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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 web page. This resource includes descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP agreements. The details offered here is not thorough and rather is meant to assist owners browse the choices readily available to them. For complete directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
   
   For specific concern about a project's eligibility to restore a HAP contract, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This option is offered to owners whose contract rents are listed below comparable market leas as identified by a rent comparability research study. An owner may request that their eligible current HAP contract be terminated and renewed under this choice.
   
   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 topped at 150% of Fair Market Rents unless the owner fulfills specific requirements to qualify under the discretionary requirements described 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 submits
   
   Option 2: Mark up to Budget
   
   Eligibility: This alternative is offered to owners whose contract rents are below or equivalent to similar market rents. An owner might minimize their leas to market levels to participate under Option 2.
   
   Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved job budget plan. These rents might not surpass market equivalent levels, as shown by a rent comparability research study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the contract leas are gotten used to current market levels. The owner should submit a rent comparability research 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 option is offered to specific projects whose rents surpass market similar levels as figured out by a lease comparability research study. Typically, this uses to jobs whose mortgages are guaranteed by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that financial obligation service is reduced to a level that can be supported by market equivalent levels. If jobs can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, leas are decreased to a market comparable level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner may ask for that their eligible mortgage be reorganized into a primary mortgage and secondary financial obligation. The brand-new primary mortgage will be sized so that market equivalent leas are sufficient to support the debt service on that mortgage. Use restrictions will remain in location at the residential or commercial property so long as the subordinate debt balance stays. If the project can remain despite a lease decrease 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 website. All questions concerning a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is readily available to jobs which are exempt from restructuring under MAHRA. This typically suggests that the project is not subject to an FHA-insured mortgage, but instead 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 spending plan (topped by market leas as figured out by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be adjusted upward each year by the Operating Cost Adjustment Factor published for the locality. This multiplicative lease adjustment is published by HUD in October of each year and works in February of the following year. The OCAF is based on a variety of market signs and is planned to catch the impacts of inflation and other market factors on the cost of running 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 contract are needed to renew 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 upon HAP agreement requirements.
   
   Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each job's specific HAP agreement, Use Agreement and, if applicable, Plan of Action. Please evaluate those files and call your HUD Account Executive with concerns regarding alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease modification mechanisms are available to your job vary depending upon the HAP contract, Use Agreement, and Plan of Action. Please evaluate those files and contact your HUD Account Executive with questions relating to choices for your residential or commercial property. Many Preservation tasks may ask for a budget-based rent boost to assist with unanticipated scenarios at a residential or commercial property or to resolve physical conditions needs.
   
   Forms and files for Option 5:
   
   - The project's Use Agreement need to be reviewed to figure out HAP renewal alternatives.
   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 renew their HAP agreement upon expiration. This does not apply to owners based on a contractual obligation to restore the HAP contract arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner should offer HUD and tenants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified occupants will be released enhanced vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to pull 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 regional laws may 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 advise an owner of their obligations under these laws.
   
   If you are preparing to choose out of HAP agreement renewal, please examine the 8( bb) Preservation Tool. This program allows HUD to ensure that budget friendly housing remains readily available 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 likewise get involved in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program offers incentives for the assignment 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 range of advantages to owners who want to guarantee long-lasting conservation of the housing assistance at their residential or commercial property.
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