides rewards for the task of a HAP agreement to a nonprofit, 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 guarantee long-term conservation of the housing support at their residential or commercial property.