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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 webpage. This resource contains descriptions of options offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The information supplied here is not extensive and instead is intended to assist owners navigate the options offered to them. For complete directions and requirements for renewal of a HAP contract, please describe the Section 8 Renewal Policy Guide.
   
   For particular question about a project's eligibility to restore a HAP agreement, please call your local HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This option is offered to owners whose contract leas are listed below equivalent market rents as identified by a lease comparability research study. An owner might request that their qualified existing HAP agreement be ended 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 figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner meets particular requirements to certify 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 submits
   
   Option 2: Mark up to Budget
   
   Eligibility: This option is offered to owners whose contract leas are below or equivalent to equivalent market leas. An owner might minimize their leas to market levels to get involved under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved task budget. These rents may not surpass market comparable levels, as demonstrated by a rent comparability study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the contract rents are adapted to existing market levels. The owner needs to send a rent 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 available to particular projects whose leas go beyond market comparable levels as determined by a lease comparability research study. Typically, this applies 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 reduced to a level that can be supported by market similar levels. If jobs can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are lowered to a market equivalent level as shown by a rent comparability study.
   
   Mortgage Restructuring: The owner might ask for that their qualified mortgage be reorganized into a main mortgage and secondary financial obligation. The brand-new main mortgage will be sized so that market comparable rents are enough to support the debt service on that mortgage. Use restrictions will stay in place at the residential or commercial property so long as the secondary financial obligation balance stays. If the task can stay financially viable in spite of a lease decrease to market levels, then no mortgage restructuring might be needed.
   
   More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market site. All questions regarding a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is available to tasks which are exempt from reorganizing under MAHRA. This normally suggests that the task is not subject to an FHA-insured mortgage, but rather has a traditional mortgage or is tax-credit funded.
   
   Term: Between 1 and 20 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 agreement leas will be adjusted upward each year by the Operating expense Adjustment Factor released for the region. 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 on a variety of market indicators and is planned to record the effects of inflation and other market elements 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 jobs subject to a long-lasting HUD usage agreement are required to renew under this Option. This usually consists of jobs with a Portfolio Reengineering Demonstration Use Agreement, an ELIHPA Use Agreement, or a LIHPRHA Use Agreement.
   
   Term: Varies depending upon HAP agreement requirements.
   
   Rent Increase at HAP Renewal: The rents upon HAP renewal depend on each project's specific HAP contract, Use Agreement and, if applicable, Strategy. Please examine those files and call your HUD Account with concerns concerning choices for your residential or commercial property.
   
   Annual Rent Adjustment: Which rent adjustment systems are readily available to your project differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please review those files and call your HUD Account Executive with questions regarding alternatives for your residential or commercial property. Many Preservation projects might request a budget-based rent boost to assist with unpredicted circumstances at a residential or commercial property or to address physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The task's Use Agreement must be reviewed 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 elect to not restore their HAP contract upon expiration. This does not use to owners subject to a contractual commitment to renew the HAP agreement arising from an Use 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, eligible occupants will be issued boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to decide out of restoring their HAP contract can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and regional laws might impact 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 obligations under these laws.
   
   If you are preparing to decide out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program allows HUD to ensure that inexpensive housing remains available in your neighborhood even if you do not want 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 offers rewards for the assignment 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-term conservation of the housing assistance at their residential or commercial property.