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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 includes descriptions of alternatives readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The details offered here is not comprehensive and instead is planned to assist owners browse the choices readily available to them. For complete instructions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For particular question about a project's eligibility to renew a HAP agreement, please contact your regional HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This alternative is readily available to owners whose agreement rents are below comparable market rents as figured out by a rent comparability study. An owner might request that their eligible current HAP contract be terminated and under this choice.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market similar levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner satisfies particular requirements 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 alternative is offered to owners whose contract leas are listed below or equal to similar market leas. An owner might decrease their leas 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 go beyond market equivalent levels, as demonstrated by a lease comparability study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the agreement rents are adapted to existing market levels. The owner must submit a lease comparability research 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 choice is available to certain jobs whose leas surpass market comparable levels as identified by a rent comparability study. Typically, this uses to projects whose mortgages are insured by the Federal Housing Administration. Congress gave HUD the authority to reorganize an owner's mortgage so that debt 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 minimized to a market comparable level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner might request that their qualified mortgage be reorganized into a main mortgage and secondary debt. The new primary mortgage will be sized so that market comparable leas are adequate to support the financial obligation service on that mortgage. Use restrictions will remain in place at the residential or commercial property so long as the subordinate financial obligation balance remains. If the task can stay financially feasible despite a rent decrease 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 choice is offered to tasks which are exempt from restructuring under MAHRA. This usually suggests that the task is not subject to an FHA-insured mortgage, however rather has a standard 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 plan (capped by market leas as determined 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 published for the region. This multiplicative lease change is published by HUD in October of each year and is effective in February of the following year. The OCAF is based upon a range of market signs and is planned to catch the impacts 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 projects based on a long-term HUD use contract are needed to restore under this Option. This typically consists of tasks with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
   
   Term: Varies depending upon HAP contract requirements.
   
   Rent Increase at HAP Renewal: The leas upon HAP renewal depend upon each project's specific HAP contract, Use Agreement and, if suitable, Plan of Action. Please evaluate those files and contact your HUD Account Executive with concerns regarding options for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent adjustment systems are readily available to your project vary depending on the HAP contract, Use Agreement, and Plan of Action. Please evaluate those documents and contact your HUD Account Executive with questions relating to choices for your residential or commercial property. Many Preservation projects might ask for a budget-based rent increase to assist with unpredicted scenarios at a residential or commercial property or to address physical conditions needs.
   
   Forms and files for Option 5:
   
   - The job's Use Agreement must be reviewed to identify 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 use to owners based on a legal obligation to renew the HAP contract resulting from an Usage Agreement that is attached to the residential or commercial property.
   
   An owner needs to offer HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified renters will be released boosted coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to pull out of restoring their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws might impact 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 commitments under these laws.
   
   If you are planning to choose out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program permits HUD to ensure that budget friendly housing remains readily available in your neighborhood even if you do not wish to restore 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
   
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is qualified to renew their HAP contract under Option 1 or 2 might also get involved 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 not-for-profit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs offer a range of benefits to owners who wish to guarantee long-lasting preservation of the housing support at their residential or commercial property.