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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 contains descriptions of options available to owners of Section 8 HAP-assisted residential or commercial properties who wish to their HAP contracts. The info provided here is not thorough and instead is planned to help owners navigate the choices offered to them. For full guidelines 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: Increase to Market
   
   Eligibility: This option is offered to owners whose agreement rents are listed below comparable market leas as figured out by a rent comparability study. An owner may ask for that their eligible current HAP agreement be terminated and renewed under this option.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market equivalent levels, as figured out by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner fulfills particular criteria to certify under the discretionary requirements described 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 choice is offered to owners whose contract leas are listed below or equal to equivalent market rents. An owner may decrease their leas to market levels to participate 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 may not exceed market similar levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement leas are adapted to existing market levels. The owner needs to submit a rent comparability study which is used to set the rents 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 alternative is offered to certain tasks whose leas surpass market comparable levels as determined by a rent comparability research study. Typically, this applies to projects whose mortgages are guaranteed 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: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are reduced to a market similar level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner might ask for that their eligible mortgage be restructured into a primary mortgage and subordinate debt. The new main mortgage will be sized so that market similar rents suffice to support the debt service on that mortgage. Use constraints will remain in location at the residential or commercial property so long as the subordinate financial obligation balance stays. If the project can remain economically viable regardless of a rent decrease 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 site. All questions regarding a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is offered to jobs which are exempt from reorganizing under MAHRA. This typically implies that the project is not subject to an FHA-insured mortgage, however instead has a standard mortgage or is tax-credit funded.
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, rents are either adjusted by the Operating Cost Adjustment Factor or by a HUD-approved spending plan (topped by market leas as figured out by a Lease 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 region. This multiplicative lease adjustment is released 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 indications and is planned to catch the results of inflation and other market aspects on the expense of running rental housing.
   
   Forms and documents for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain projects based on a long-term HUD use agreement are required to renew under this Option. This normally consists of jobs 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 leas upon HAP renewal depend on each project's particular HAP contract, Use Agreement and, if applicable, Plan of Action. 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 rent modification systems are available to your job differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please examine those documents and contact your HUD Account Executive with concerns relating to choices for your residential or commercial property. Many Preservation tasks may ask for a budget-based lease increase to assist with unpredicted situations at a residential or commercial property or to resolve physical conditions requires.
   
   Forms and documents for Option 5:
   
   - The task's Use Agreement need to be evaluated to figure out 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 may elect to not renew their HAP contract upon expiration. This does not use to owners based on a contractual responsibility to renew the HAP agreement arising from an Usage Agreement that is attached to the residential or commercial property.
   
   An owner should supply HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified renters will be provided enhanced vouchers 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 affect an owner's capability 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 responsibilities under these laws.
   
   If you are preparing to decide out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program enables HUD to make sure that budget-friendly housing stays readily available in your community even if you do not want to renew 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
   carincambodia.com
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is eligible to restore their HAP contract under Option 1 or 2 may also take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies incentives for the project of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs supply a range of benefits to owners who want to make sure long-term conservation of the housing help at their residential or commercial property.