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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 website. This resource includes descriptions of available to owners of Section 8 HAP-assisted residential or commercial properties who wish to restore their HAP agreements. The information offered here is not comprehensive and instead is intended 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: Mark up to Market
   
   Eligibility: This choice is available to owners whose agreement leas are below similar market leas as identified by a lease comparability study. An owner may request that their qualified existing HAP agreement be terminated and restored under this option.
   
   Term: Between 5 and twenty years.
   
   Renewal Rent Increase: At HAP renewal, leas are set at market similar levels, as identified by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner meets particular criteria to certify under the discretionary requirements explained 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 leas are listed below or equivalent to comparable market leas. An owner may lower their leas to market levels to get involved under Option 2.
   
   Renewal Rent Increase: At HAP renewal, leas are set at a level required to support a HUD-approved job spending plan. These leas might not surpass market equivalent levels, as shown by a lease comparability research study.
   
   Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the agreement leas are adapted to present market levels. The owner should send a rent comparability study which is used 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
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   Option 3: Mark-to-Market
   
   Eligibility: This alternative is available to certain tasks whose leas go beyond market similar levels as identified by a lease comparability study. Typically, this applies to projects whose mortgages are guaranteed by the Federal Housing Administration. Congress approved HUD the authority to restructure an owner's mortgage so that financial obligation service is decreased to a level that can be supported by market similar levels. If tasks can
   
   Term: twenty years.
   
   Annual Rent Increase: At HAP renewal, rents are decreased to a market similar level as demonstrated by a rent comparability study.
   
   Mortgage Restructuring: The owner may request that their eligible mortgage be restructured into a primary mortgage and secondary financial obligation. The new main mortgage will be sized so that market similar leas are adequate to support the financial obligation service on that mortgage. Use limitations will stay in location at the residential or commercial property so long as the secondary financial obligation balance stays. If the project can stay financially practical in spite of a lease decrease to market levels, then no mortgage restructuring might be required.
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   More Information for Option 3: Information about Option 3 can be found on the About Mark-to-Market site. All queries relating to a HAP renewal under Option 3 must be directed to m2minfo@hud.gov.
   
   Option 4: Exception Projects
   
   Eligibility: This alternative is readily available to tasks which are exempt from reorganizing under MAHRA. This normally indicates that the task is not subject to an FHA-insured mortgage, however rather has a conventional mortgage or is tax-credit funded.
   
   Term: Between 1 and twenty years.
   
   Rent Increase: At HAP renewal, rents are either changed by the Operating Cost Adjustment Factor or by a HUD-approved budget (topped by market rents as identified by a Rent Comparability Study), whichever is lesser.
   
   Annual Rent Adjustment: The contract rents will be adjusted upward 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 list below year. The OCAF is based on a range of market indicators and is intended to capture the effects 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 subject to a long-lasting HUD usage contract are needed to renew under this Option. This typically consists of 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 upon each task's specific HAP contract, Use Agreement and, if relevant, Strategy. Please review those documents and contact your HUD Account Executive with questions relating to options for your residential or commercial property.
   
   Annual Rent Adjustment: Which lease change systems are offered to your job vary depending on the HAP contract, Use Agreement, and Strategy. Please evaluate those documents and contact your HUD Account Executive with concerns regarding alternatives for your residential or commercial property. Many Preservation jobs may ask for a budget-based lease increase to assist with unexpected circumstances at a residential or commercial property or to attend to physical conditions requires.
   
   Forms and documents for Option 5:
   
   - The job's Use Agreement need to be reviewed 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 agreement upon expiration. This does not apply to owners based on a contractual obligation to restore the HAP agreement resulting 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 agreement. Upon expiration, eligible renters will be released boosted vouchers pursuant to 42 U.S.C. § 1437f( t).
   
   Full HUD requirements for an owner who wants to pull out of renewing their HAP contract 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 ability to opt-out of restoring their HAP agreement. 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 opt out of HAP agreement renewal, please evaluate the 8( bb) Preservation Tool. This program allows HUD to ensure that budget friendly housing stays available in your neighborhood even if you do not want to renew 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
   
   
   Section 8 Preservation Efforts
   
   Eligibility: An owner who is qualified to renew their HAP agreement under Option 1 or 2 may 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 rewards for the project of a HAP contract 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 make sure long-lasting preservation of the housing assistance at their residential or commercial property.