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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 options readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP agreements. The details supplied here is not detailed and instead is intended to help owners navigate the choices readily available to them. For complete directions and requirements for renewal of a HAP agreement, please refer to the Section 8 Renewal Policy Guide.
   
   For particular question about a job's eligibility to renew a HAP agreement, please call your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This choice is readily available to owners whose contract rents are listed below equivalent market rents as identified by a lease comparability research study. An owner may ask for that their qualified current HAP agreement be terminated and renewed under this choice.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills specific criteria to qualify under the discretionary requirements explained 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: Mark up to Budget
   
   Eligibility: This alternative is offered to owners whose contract rents are listed below or equivalent to equivalent market leas. An owner may reduce 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 task budget plan. These leas might not exceed market similar levels, as demonstrated by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the agreement leas are gotten used to existing 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 contract.
   
   Forms and files for Option 2:
   
   
   Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
   
   
   Option 3: Mark-to-Market
   
   Eligibility: This alternative is readily available to particular jobs whose leas surpass market comparable levels as figured out by a lease comparability study. Typically, this uses to projects whose are guaranteed by the Federal Housing Administration. Congress gave HUD the authority to reorganize an owner's mortgage so that financial obligation service is minimized to a level that can be supported by market similar 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 lease comparability study.
   
   Mortgage Restructuring: The owner might ask for that their qualified mortgage be restructured into a primary mortgage and subordinate financial obligation. The new primary mortgage will be sized so that market comparable leas are adequate to support the financial obligation service on that mortgage. Use constraints will remain in place at the residential or commercial property so long as the subordinate debt balance remains. If the task can remain financially viable regardless of a lease decrease to market levels, then no mortgage restructuring might be required.
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   More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market website. All inquiries concerning a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This alternative is offered to jobs which are exempt from restructuring under MAHRA. This normally implies that the job is exempt to an FHA-insured mortgage, however rather has a conventional mortgage or is tax-credit funded.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, leas are either changed by the Operating expense Adjustment Factor or by a HUD-approved budget plan (capped by market leas as determined by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The agreement rents will be changed up each year by the Operating expense Adjustment Factor released for the area. This multiplicative lease modification is released by HUD in October of each year and works in February of the following year. The OCAF is based on a range of market signs and is intended to capture the impacts of inflation and other market elements 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 jobs subject to a long-lasting HUD usage contract are needed to renew under this Option. This normally consists of tasks 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 task's specific HAP contract, Use Agreement and, if suitable, Plan of Action. Please review those files and call your HUD Account Executive with concerns relating to options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease adjustment systems are available to your project vary depending upon the HAP contract, Use Agreement, and Plan of Action. Please examine those files and call your HUD Account Executive with concerns concerning choices for your residential or commercial property. Many Preservation tasks might request a budget-based lease increase to assist with unforeseen situations at a residential or commercial property or to address physical conditions requires.
   
   Forms and files for Option 5:
   
   - The job's Use Agreement ought to be evaluated 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 might elect to not renew their HAP agreement upon expiration. This does not apply to owners subject to a contractual obligation to renew the HAP contract resulting from an Usage Agreement that is connected to the residential or commercial property.
   
   An owner must offer HUD and renters notice of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified occupants will be issued improved coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to pull out of renewing 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 ability to opt-out of restoring their HAP contract. 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 agreement renewal, please evaluate the 8( bb) Preservation Tool. This program allows HUD to guarantee that budget-friendly housing stays offered in your neighborhood even if you do not wish to restore 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 might likewise take part 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 task of a HAP contract to a not-for-profit, mission-oriented owner. The Capital Repairs program makes sure that the HAP renewal These programs offer a variety of benefits to owners who wish to guarantee long-lasting preservation of the housing help at their residential or commercial property.