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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 consists of descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The information provided here is not detailed and rather is planned to assist owners browse the choices readily 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 job's eligibility to restore a HAP contract, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This option is readily available to owners whose contract rents are listed below similar market rents as figured out by a rent comparability research study. An owner may request that their eligible current HAP contract be terminated and restored under this choice.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market equivalent levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner meets specific criteria to qualify under the discretionary criteria described 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 option is readily available to owners whose agreement rents are below or equal to similar market rents. An owner may reduce their rents to market levels to get involved 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 may not go beyond market comparable levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the agreement rents are gotten used to present market levels. The owner should send a rent comparability research study which is utilized to set the rents 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 offered to specific tasks whose leas exceed market comparable levels as identified by a lease comparability research study. Typically, this applies to jobs 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 minimized 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 decreased to a market comparable 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 subordinate financial obligation. The new primary mortgage will be sized so that market comparable rents suffice to support the financial obligation service on that mortgage. Use constraints will stay in place 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 lease decrease 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 website. All queries concerning a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This alternative is available to tasks which are exempt from reorganizing under MAHRA. This generally indicates that the job is not subject to an FHA-insured mortgage, but instead has a conventional mortgage or is tax-credit financed.
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, leas are either adjusted by the Operating Cost Adjustment Factor or by a HUD-approved spending plan (capped by market rents as determined by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The agreement leas will be adjusted up each year by the Operating Cost Adjustment Factor published for the area. This multiplicative rent change is released by HUD in October of each year and is reliable in February of the list below year. The OCAF is based upon a variety of market indications and is intended to capture the effects of inflation and other market elements on the cost of operating 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 agreement are required to restore under this Option. This typically includes jobs 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 on each job's particular HAP contract, Use Agreement and, if relevant, Plan of Action. Please examine those documents and contact your HUD Account Executive with questions regarding options for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent modification mechanisms are readily available to your task differ depending upon the HAP contract, Use Agreement, and Strategy. Please evaluate those documents and contact your HUD Account Executive with concerns relating to choices for your residential or commercial property. Many Preservation jobs might request a budget-based lease increase to help with unexpected situations at a residential or commercial property or to deal with physical conditions needs.
   
   Forms and files 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 might elect to not restore their HAP contract upon expiration. This does not use to owners subject to a legal responsibility to renew the HAP contract resulting from an Use Agreement that is connected to the residential or commercial property.
   
   An owner must provide HUD and occupants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants will be released enhanced coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to decide out of restoring their HAP contract can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws might impact 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 responsibilities under these laws.
   
   If you are preparing to opt out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program allows HUD to ensure that cost effective housing stays readily available in your community even if you do not want to restore your HAP contract.
   
   Forms and documents for Option 6:
   
   HAP Renewal Request Form (HUD-9624)
   
   
   Fact Sheet
   
   
   Section 8 Renewal Policy Guidebook, Chapter 8
   
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is eligible to restore their HAP contract under Option 1 or 2 might also take part in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program offers rewards for the task of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs provide a variety of benefits to owners who want to make sure long-term preservation of the housing support at their residential or commercial property.
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