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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 website. This resource includes descriptions of choices offered to owners of Section 8 HAP-assisted residential or commercial properties who want to renew their HAP contracts. The details provided here is not extensive and instead is meant to assist owners browse the choices offered to them. For complete instructions and requirements for renewal of a HAP contract, please refer to the Section 8 Renewal Policy Guide.
For specific concern about a project's eligibility to renew a HAP contract, please contact your regional HUD Multifamily Account Executive.
Option 1: Increase to Market
Eligibility: This alternative is available to owners whose agreement rents are below equivalent market leas as figured out by a lease comparability study. An owner might request that their eligible current HAP contract be ended and renewed under this option.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, rents are set at market equivalent levels, as figured out by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner fulfills certain requirements to certify 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 submits
Option 2: Increase to Budget
Eligibility: This choice is readily available to owners whose agreement rents are below or equivalent to similar market leas. An owner may decrease their leas to market levels to participate under Option 2.
Renewal Rent Increase: At HAP renewal, leas are set at a level needed to support a HUD-approved project budget plan. These rents may not exceed market similar levels, as demonstrated by a rent comparability study.
Comparability Adjustment: At each fifth year anniversary of the HAP agreement renewal, the agreement leas are adapted to existing market levels. The owner needs to send a lease comparability research study which is used to set the rents on the 5th, 10th, and 15th anniversaries of the HAP agreement.
Forms and documents for Option 2:
Section 8 Renewal Policy Guidebook: Chapter 4, Chapter 9
Option 3: Mark-to-Market
Eligibility: This choice is available to certain jobs whose leas surpass market comparable 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 financial obligation 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 reduced to a market similar level as shown by a lease comparability study.
Mortgage Restructuring: The owner might ask for that their qualified mortgage be reorganized into a primary mortgage and secondary debt. The brand-new primary mortgage will be sized so that market similar rents are sufficient to support the financial obligation service on that mortgage. Use constraints will remain in location at the residential or commercial property so long as the secondary financial obligation balance stays. If the task can stay economically viable regardless 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 discovered on the About Mark-to-Market site. All queries regarding a HAP renewal under Option 3 ought to be directed to [email protected].
Option 4: Exception Projects
Eligibility: This choice is available to projects which are exempt from reorganizing under MAHRA. This normally suggests that the job is exempt to an FHA-insured mortgage, however rather has a conventional mortgage or is tax-credit financed.
Term: Between 1 and twenty years.
Rent Increase: At HAP renewal, leas are either changed by the Operating expense Adjustment Factor or by a HUD-approved budget (topped by market rents as figured out by a Rent Comparability Study), whichever is lower.
Annual Rent Adjustment: The agreement leas will be changed upward each year by the Operating expense Adjustment Factor released for the area. This multiplicative lease adjustment is published by HUD in October of each year and works in February of the list below year. The OCAF is based on a range of market indications and is intended to catch the results of inflation and other market factors on the cost of running 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-lasting HUD use contract are needed to restore under this Option. This normally consists of tasks 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 job's particular HAP agreement, Use Agreement and, if suitable, Plan of Action. Please examine those documents and contact your HUD Account Executive with concerns relating to alternatives for your residential or commercial property.
Annual Rent Adjustment: Which lease change mechanisms are offered to your project vary depending upon the HAP agreement, Use Agreement, and Strategy. Please review those documents and call your HUD Account Executive with concerns concerning alternatives for your residential or commercial property. Many Preservation jobs may request a budget-based rent increase to assist with unanticipated situations at a residential or commercial property or to deal with physical conditions requires.
Forms and files for Option 5:
- The project's Use Agreement must be evaluated to identify HAP renewal options.
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 renew their HAP contract upon expiration. This does not apply to owners based on a contractual obligation to renew the HAP contract arising from an Use Agreement that is connected to the residential or commercial property.
An owner should provide HUD and tenants notification of the opt-out one year prior to expiration of the HAP contract. Upon expiration, eligible tenants will be issued boosted coupons pursuant to 42 U.S.C. § 1437f( t).
Full HUD requirements for an owner who wishes to decide out of restoring their HAP agreement can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please note that state and local laws may affect an owner's ability to opt-out of renewing their HAP agreement. These requirements would not appear in the Section 8 Renewal Policy Guide and HUD can not encourage an owner of their commitments under these laws.
If you are planning to pull out of HAP agreement renewal, please examine the 8( bb) Preservation Tool. This program enables HUD to guarantee that cost effective housing stays offered in your community even if you do not want to restore 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 might likewise 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 assignment of a HAP contract 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-term conservation of the housing assistance at their residential or commercial property.
