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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 web page. This resource contains descriptions of choices readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP contracts. The information provided here is not comprehensive and rather is planned to help owners navigate the options readily available to them. For full instructions 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 renew a HAP agreement, please contact your local HUD Multifamily Account Executive.
   
   Option 1: Increase to Market
   
   Eligibility: This choice is available to owners whose agreement rents are listed below similar market leas as figured out by a lease comparability study. An owner might request that their qualified existing HAP contract be terminated and restored under this choice.
   
   Term: Between 5 and 20 years.
   
   Renewal Rent Increase: At HAP renewal, rents 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 meets certain requirements to qualify under the discretionary criteria 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 files
   
   Option 2: Increase to Budget
   
   Eligibility: This choice is available to owners whose agreement rents are listed below or equivalent to equivalent market leas. An owner might reduce their leas to market levels to take part under Option 2.
   
   Renewal Rent Increase: At HAP renewal, rents are set at a level required to support a HUD-approved job spending plan. These rents might not exceed market comparable levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP agreement renewal, the contract rents are gotten used to present market levels. The owner should send 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 choice is available to particular projects whose rents exceed market equivalent levels as identified by a rent comparability 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 minimized to a level that can be supported by market equivalent levels. If projects can
   
   Term: 20 years.
   
   Annual Rent Increase: At HAP renewal, leas are minimized to a market similar level as demonstrated by a rent comparability research study.
   
   Mortgage Restructuring: The owner might ask for that their eligible mortgage be reorganized into a main mortgage and secondary debt. The new primary mortgage will be sized so that market comparable leas are enough to support the financial obligation service on that mortgage. Use limitations will remain in place at the residential or commercial property so long as the subordinate financial obligation balance stays. If the project can remain financially feasible regardless of a lease decrease to market levels, then no mortgage restructuring may 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 need to be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This choice is offered to jobs which are exempt from restructuring under MAHRA. This generally suggests that the task is not subject 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, leas are either adjusted by the Operating expense Adjustment Factor or by a HUD-approved spending plan (topped by market leas as determined by a Rent Comparability Study), whichever is lower.
   
   Annual Rent Adjustment: The agreement rents will be changed up each year by the Operating Cost Adjustment Factor released for the region. This multiplicative lease modification is released by HUD in October of each year and works in February of the following year. The OCAF is based upon a variety of market indications and is intended to capture the impacts of inflation and other market elements on the cost of operating rental housing.
   
   Forms and files for Option 4:
   
   
   Section 8 Renewal Policy Guidebook, Chapter 6
   
   
   Option 5: Preservation Projects
   
   Eligibility: Certain jobs based on a long-lasting HUD usage agreement are required to renew under this Option. This normally includes tasks 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 on each task's specific HAP agreement, Use Agreement and, if applicable, Plan of Action. Please evaluate those files and contact your HUD Account Executive with concerns relating to options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease modification systems are readily available to your project differ depending upon the HAP agreement, Use Agreement, and Strategy. Please examine those documents and contact your HUD Account Executive with concerns relating to choices for your residential or commercial property. Many Preservation projects may ask for a budget-based lease increase to assist with unanticipated situations at a residential or commercial property or to resolve physical conditions needs.
   
   Forms and files for Option 5:
   
   - The job's Use Agreement need to be evaluated to figure out 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 apply to owners based on a legal responsibility to renew the HAP agreement arising from an Usage 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 contract. Upon expiration, qualified renters will be issued enhanced 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 discovered at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and regional 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 advise an owner of their responsibilities under these laws.
   
   If you are planning to decide out of HAP contract renewal, please review the 8( bb) Preservation Tool. This program allows HUD to make sure that economical housing stays readily available in your neighborhood even if you do not want to renew 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 qualified to restore their HAP agreement under Option 1 or 2 may also take part in the Section 8 Preservation Efforts programs explained in Chapter 15 of the Section 8 Renewal Policy Guide. The Transfer program provides incentives for the project of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs provide a range of benefits to owners who wish to ensure long-lasting conservation of the housing support at their residential or commercial property.