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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 agreements. The information supplied here is not extensive and rather is meant to help owners navigate the alternatives readily available to them. For complete instructions and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.
   
   For specific question about a job's eligibility to renew a HAP contract, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This alternative is offered to owners whose agreement rents are below similar market leas as figured out by a rent comparability research study. An owner might ask for that their qualified present HAP agreement be terminated and renewed under this option.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas 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 satisfies specific criteria to certify under the discretionary requirements 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 files
   
   Option 2: Mark up to Budget
   
   Eligibility: This alternative is offered to owners whose contract leas are below or equal to comparable market rents. An owner may minimize their rents to market levels to take part under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved project spending plan. These rents may not surpass market equivalent levels, as shown by a lease comparability study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement rents are adapted to current market levels. The owner must submit a lease comparability study which is used 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 certain tasks whose rents go beyond market similar levels as figured out by a lease comparability 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 financial obligation service is reduced to a level that can be supported by market equivalent levels. If tasks can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, leas are reduced to a market similar level as demonstrated by a lease comparability study.
   
   Mortgage Restructuring: The owner might ask for that their qualified mortgage be restructured into a primary mortgage and subordinate debt. The brand-new main mortgage will be sized so that market equivalent rents suffice to support the financial obligation service on that mortgage. Use restrictions will remain in location at the residential or commercial property so long as the secondary financial obligation balance remains. If the task can remain financially viable regardless of a to market levels, then no mortgage restructuring might be needed.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. 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 available to jobs which are exempt from reorganizing under MAHRA. This usually implies that the job is not subject to an FHA-insured mortgage, but rather has a standard 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 budget plan (capped by market leas as identified by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be adjusted upward each year by the Operating expense Adjustment Factor released for the region. This multiplicative rent change 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 indicators and is meant to catch the results of inflation and other market aspects 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 projects subject to a long-term HUD usage arrangement are required to renew under this Option. This usually consists of 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 agreement, Use Agreement and, if applicable, Plan of Action. Please examine those documents and call your HUD Account Executive with concerns concerning alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent modification mechanisms are available to your task differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please examine those files and call your HUD Account Executive with questions relating to choices for your residential or commercial property. Many Preservation tasks might ask for a budget-based lease boost to help with unpredicted scenarios at a residential or commercial property or to resolve physical conditions requires.
   
   Forms and documents for Option 5:
   
   - The job's Use Agreement must be reviewed to identify HAP renewal alternatives.
   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 agreement upon expiration. This does not use to owners based on a legal obligation to restore the HAP contract resulting from an Use 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 occupants will be provided improved vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to opt out of renewing their HAP agreement 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 ability to opt-out of restoring their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their obligations under these laws.
   
   If you are planning to choose out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program enables HUD to ensure that inexpensive housing remains available in your community even if you do not want to restore your HAP contract.
   
   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 eligible to renew their HAP contract under Option 1 or 2 may likewise 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 contract to a not-for-profit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs offer a range of benefits to owners who want to ensure long-lasting preservation of the housing help at their residential or commercial property.