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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 options readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP contracts. The info supplied here is not comprehensive and instead is intended to assist owners navigate the choices offered to them. For full directions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For particular concern about a job's eligibility to renew a HAP contract, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This choice is offered to owners whose agreement rents are below comparable market leas as identified by a rent comparability study. An owner may request that their eligible existing HAP agreement be ended and restored under this option.
   
   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 topped at 150% of Fair Market Rents unless the owner satisfies certain criteria 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: Increase to Budget
   
   Eligibility: This alternative is offered to owners whose contract leas are below or equal to equivalent market rents. An owner might decrease their rents 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 project budget plan. These rents might not surpass market equivalent levels, as demonstrated by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract rents are gotten used to present market levels. The owner needs to send a lease comparability study which is used to set the leas on the 5th, 10th, and 15th anniversaries of the HAP agreement.
   
   Forms and files for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This option is available to specific jobs whose leas exceed market similar levels as figured out by a rent comparability research study. Typically, this uses to tasks whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to restructure an owner's mortgage so that debt service is minimized to a level that can be supported by market equivalent levels. If projects can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, leas are decreased to a market comparable level as shown by a lease comparability study.
   
   Mortgage Restructuring: The owner may request that their qualified mortgage be restructured into a primary mortgage and subordinate financial obligation. The brand-new main mortgage will be sized so that market similar rents suffice to support the financial obligation service on that mortgage. Use constraints will remain in location at the residential or commercial property so long as the secondary financial obligation balance remains. If the project can remain economically feasible regardless of a lease decrease 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 site. All questions concerning a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is offered to tasks which are exempt from reorganizing under MAHRA. This typically implies that the task is not subject to an FHA-insured mortgage, however instead has a standard mortgage or is tax-credit funded.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, leas are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget (topped by market leas as figured out by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be changed up each year by the Operating expense Adjustment Factor released for the region. This multiplicative lease modification is by HUD in October of each year and works in February of the following year. The OCAF is based on a range of market indications and is meant to record the results of inflation and other market aspects on the expense of operating rental housing.
   
   Forms and files for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain jobs subject to a long-lasting HUD usage contract are needed to restore under this Option. This normally 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 project's particular HAP agreement, Use Agreement and, if relevant, Plan of Action. Please examine those files and call your HUD Account Executive with concerns concerning choices for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease modification systems are readily available to your job differ depending on the HAP agreement, Use Agreement, and Strategy. Please examine those documents and contact your HUD Account Executive with concerns regarding choices for your residential or commercial property. Many Preservation projects may request a budget-based lease boost to help with unpredicted situations at a residential or commercial property or to deal with physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The project's Use Agreement ought to be reviewed 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 choose to not renew their HAP contract upon expiration. This does not use to owners based on a contractual commitment to restore the HAP contract arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner needs to supply HUD and renters notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified renters will be released enhanced vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to decide out of renewing their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws may impact an owner's ability to opt-out of renewing 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 preparing to pull out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program allows HUD to guarantee that affordable housing remains readily available in your community 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 renew their HAP agreement under Option 1 or 2 may also participate 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 project of a HAP contract to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs offer a variety of advantages to owners who wish to guarantee long-term preservation of the housing assistance at their residential or commercial property.