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 web page. This resource includes descriptions of choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP agreements. The info provided here is not extensive and rather is planned to help owners browse the alternatives readily available to them. For full directions and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.
For specific question about a job's eligibility to restore a HAP agreement, please call your regional HUD Multifamily Account Executive.
Option 1: Mark up to Market
Eligibility: This option is available to owners whose agreement rents are listed below comparable market leas as figured out by a lease comparability study. An owner may ask for that their qualified existing HAP agreement be ended and renewed under this choice.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as figured out by an owner's RCS. Rents are topped at 150% of Fair Market Rents unless the owner satisfies particular criteria to certify under the discretionary criteria explained 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 files
Option 2: Mark up to Budget
Eligibility: This option is available to owners whose agreement rents are below or equivalent to comparable market rents. An owner might reduce their leas to market levels to take part under Option 2.
Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved job budget. These leas may not exceed market similar levels, as demonstrated by a lease comparability study.
Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the contract rents are gotten used to existing market levels. The owner should send 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 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 exceed market similar levels as figured out by a lease comparability study. Typically, this uses to jobs whose mortgages are insured by the Federal Housing Administration. Congress granted HUD the authority to reorganize 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: twenty years.
Annual Rent Increase: At HAP renewal, rents are reduced to a market similar level as shown by a lease comparability research study.
Mortgage Restructuring: The owner might request that their qualified mortgage be restructured into a main mortgage and secondary debt. The brand-new primary mortgage will be sized so that market comparable leas are sufficient to support the debt service on that mortgage. Use constraints will remain in place at the residential or commercial property so long as the subordinate debt balance stays. If the job can remain economically viable despite a lease reduction to market levels, then no mortgage restructuring may be required.
More Information for Option 3: Information about Option 3 can be discovered on the About Mark-to-Market site. All queries concerning a HAP renewal under Option 3 need to be directed to m2minfo@hud.gov.
Option 4: Exception Projects
Eligibility: This alternative is available to tasks which are exempt from reorganizing under MAHRA. This typically indicates that the task is not subject to an FHA-insured mortgage, however instead has a standard mortgage or is tax-credit financed.
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 determined by a Rent Comparability Study), whichever is lesser.
Annual Rent Adjustment: The agreement leas will be changed up each year by the Operating expense Adjustment Factor released for the region. This multiplicative lease modification is released by HUD in October of each year and is effective in February of the list below year. The OCAF is based upon a variety of market indicators and is planned to record the impacts of inflation and other market aspects 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 tasks subject to a long-term HUD use contract are needed to renew under this Option. This generally includes jobs 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 HAP agreement, Use Agreement and, if appropriate, Plan of Action. Please examine those documents and contact your HUD Account Executive with questions relating to options for your residential or commercial property.
Annual Rent Adjustment: Which rent adjustment mechanisms are offered to your task vary depending upon the HAP agreement, Use Agreement, and Plan of Action. Please evaluate those documents and contact your HUD Account Executive with questions regarding alternatives for your residential or commercial property. Many Preservation tasks might ask for a budget-based rent boost to assist with unforeseen circumstances at a residential or commercial property or to attend to physical conditions needs.
Forms and files for Option 5:
- The job's Use Agreement ought to be examined to determine 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 might choose to not renew their HAP contract upon expiration. This does not apply 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 needs to offer HUD and tenants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, qualified renters will be released improved coupons pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to decide out of renewing their HAP agreement can be discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional laws may impact 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 recommend an owner of their commitments under these laws.
If you are preparing to pull out of HAP agreement renewal, please review the 8( bb) Preservation Tool. This program enables HUD to ensure that inexpensive housing stays offered in your community even if you do not want to restore your HAP agreement.
Forms and files for Option 6:
HAP Renewal Request Form (HUD-9624)
Enhanced Voucher Fact Sheet
Section 8 Renewal Policy Guidebook, Chapter 8
arxiv.org
Section 8 Preservation Efforts
Eligibility: An owner who is qualified to renew their HAP agreement 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 provides incentives for the project of a HAP contract to a not-for-profit, mission-oriented owner. The Capital Repairs program guarantees that the HAP renewal These programs offer a range of benefits to owners who want to make sure long-term preservation of the housing support at their residential or commercial property.