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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 contains descriptions of alternatives offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The details provided here is not thorough and rather is planned to help owners navigate the alternatives offered to them. For complete guidelines and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
   
   For particular question about a project's eligibility to restore a HAP contract, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This alternative is available to owners whose agreement leas are listed below comparable market rents as figured out by a rent comparability research study. An owner might request that their eligible current HAP agreement be ended and restored 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 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 option is available to owners whose agreement leas are listed below or equal to comparable market rents. An owner may minimize their leas to market levels to participate under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved job budget. These rents might not surpass market equivalent levels, as demonstrated by a rent comparability research study.
   
   Comparability Adjustment: At each fifth year anniversary of the HAP contract renewal, the contract leas are adjusted to current market levels. The owner must send a lease 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 option is available to certain projects whose leas go beyond market comparable levels as figured out by a lease comparability research study. Typically, this applies to tasks whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to restructure an owner's mortgage so that debt service is decreased to a level that can be supported by market comparable levels. If projects can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are reduced to a market comparable level as shown by a rent comparability study.
   
   Mortgage Restructuring: The owner may ask for that their eligible mortgage be reorganized into a main mortgage and subordinate financial obligation. The new primary mortgage will be sized so that market similar rents suffice to support the debt service on that mortgage. Use limitations will remain in location at the residential or commercial property so long as the secondary debt balance remains. If the task can stay economically practical regardless of a lease reduction to market levels, then no mortgage restructuring may be needed.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market site. All inquiries relating to a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is readily available to projects which are exempt from restructuring under MAHRA. This generally implies that the task is exempt to an FHA-insured mortgage, but instead has a conventional mortgage or is tax-credit funded.
   
   Term: Between 1 and 20 years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating expense Adjustment Factor or by a HUD-approved budget (topped by market leas as figured out by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract rents will be adjusted upward each year by the Operating Cost Adjustment Factor published for the region. 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 on a range of market indicators and is meant to record the impacts 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 tasks based on a long-term HUD usage contract are required to renew under this Option. This typically includes jobs 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 on each task's specific HAP contract, Use Agreement and, if relevant, Strategy. 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 mechanisms are available to your job differ depending on the HAP agreement, Use Agreement, and Strategy. Please review those documents and call your HUD Account Executive with concerns regarding alternatives for your residential or commercial property. Many Preservation projects may ask for a budget-based lease boost to help with unforeseen situations at a residential or commercial property or to resolve physical conditions needs.
   
   Forms and files for Option 5:
   
   - The project's Use Agreement must 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 may choose to not renew their HAP contract upon expiration. This does not apply to owners based on a legal obligation to renew the HAP agreement arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner must offer HUD and tenants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified tenants will be provided boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to decide 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 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 planning to decide out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program allows HUD to make sure that budget-friendly housing remains offered 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
   penieltech.com
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is qualified to restore their HAP agreement under Option 1 or 2 might also take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program offers rewards for the assignment of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital ensures that the HAP renewal These programs offer a variety of benefits to owners who wish to guarantee long-term conservation of the housing support at their residential or commercial property.