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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 wish to renew their HAP agreements. The info supplied here is not thorough and instead is intended to help owners browse the options offered to them. For complete directions and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
   
   For specific question about a project's eligibility to renew a HAP agreement, please call your regional HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This choice is offered to owners whose contract rents are listed below comparable market rents as identified by a lease comparability study. An owner may request that their eligible existing HAP contract be terminated and restored under this choice.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner satisfies 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 files
   
   Option 2: Increase to Budget
   
   Eligibility: This option is readily available to owners whose agreement rents are below or equal to comparable market rents. An owner might minimize their rents 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 plan. These leas may not exceed market comparable levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract rents are gotten used to current market levels. The owner must 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 files for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This alternative is available to certain projects whose leas surpass market comparable levels as figured out by a lease comparability research study. Typically, this uses to tasks whose mortgages are insured by the Federal Housing Administration. Congress gave HUD the authority to reorganize an owner's mortgage so that financial obligation service is decreased to a level that can be supported by market comparable levels. If tasks can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, rents are lowered to a market similar level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner may ask for that their eligible mortgage be restructured into a main mortgage and secondary financial obligation. The new main mortgage will be sized so that market similar leas are sufficient to support the debt service on that mortgage. Use limitations will stay in location at the residential or commercial property so long as the subordinate financial obligation balance stays. If the job can remain financially viable regardless 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 website. All questions 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 normally implies that the job is exempt 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 determined by a Rent Comparability Study), whichever is lesser.
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   Annual Rent Adjustment: The agreement leas will be changed up each year by the Operating Cost Adjustment Factor published for the region. This multiplicative rent modification is released by HUD in October of each year and works in February of the list below year. The OCAF is based on a range 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 based on a long-term arrangement are required to renew under this Option. This normally consists of tasks 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 rents upon HAP renewal depend on each task's particular HAP agreement, Use Agreement and, if appropriate, Plan of Action. Please review those documents and call your HUD Account Executive with questions concerning options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease adjustment mechanisms are available to your job vary depending upon the HAP contract, Use Agreement, and Strategy. Please evaluate those documents and contact your HUD Account Executive with questions concerning choices for your residential or commercial property. Many Preservation projects may ask for a budget-based rent increase to assist with unforeseen scenarios at a residential or commercial property or to resolve physical conditions needs.
   
   Forms and documents for Option 5:
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   - The task's Use Agreement should be examined to determine 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 choose to not restore their HAP agreement upon expiration. This does not apply to owners subject to a legal responsibility to restore the HAP agreement resulting from an Usage Agreement that is attached to the residential or commercial property.
   
   An owner must supply HUD and tenants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible renters will be issued improved vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants 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 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 commitments under these laws.
   
   If you are preparing to opt out of HAP agreement renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to ensure that budget friendly housing remains available in your community even if you do not wish to renew 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 agreement under Option 1 or 2 may likewise participate in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides incentives for the assignment of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs offer a range of advantages to owners who want to ensure long-lasting conservation of the housing support at their residential or commercial property.