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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 choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP contracts. The information supplied here is not detailed and rather is intended to help owners navigate the options readily available to them. For complete directions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For particular question about a project's eligibility to renew a HAP agreement, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This option is offered to owners whose agreement leas are below equivalent market leas as determined by a lease comparability research study. An owner might ask for that their eligible existing HAP contract be terminated and renewed under this option.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as determined by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner satisfies 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
   
   Option 2: Increase to Budget
   
   Eligibility: This option is readily available to owners whose contract leas are below or equal to comparable market leas. An owner may minimize their leas to market levels to participate under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved project spending plan. These rents may not go beyond market similar levels, as demonstrated by a lease comparability study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract leas are adjusted to current market levels. The owner should send a rent comparability research study which is utilized to set the leas 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 particular tasks whose rents surpass market similar levels as identified by a rent comparability study. Typically, this applies to projects whose mortgages are insured 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 jobs can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, rents are reduced to a market comparable level as demonstrated by a rent comparability study.
   
   Mortgage Restructuring: The owner may request that their eligible mortgage be reorganized into a primary mortgage and secondary financial obligation. The brand-new main mortgage will be sized so that market similar leas suffice to support the financial obligation service on that mortgage. Use constraints will stay in place at the residential or commercial property so long as the secondary financial obligation balance remains. If the task can stay financially feasible regardless of a rent reduction to market levels, then no mortgage restructuring might be required.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All inquiries regarding a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This is available to tasks which are exempt from restructuring under MAHRA. This normally implies that the task is not subject to an FHA-insured mortgage, however rather has a traditional 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 spending plan (topped by market leas as determined by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract leas will be changed up each year by the Operating Cost Adjustment Factor released for the locality. This multiplicative rent change is published by HUD in October of each year and works in February of the list below year. The OCAF is based upon a range of market signs and is intended to record the effects 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 needed to restore under this Option. This normally includes projects 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 rents upon HAP renewal depend upon each job's particular HAP contract, Use Agreement and, if relevant, Plan of Action. Please review those documents and contact your HUD Account Executive with concerns concerning alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent adjustment mechanisms are available to your project differ depending upon the HAP contract, Use Agreement, and Strategy. Please evaluate those files and contact your HUD Account Executive with questions relating to choices for your residential or commercial property. Many Preservation jobs may ask for a budget-based rent boost to assist with unforeseen scenarios at a residential or commercial property or to attend to physical conditions requires.
   
   Forms and files for Option 5:
   
   - The job's Use Agreement ought 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 might choose to not restore their HAP contract upon expiration. This does not use to owners subject to a contractual obligation to renew the HAP agreement arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner needs to offer HUD and renters notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified renters will be released boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to opt out of restoring their HAP agreement can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws might affect an owner's capability 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 obligations under these laws.
   
   If you are preparing to pull out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program permits HUD to make sure that affordable housing remains 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 also take part 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 project of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs provide a variety of benefits to owners who wish to make sure long-lasting preservation of the housing help at their residential or commercial property.