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1. HUD Partners.
2. Multifamily Housing - Section 8 Contract Renewal Options
Section 8 Contract Renewal Options
Welcome to the Section 8 Housing Assistance Payment Contract Renewal Options website. This resource includes descriptions of options available to owners of Section 8 HAP-assisted residential or commercial properties who want to restore their HAP contracts. The information provided here is not extensive and rather is planned to help owners browse the choices offered to them. For full guidelines and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
For specific concern about a project's eligibility to renew a HAP agreement, please call your regional HUD Multifamily Account Executive.
Option 1: Mark up to Market
Eligibility: This option is offered to owners whose contract leas are listed below equivalent market rents as identified by a lease comparability study. An owner may ask for that their eligible existing HAP agreement be terminated and restored under this alternative.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, leas are set at market equivalent levels, as identified by an
owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner satisfies certain requirements to certify under the discretionary criteria 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 submits
Option 2: Mark up to Budget
Eligibility: This choice is available to owners whose agreement rents are listed below or equivalent to similar market leas. An owner might decrease their rents to market levels to get involved under Option 2.
Renewal Rent Increase: At HAP renewal, rents are set at a level needed to support a HUD-approved job budget. These leas might not surpass market similar levels, as shown by a rent comparability study.
Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement leas are adapted to existing market levels. The owner must submit a rent 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 alternative is available to specific jobs whose leas go beyond market similar levels as identified by a rent comparability research study. Typically, this uses to tasks whose mortgages are insured by the Federal Housing Administration. Congress approved HUD the authority to
restructure an owner's mortgage so that financial obligation service is minimized to a level that can be
supported by market equivalent levels. If projects can
Term: twenty years.
Annual Rent Increase: At HAP renewal, rents are decreased to a market equivalent level as demonstrated by a rent comparability study.
Mortgage Restructuring: The owner may ask for that their eligible mortgage be restructured into a primary mortgage and secondary debt. The new primary mortgage will be sized so that market comparable rents are adequate to support the financial obligation service on that mortgage. Use restrictions will stay in place at the residential or commercial property so long as the secondary debt balance stays. If the job can stay financially feasible regardless of a rent decrease to market levels, then no mortgage restructuring may be
required.
More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market website. All inquiries relating to a HAP renewal under Option 3 need to be directed to
m2minfo@hud.gov.
Option 4: Exception Projects
Eligibility: This option is offered to tasks which are exempt from reorganizing under MAHRA. This normally implies 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 twenty years.
Rent Increase: At HAP renewal, leas are either adjusted by the Operating expense Adjustment Factor or by a HUD-approved budget (topped by market rents as figured out by a Lease Comparability Study), whichever is lower.
Annual Rent Adjustment: The contract leas will be changed up each year by the Operating expense Adjustment Factor published for the locality. This multiplicative rent adjustment is published by HUD in October of each year and works in February of the following year. The OCAF is based upon a variety of market indicators and is planned to record the results of inflation and other market factors on the expense of running rental
housing.
Forms and files for Option 4:
Section 8 Renewal Policy Guidebook, Chapter 6
Option 5: Preservation Projects
Eligibility: Certain tasks subject to a long-term HUD usage agreement are needed to restore under this Option. This generally 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 rents upon HAP renewal depend on each job's particular HAP contract, Use
Agreement and, if relevant, Plan of Action. Please review those documents and contact your HUD Account Executive with concerns concerning choices for your
residential or commercial property.
Annual Rent Adjustment: Which rent modification mechanisms are available to your task differ depending upon the HAP agreement, Use Agreement, and Strategy. Please review those documents and contact your HUD Account Executive with questions regarding choices for your residential or commercial property. Many Preservation tasks might request a budget-based rent boost to assist with unexpected circumstances at a residential or commercial property or to deal with physical conditions needs.
Forms and documents for Option 5:
- The task's Use Agreement must be reviewed 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 might elect to not restore their HAP agreement upon expiration. This does not use to owners based on a legal commitment to restore the HAP contract resulting from an Usage Agreement that is attached to the residential or commercial property.
An owner must provide HUD and renters notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible renters will be provided improved vouchers
pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to choose out of restoring their HAP contract can be
discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local 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 advise an owner of their obligations under these laws.
If you are planning to decide out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This
program permits HUD to guarantee that cost effective housing stays 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 eligible to restore their
HAP agreement under Option 1 or 2 may also participate in the Section 8 Preservation Efforts programs described in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program supplies incentives for the assignment of a HAP contract to a nonprofit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs supply a variety of advantages to owners who want to make sure long-term conservation of the housing help at their residential or commercial property.
