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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 website. This resource contains descriptions of choices available to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The details supplied here is not detailed and instead is intended to assist 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 call your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This choice is offered to owners whose agreement rents are listed below equivalent market rents as identified by a rent comparability research study. An owner might request that their qualified existing HAP agreement be ended and renewed under this alternative.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas 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 satisfies certain requirements to certify under the discretionary requirements described 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: Increase to Budget
   
   Eligibility: This option is readily available to owners whose contract rents are listed below or equal to similar market leas. An owner might lower their leas to market levels to participate under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved project budget. These rents may not surpass market similar levels, as demonstrated by a lease comparability study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract leas are adapted to present market levels. The owner should submit a rent comparability research study which is used to set the rents on the 5th, 10th, and 15th anniversaries of the HAP contract.
   
   Forms and documents 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 tasks whose leas go beyond market similar levels as determined by a lease comparability study. Typically, this applies to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to reorganize an owner's mortgage so that debt service is decreased 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 reduced to a market comparable level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner may ask for that their qualified mortgage be reorganized into a primary mortgage and secondary debt. The brand-new main mortgage will be sized so that market equivalent rents are enough 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 remains. If the project can remain economically 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 found on the About Mark-to-Market site. All inquiries concerning a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is offered to jobs which are exempt from restructuring under MAHRA. This usually suggests that the task is exempt to an FHA-insured mortgage, but instead has a conventional mortgage or is tax-credit financed.
   
   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 plan (capped by market leas as identified by a Lease Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The contract leas will be adjusted upward each year by the Operating expense Adjustment Factor published for the region. This multiplicative rent modification is released by HUD in October of each year and is efficient in February of the following year. The OCAF is based upon a range of market indicators and is meant to capture the impacts of inflation and other market factors 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 jobs subject to a long-term HUD use contract are needed to renew under this Option. This generally consists of tasks 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 upon each task's particular HAP contract, Use Agreement and, if suitable, Plan of Action. 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 modification mechanisms are readily available to your task differ depending upon the HAP contract, Use Agreement, and Strategy. Please examine those documents and contact your HUD Account Executive with concerns regarding options for your residential or commercial property. Many Preservation jobs might request a budget-based rent increase to help with unforeseen scenarios at a residential or commercial property or to attend to physical conditions needs.
   
   Forms and files for Option 5:
   
   - The project's Use Agreement need to be reviewed to identify 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 contract upon expiration. This does not use to owners based on a contractual commitment to restore the HAP agreement resulting from an Use Agreement that is connected to the residential or commercial property.
   
   An owner should supply HUD and occupants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible occupants will be issued improved coupons pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to pull 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 to opt-out of restoring their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not advise an owner of their commitments under these laws.
   
   If you are planning to pull out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program permits HUD to guarantee that economical housing stays readily available in your community even if you do not wish 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
   ohiorealtors.org
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is eligible to renew their HAP agreement under Option 1 or 2 might 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 task of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs provide a range of benefits to owners who want to guarantee long-lasting conservation of the housing assistance at their residential or commercial property.