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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 options 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 thorough and rather is intended to assist owners navigate the choices offered to them. For full instructions 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 restore a HAP agreement, please contact your regional HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This option is available to owners whose contract rents are below similar market rents as determined by a rent comparability research study. An owner might ask for that their qualified current HAP agreement be ended and restored under this alternative.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills certain criteria 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
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   Option 2: Mark up to Budget
   
   Eligibility: This alternative is readily available to owners whose agreement rents are listed below or equal to comparable market rents. An owner may reduce their leas to market levels to participate under Option 2.
   
   Renewal Rent Increase: At HAP renewal, rents are set at a level required to support a HUD-approved project budget plan. These rents might not surpass market similar levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the agreement rents are adapted to current market levels. The owner should submit a lease 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 choice is readily available to specific tasks whose rents surpass market equivalent levels as figured out by a lease comparability research study. Typically, this applies to tasks whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that financial obligation service is lowered to a level that can be supported by market equivalent levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, rents are decreased to a market similar level as shown by a rent comparability research study.
   
   Mortgage Restructuring: The owner might ask for that their eligible mortgage be restructured into a main mortgage and secondary financial obligation. The brand-new main mortgage will be sized so that market equivalent leas are adequate to support the debt service on that mortgage. Use restrictions will stay in place at the residential or commercial property so long as the secondary debt balance remains. If the task can remain financially viable in spite 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 found on the About Mark-to-Market site. All queries relating to a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This alternative is available to projects which are exempt from under MAHRA. This typically means that the job is exempt to an FHA-insured mortgage, however rather has a standard mortgage or is tax-credit financed.
   
   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 spending plan (topped by market leas as figured out by a Lease Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The contract leas will be adjusted upward each year by the Operating expense Adjustment Factor published for the region. This multiplicative rent modification is released by HUD in October of each year and is reliable in February of the list below year. The OCAF is based upon a variety of market indications and is intended to record 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 projects subject to a long-term HUD use contract are needed to renew 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 on 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 suitable, Plan of Action. Please review those documents and call your HUD Account Executive with concerns concerning choices for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent change systems are readily available to your project differ depending on the HAP contract, Use Agreement, and Plan of Action. Please examine those files and contact your HUD Account Executive with concerns concerning options for your residential or commercial property. Many Preservation tasks may ask for a budget-based rent boost to assist with unforeseen scenarios at a residential or commercial property or to deal with physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The task's Use Agreement need to be evaluated to identify 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 elect to not renew their HAP contract upon expiration. This does not use to owners subject to a legal obligation to renew the HAP agreement resulting from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner must provide HUD and tenants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible tenants will be provided boosted coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to opt out of restoring 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 might affect 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 encourage an owner of their obligations under these laws.
   
   If you are preparing to choose out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program permits HUD to ensure that economical housing stays available in your neighborhood even if you do not want to restore 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 also take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies incentives for the assignment of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs provide a range of advantages to owners who want to ensure long-lasting preservation of the housing help at their residential or commercial property.