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1. HUD Partners. 2. 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 consists of descriptions of options 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 detailed and rather is intended to assist owners navigate the alternatives available to them. For full 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 agreement, please contact your regional HUD Multifamily Account Executive.

Option 1: Mark up to Market

Eligibility: This choice is readily available to owners whose agreement leas are listed below equivalent market rents as determined by a rent comparability research study. An owner might ask for that their qualified existing HAP contract be terminated and restored under this option.

Term: Between 5 and twenty 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 fulfills certain requirements to qualify under the discretionary requirements 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: Mark up to Budget

Eligibility: This choice is offered to owners whose agreement rents are listed below or equal to equivalent market leas. An owner may reduce their leas to market levels to get involved under Option 2.

Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved project budget. These rents might not exceed market similar levels, as shown by a rent comparability study.

Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract rents are adapted to existing market levels. The owner needs to submit 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 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 leas exceed market equivalent levels as determined by a lease comparability research study. Typically, this uses to tasks whose mortgages are insured 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 projects can

Term: 20 years.

Annual Rent Increase: At HAP renewal, leas are minimized to a market equivalent level as demonstrated by a lease comparability research study.

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 equivalent leas suffice to support the financial obligation service on that mortgage. Use limitations will remain in location at the residential or commercial property so long as the secondary financial obligation balance remains. If the task can stay economically practical in spite 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 regarding a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.

Option 4: Exception Projects

Eligibility: This option is offered to jobs which are exempt from reorganizing under MAHRA. This normally means that the job is exempt to an FHA-insured mortgage, however rather has a standard mortgage or is tax-credit financed.

Term: Between 1 and 20 years.

Rent Increase: At HAP renewal, leas are either changed by the Operating expense Adjustment Factor or by a HUD-approved budget plan (topped by market rents as figured out by a Lease Comparability Study), whichever is lower.

Annual Rent Adjustment: The contract leas will be changed upward each year by the Operating Cost Adjustment Factor published for the region. This multiplicative lease modification 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 indicators and is intended to catch the impacts 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 jobs based on a long-term HUD usage arrangement are required 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 leas upon HAP renewal depend upon each job's specific HAP contract, Use Agreement and, if applicable, Plan of Action. Please examine those documents and call your HUD Account Executive with concerns regarding alternatives for your residential or commercial property.

Annual Rent Adjustment: Which rent change mechanisms are offered to your project differ depending on the HAP agreement, Use Agreement, and Strategy. Please evaluate those documents and contact your HUD Account Executive with concerns concerning options for your residential or commercial property. Many Preservation projects might ask for a budget-based rent boost to assist with unexpected scenarios at a residential or commercial property or to resolve physical conditions needs.

Forms and documents for Option 5:

- The task's Use Agreement ought to be examined to figure out HAP renewal options.
HAP Renewal 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 restore their HAP agreement upon expiration. This does not use to owners subject to a legal commitment to restore the HAP agreement 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 contract. Upon expiration, eligible renters will be provided improved coupons pursuant to 42 U.S.C. § 1437f( t).

Full HUD requirements for an owner who wants to pull out of renewing their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws might impact an owner's capability to opt-out of renewing their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not recommend an owner of their responsibilities under these laws.

If you are preparing to decide out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program allows HUD to guarantee that budget-friendly housing stays readily available in your neighborhood even if you do not wish 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 renew their HAP agreement under Option 1 or 2 may likewise take part 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 contract to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs provide a range of benefits to owners who wish to guarantee long-term preservation of the housing support at their residential or commercial property.