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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 consists of descriptions of choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The info supplied here is not comprehensive and instead is intended to help owners navigate the alternatives readily available to them. For full instructions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For specific concern about a task's eligibility to renew a HAP agreement, please contact your regional HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This alternative is readily available to owners whose agreement rents are listed below comparable market rents as identified by a rent comparability study. An owner might request that their eligible current HAP agreement be ended 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 figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills specific criteria to qualify under the discretionary criteria described at Section 9-3.
   
   Forms and for Option 1:
   
   Worksheets for Mark-up-to-Market. Blank worksheets as PDF files
   
   
   Sample worksheets as PDF files
   
   
   Worksheets as Microsoft Excel submits
   
   Option 2: Increase to Budget
   
   Eligibility: This alternative is readily available to owners whose agreement rents are listed below or equivalent to equivalent market rents. An owner may reduce their rents 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 job budget. These leas may not go beyond market equivalent levels, as shown by a rent comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the agreement rents are adapted to present market levels. The owner should send a lease comparability research study which is used to set the leas 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 projects whose rents go beyond market equivalent levels as figured out by a rent 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 financial obligation service is lowered to a level that can be supported by market similar levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are reduced to a market similar level as demonstrated by a rent comparability study.
   
   Mortgage Restructuring: The owner might request that their eligible mortgage be restructured into a primary mortgage and secondary debt. The new primary mortgage will be sized so that market equivalent rents suffice to support the financial obligation service on that mortgage. Use limitations will remain in place at the residential or commercial property so long as the subordinate debt balance stays. If the task can stay financially viable despite a rent reduction to market levels, then no mortgage restructuring may be needed.
   
   More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All queries concerning a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is available to projects which are exempt from restructuring under MAHRA. This normally means that the project is not subject to an FHA-insured mortgage, however rather has a traditional mortgage or is tax-credit financed.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, leas are either adjusted by the Operating expense Adjustment Factor or by a HUD-approved budget plan (capped by market rents as identified by a Rent Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The agreement leas will be changed up each year by the Operating Cost Adjustment Factor published for the region. This multiplicative rent adjustment is released by HUD in October of each year and is efficient in February of the following year. The OCAF is based on a range of market indicators and is planned to catch the impacts of inflation and other market elements on the expense 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-lasting HUD use arrangement are needed to restore under this Option. This typically consists of jobs with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
   
   Term: Varies depending upon HAP agreement requirements.
   
   Rent Increase at HAP Renewal: The leas upon HAP renewal depend on each task's particular HAP contract, Use Agreement and, if appropriate, Strategy. Please examine those files and call your HUD Account Executive with concerns regarding alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change mechanisms are offered to your project differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please examine those documents and contact your HUD Account Executive with questions concerning alternatives for your residential or commercial property. Many Preservation tasks may request a budget-based rent increase to assist with unanticipated situations at a residential or commercial property or to resolve physical conditions requires.
   
   Forms and files for Option 5:
   
   - The task's Use Agreement need to 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 might elect to not renew their HAP agreement upon expiration. This does not apply to owners based on a legal responsibility to renew the HAP agreement 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 occupants will be issued improved coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to pull out of renewing their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws might 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 obligations under these laws.
   
   If you are planning to decide out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program allows HUD to make sure that budget friendly housing remains available in your community even if you do not wish to renew 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
   azprimepropertymanagement.com
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is eligible to renew their HAP contract under Option 1 or 2 might 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 task of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs offer a range of benefits to owners who want to ensure long-term preservation of the housing help at their residential or commercial property.