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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 available to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The information supplied here is not extensive and rather is meant to assist owners browse the choices readily available to them. For full guidelines and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
   
   For specific concern about a job's eligibility to renew a HAP agreement, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This option is offered to owners whose agreement rents are below comparable market rents as determined by a rent comparability research study. An owner might request that their qualified existing HAP contract be terminated and renewed under this option.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market similar levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner satisfies specific criteria to qualify 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 files
   
   Option 2: Mark up to Budget
   
   Eligibility: This option is readily available to owners whose agreement rents are below or equivalent to comparable market rents. An owner might 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 task budget. These leas may not exceed market equivalent levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the agreement leas are adapted to present market levels. The owner must send a rent comparability study which is used to set the rents 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 option is offered to certain jobs whose leas exceed market comparable levels as determined by a lease comparability research study. Typically, this uses to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to reorganize an owner's mortgage so that debt service is decreased to a level that can be supported by market comparable levels. If tasks can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are reduced 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 reorganized into a primary mortgage and subordinate financial obligation. The brand-new primary mortgage will be sized so that market similar rents are enough to support the debt service on that mortgage. Use limitations will remain in location at the residential or commercial property so long as the secondary debt balance remains. If the job can stay economically practical 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 queries concerning a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is offered to jobs which are exempt from reorganizing under MAHRA. This generally suggests that the job is exempt 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 plan (capped by market rents as determined by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be adjusted upward each year by the Operating expense Adjustment Factor released 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 upon a variety of market indicators and is planned to catch the results of inflation and other market elements on the expense of operating rental housing.
   
   Forms and documents for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain tasks subject to a long-term HUD usage arrangement are needed to restore under this Option. This usually consists of 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 leas upon HAP renewal depend upon each task's specific HAP contract, Use Agreement and, if applicable, Strategy. Please evaluate those files and call your HUD Account Executive with concerns regarding options for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent change mechanisms are readily available to your project differ depending on the HAP contract, Use Agreement, and Strategy. Please evaluate those files and contact your HUD Account Executive with concerns regarding alternatives for your residential or commercial property. Many Preservation tasks may ask for a budget-based lease boost to help with unexpected scenarios at a residential or commercial property or to attend to physical conditions requires.
   
   Forms and files for Option 5:
   
   - The project's Use Agreement ought to be reviewed to figure out 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 might choose to not restore their HAP agreement upon expiration. This does not apply to owners subject to a legal commitment to restore the HAP contract arising from an Use Agreement that is attached to the residential or commercial property.
   
   An owner must supply HUD and tenants notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified occupants will be issued enhanced coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to choose out of restoring their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local 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 advise an owner of their commitments under these laws.
   
   If you are planning to opt out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program allows HUD to ensure that cost effective housing remains 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 qualified to restore their HAP agreement under Option 1 or 2 may likewise take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides incentives for the project of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs offer a variety of benefits to owners who want to ensure long-lasting preservation of the housing assistance at their residential or commercial property.