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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 consists of descriptions of alternatives offered to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The details provided here is not detailed and instead is planned to help owners browse the options available to them. For complete instructions and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.
   
   For specific question about a job's eligibility to renew a HAP agreement, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This choice is offered to owners whose contract leas are listed below equivalent market rents as identified by a rent comparability study. An owner might request that their eligible existing HAP contract be ended and renewed under this alternative.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner meets specific requirements to certify under the discretionary criteria explained 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 option is readily available to owners whose agreement rents are below or equal to similar market rents. An owner might decrease 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 leas might not go beyond market comparable levels, as shown by a lease comparability study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the contract leas are adapted to present market levels. The owner should send a rent comparability study which is utilized to set the leas 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 readily available to specific projects whose rents surpass market comparable levels as identified by a lease comparability research study. Typically, this uses to jobs whose mortgages are insured by the Federal Housing Administration. Congress approved HUD the authority to reorganize an owner's mortgage so that debt service is lowered to a level that can be supported by market equivalent levels. If jobs can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, rents are minimized to a market similar level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner might request that their eligible mortgage be restructured into a primary mortgage and subordinate financial obligation. The brand-new main mortgage will be sized so that market similar leas are sufficient to support the financial obligation service on that mortgage. Use restrictions will stay in place at the residential or commercial property so long as the secondary debt balance stays. If the project can remain economically practical despite a lease reduction to market levels, then no mortgage restructuring might be needed.
   
   More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All queries concerning a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is available to tasks which are exempt from reorganizing under MAHRA. This normally implies that the project is exempt to an FHA-insured mortgage, however rather has a conventional mortgage or is tax-credit financed.
   
   Term: Between 1 and 20 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 Rent Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The contract rents will be changed upward each year by the Operating expense Adjustment Factor released for the area. This multiplicative rent 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 variety of market signs and is intended to capture the effects of inflation and other market elements 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 tasks based on a long-lasting HUD usage contract are required to restore under this Option. This typically includes projects 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 rents upon HAP renewal depend on each task's particular HAP contract, Use Agreement and, if suitable, Strategy. Please examine those files and call your HUD Account Executive with questions relating to options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change systems are readily available to your project differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please review those files and call your HUD Account Executive with questions concerning alternatives for your residential or commercial property. Many Preservation projects might ask for a budget-based lease increase to assist with unanticipated situations at a residential or commercial property or to attend to physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The project's Use Agreement need to be evaluated to determine HAP renewal options.
   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 elect to not renew their HAP contract upon expiration. This does not apply to owners subject to a legal obligation to restore the HAP agreement arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner should provide HUD and occupants notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants will be issued enhanced vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to pull out of restoring their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws may affect an owner's ability to opt-out of restoring 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 planning to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program enables HUD to ensure that budget friendly housing stays offered in your community even if you do not want to renew your HAP agreement.
   
   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 restore their HAP contract under Option 1 or 2 may also get involved in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The provides incentives for the project of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs offer a variety of advantages to owners who wish to guarantee long-term preservation of the housing help at their residential or commercial property.