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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 includes descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP agreements. The info provided here is not extensive and instead is intended to assist owners browse the choices available to them. For complete instructions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
   
   For particular question 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 choice is available to owners whose contract rents are below similar market rents as figured out by a rent comparability research study. An owner may ask for that their qualified present HAP contract be and restored under this choice.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills certain criteria to qualify 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 submits
   
   Option 2: Increase to Budget
   
   Eligibility: This alternative is readily available to owners whose agreement leas are below or equal to comparable market leas. 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 project budget plan. These rents may not exceed market similar levels, as demonstrated by a lease comparability study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the contract leas are gotten used to present market levels. The owner needs to submit a rent comparability research study which is used to set the rents 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 available to specific jobs whose leas exceed market similar levels as identified by a lease comparability study. Typically, this applies to projects 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 decreased to a level that can be supported by market similar levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, rents are lowered to a market similar level as shown by a rent comparability research study.
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   Mortgage Restructuring: The owner might ask for that their eligible mortgage be reorganized into a primary mortgage and secondary debt. The brand-new main mortgage will be sized so that market comparable 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 secondary debt balance remains. If the task can stay economically practical in spite of a rent reduction to market levels, then no mortgage restructuring may be needed.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market site. All queries regarding a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is offered to tasks which are exempt from restructuring under MAHRA. This usually implies that the task is exempt to an FHA-insured mortgage, but rather 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 (capped by market rents as determined by a Rent Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The contract rents will be changed upward 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 works in February of the list below year. The OCAF is based upon a variety of market signs and is intended to catch the results 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 use agreement are needed to restore under this Option. This usually consists of jobs 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 on each task's particular HAP contract, Use Agreement and, if applicable, Plan of Action. Please evaluate those files and contact your HUD Account Executive with questions regarding alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease adjustment mechanisms are offered to your job vary depending on the HAP contract, Use Agreement, and Plan of Action. Please examine those files and call your HUD Account Executive with questions relating to alternatives for your residential or commercial property. Many Preservation jobs may request a budget-based lease increase to help with unanticipated situations at a residential or commercial property or to resolve physical conditions requires.
   
   Forms and documents for Option 5:
   
   - The job's Use Agreement ought to be evaluated to figure out 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
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   Eligibility: An owner may elect to not restore their HAP contract upon expiration. This does not apply to owners subject to a legal obligation to renew the HAP contract resulting from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner needs to supply HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible 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 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 recommend an owner of their commitments under these laws.
   
   If you are preparing to pull out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program enables HUD to ensure that budget-friendly housing remains offered 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 qualified to renew their HAP contract 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 provides rewards for the task of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs supply a variety of benefits to owners who want to guarantee long-term preservation of the housing assistance at their residential or commercial property.