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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 offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP agreements. The information provided here is not extensive and instead is planned to assist owners browse the alternatives available to them. For full directions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For specific concern about a project's eligibility to renew a HAP agreement, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This choice is readily available to owners whose agreement leas are listed below similar market rents as determined by a rent comparability research study. An owner may request that their qualified current HAP agreement be terminated and renewed under this choice.
   
   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 certain requirements to certify under the discretionary requirements explained 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 alternative is available to owners whose agreement leas are listed below or equivalent to equivalent market rents. An owner may lower 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 job budget. These rents might not go beyond market comparable levels, as demonstrated by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract rents are changed to existing market levels. The owner needs to send a rent comparability 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 option is readily available to certain projects whose rents surpass market equivalent levels as figured out by a lease comparability research study. Typically, this applies to tasks whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to reorganize an owner's mortgage so that financial obligation service is reduced to a level that can be supported by market equivalent levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, rents are decreased to a market comparable level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner may request that their eligible mortgage be restructured into a main mortgage and secondary debt. The new main mortgage will be sized so that market similar 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 stays. If the task can stay financially feasible despite a rent decrease to market levels, then no mortgage restructuring may be required.
   
   More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market website. All questions concerning a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is available to jobs which are exempt from restructuring under MAHRA. This usually implies that the job is not subject to an FHA-insured mortgage, but instead has a traditional mortgage or is tax-credit funded.
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved spending plan (capped by market rents as identified by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be changed upward each year by the Operating Cost Adjustment Factor published for the locality. This multiplicative rent change is published by HUD in October of each year and works in February of the following year. The OCAF is based upon a range of market indications and is planned to record the effects of inflation and other market factors 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 tasks based on a long-lasting HUD usage arrangement are needed to renew under this Option. This normally consists of 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 leas upon HAP renewal depend upon each task's specific HAP agreement, Use Agreement and, if appropriate, Plan of Action. Please review those documents and contact your HUD Account Executive with questions relating to alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent adjustment systems are readily available to your project vary depending upon the HAP contract, Use Agreement, and Plan of Action. Please evaluate those files and call your HUD Account Executive with questions relating to alternatives for your residential or commercial property. Many Preservation jobs might request a budget-based lease increase to help with unforeseen scenarios at a residential or commercial property or to deal with physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The task's Use Agreement should be examined 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 might choose to not renew their HAP contract upon expiration. This does not use to owners subject to a legal responsibility to restore the HAP agreement arising from an Usage Agreement that is attached to the residential or commercial property.
   
   An owner must offer HUD and renters notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified renters will be issued enhanced coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to choose out of restoring their HAP agreement can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and regional laws may affect 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 responsibilities under these laws.
   
   If you are preparing to opt out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program enables HUD to make sure that economical housing stays readily available in your neighborhood even if you do not wish to renew 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 restore 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 provides 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 conservation of the housing support at their residential or commercial property.