Section 8 Contract Renewal Options
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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 webpage. This resource includes descriptions of choices offered to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP agreements. The info offered here is not thorough and instead is intended to assist owners browse the alternatives readily available to them. For complete guidelines and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.
For particular question about a job's eligibility to restore a HAP contract, please contact your regional HUD Multifamily Account Executive.
Option 1: Mark up to Market
Eligibility: This choice is readily available to owners whose agreement leas are below similar market rents as figured out by a rent comparability research study. An owner may request that their eligible existing HAP contract be ended and renewed under this option.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, leas are set at market comparable levels, as determined by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner satisfies particular criteria to qualify under the discretionary criteria 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 option is readily available to owners whose contract rents are listed below or equivalent to equivalent market rents. An owner might minimize 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 job budget plan. These leas may not exceed market equivalent levels, as shown by a rent comparability study.
Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract leas are gotten used to current market levels. The owner should send a lease comparability 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 choice is readily available to particular projects whose leas exceed market similar levels as determined by a rent comparability research study. Typically, this uses to projects whose mortgages are insured by the Federal Housing Administration. Congress gave HUD the authority to restructure an owner's mortgage so that debt service is lowered to a level that can be supported by market equivalent levels. If tasks can
Term: twenty years.
Annual Rent Increase: At HAP renewal, rents are minimized 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 main mortgage and secondary financial obligation. The new main mortgage will be sized so that market comparable leas are enough to support the debt service on that mortgage. Use restrictions will remain in location at the residential or commercial property so long as the subordinate debt balance remains. If the task can stay economically feasible despite a lease reduction to market levels, then no mortgage restructuring might be required.
More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All queries regarding a HAP renewal under Option 3 ought 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 means that the task is exempt to an FHA-insured mortgage, but instead has a traditional mortgage or is tax-credit funded.
Term: Between 1 and 20 years.
Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget plan (topped by market rents as identified 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 released for the region. This multiplicative rent modification is published by HUD in October of each year and is efficient in February of the list below year. The OCAF is based upon a variety of market indications and is planned to catch the results of inflation and other market factors on the cost 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 agreement are needed to restore under this Option. This normally includes projects 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 leas upon HAP renewal depend upon each job's particular HAP agreement, Use Agreement and, if relevant, Plan of Action. Please review those documents and call your HUD Account Executive with questions relating to options for your residential or commercial property.
Annual Rent Adjustment: Which lease change systems are available to your task vary depending on the HAP agreement, Use Agreement, and . Please review those files and call your HUD Account Executive with concerns relating to alternatives for your residential or commercial property. Many Preservation jobs may ask for a budget-based lease increase to assist with unpredicted scenarios at a residential or commercial property or to attend to physical conditions needs.
Forms and files for Option 5:
- The job's Use Agreement need to be evaluated 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 may choose to not renew their HAP contract upon expiration. This does not apply to owners based on a legal responsibility to renew the HAP contract arising from an Usage Agreement that is attached to the residential or commercial property.
An owner must supply HUD and renters notification of the opt-out one year prior to expiration of the HAP agreement. Upon expiration, eligible tenants will be provided improved vouchers pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to pull out of restoring their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note 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 advise an owner of their obligations under these laws.
If you are preparing to opt out of HAP agreement renewal, please examine the 8( bb) Preservation Tool. This program permits HUD to ensure that inexpensive housing stays 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
Section 8 Preservation Efforts
Eligibility: An owner who is eligible to restore their HAP agreement under Option 1 or 2 may also get involved 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 project of a HAP agreement to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs offer a variety of benefits to owners who want to make sure long-lasting conservation of the housing support at their residential or commercial property.
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