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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 choices offered to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The details supplied here is not comprehensive and instead is planned to help owners navigate the choices 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 concern about a project's eligibility to restore a HAP agreement, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Mark up to Market
   
   Eligibility: This option is readily available to owners whose contract leas are below comparable market leas as determined by a rent comparability study. An owner might ask for that their eligible current HAP contract be terminated and restored under this alternative.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, rents are set at market similar levels, as identified by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner fulfills certain criteria to qualify 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: Mark up to Budget
   
   Eligibility: This choice is offered to owners whose agreement rents are listed below or equal to equivalent market rents. An owner might reduce their leas 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 project budget. These leas may not surpass market comparable levels, as demonstrated by a rent comparability study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract leas are gotten used to existing market levels. The owner should submit a lease comparability research study which is utilized to set the leas 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 certain jobs whose leas go beyond market similar levels as determined by a rent comparability research study. Typically, this applies to jobs whose mortgages are insured by the Federal Housing Administration. Congress gave HUD the authority to reorganize an owner's mortgage so that debt service is lowered 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 shown by a rent comparability research study.
   
   Mortgage Restructuring: The owner might ask for that their eligible mortgage be restructured into a main mortgage and secondary financial obligation. The brand-new primary mortgage will be sized so that market similar leas are sufficient to support the debt service on that mortgage. Use restrictions will remain in location at the residential or commercial property so long as the secondary debt balance stays. If the task can stay financially viable despite a rent 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 relating to a HAP renewal under Option 3 should be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This option is available to projects which are exempt from restructuring under MAHRA. This generally suggests that the job is not subject to an FHA-insured mortgage, however rather has a traditional mortgage or is tax-credit financed.
   
   Term: Between 1 and 20 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 rents as identified by a Lease Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The contract rents will be changed up each year by the Operating expense Adjustment Factor released for the area. This multiplicative lease change is published by HUD in October of each year and works in February of the following year. The OCAF is based on a range of market indications and is planned to record the effects of inflation and other market elements on the cost of running rental .
   
   Forms and files for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain tasks based on a long-term HUD usage agreement are needed to renew under this Option. This generally includes 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 on each task's particular HAP contract, Use Agreement and, if suitable, Strategy. Please examine those files and contact your HUD Account Executive with concerns relating to options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease adjustment systems are readily available to your task differ depending upon the HAP agreement, Use Agreement, and Plan of Action. Please evaluate those files and call your HUD Account Executive with questions relating to alternatives for your residential or commercial property. Many Preservation projects may request a budget-based lease boost to help with unpredicted circumstances at a residential or commercial property or to resolve physical conditions needs.
   
   Forms and documents for Option 5:
   
   - The job's Use Agreement need to be examined to identify 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 may choose to not restore their HAP contract upon expiration. This does not use to owners subject to a contractual responsibility to restore the HAP contract resulting from an Use Agreement that is attached to the residential or commercial property.
   
   An owner needs to offer HUD and tenants notice of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible occupants will be issued enhanced vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wishes to choose out of restoring their HAP agreement can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and local laws might impact an owner's capability to opt-out of restoring their HAP contract. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not recommend an owner of their responsibilities under these laws.
   
   If you are preparing to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program enables HUD to make sure that affordable housing stays readily available in your community even if you do not want to restore your HAP contract.
   
   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 restore 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 offers incentives for the assignment 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 advantages to owners who want to guarantee long-lasting conservation of the housing help at their residential or commercial property.