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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 renew their HAP agreements. The details provided here is not comprehensive and instead is planned to help owners browse the options readily 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 question about a task's eligibility to renew a HAP agreement, please call your local HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This option is readily available to owners whose contract rents are listed below comparable market leas as identified by a lease comparability study. An owner might ask for that their eligible existing HAP agreement be terminated and renewed under this option.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market comparable levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills certain 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 files
   
   Option 2: Increase to Budget
   
   Eligibility: This choice is offered to owners whose contract leas are below or equal to comparable market leas. An owner may decrease their rents to market levels to take part under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved job spending plan. These rents 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 agreement rents are gotten used to present market levels. The owner needs to submit a lease comparability research study which is utilized to set the rents on the 5th, 10th, and 15th anniversaries of the HAP agreement.
   
   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 particular jobs whose leas exceed market comparable levels as determined by a lease comparability study. Typically, this applies to jobs whose mortgages are insured by the Federal Housing Administration. Congress approved HUD the authority to restructure an owner's mortgage so that debt service is lowered to a level that can be supported by market comparable levels. If tasks can
   
   Term: 20 years.
   hollandprop.com
   Annual Rent Increase: At HAP renewal, leas are reduced to a market similar level as demonstrated by a rent comparability study.
   
   Mortgage Restructuring: The owner might request that their qualified mortgage be reorganized into a main mortgage and subordinate financial obligation. The new main mortgage will be sized so that market equivalent rents are adequate to support the financial obligation service on that mortgage. Use constraints will remain in location at the residential or commercial property so long as the secondary financial obligation balance stays. If the project can remain financially practical despite a rent reduction to market levels, then no mortgage restructuring may 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 under Option 3 ought to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   regencymanagementinc.com
   Eligibility: This option is available to tasks which are exempt from restructuring under MAHRA. This generally indicates that the job is exempt to an FHA-insured mortgage, but rather has a traditional mortgage or is tax-credit financed.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, leas are either changed 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 agreement rents will be changed upward each year by the Operating Cost Adjustment Factor published for the locality. This multiplicative lease modification is published by HUD in October of each year and is reliable in February of the following year. The OCAF is based on a variety of market signs and is meant 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-lasting HUD use contract are needed to restore under this Option. This generally 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 particular HAP agreement, Use Agreement and, if applicable, Strategy. Please review those files and call your HUD Account Executive with questions concerning alternatives for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change mechanisms are readily available to your task differ depending on the HAP agreement, Use Agreement, and Strategy. Please review those files and call your HUD Account Executive with questions relating to alternatives for your residential or commercial property. Many Preservation tasks may ask for a budget-based lease increase to assist with unexpected scenarios at a residential or commercial property or to deal with physical conditions requires.
   
   Forms and files for Option 5:
   
   - The job's Use Agreement ought to be examined to determine HAP renewal alternatives.
   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 restore their HAP agreement upon expiration. This does not apply to owners based on a contractual commitment to renew the HAP agreement arising from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner needs to provide HUD and occupants notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, qualified tenants will be released improved coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to choose out of renewing their HAP contract 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 restoring their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their responsibilities under these laws.
   
   If you are preparing to opt out of HAP contract renewal, please evaluate the 8( bb) Preservation Tool. This program allows HUD to ensure that economical housing stays readily available in your neighborhood even if you do not wish to renew your HAP agreement.
   
   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 eligible to renew their HAP contract under Option 1 or 2 may also take part in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies rewards for the assignment of a HAP contract to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs offer a variety of advantages to owners who wish to ensure long-lasting conservation of the housing help at their residential or commercial property.