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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 consists of descriptions of options readily available to owners of Section 8 HAP-assisted residential or commercial properties who wish to renew their HAP agreements. The information provided here is not thorough and rather is meant to help owners navigate the options available to them. For complete guidelines and requirements for renewal of a HAP agreement, please describe the Section 8 Renewal Policy Guide.
For particular concern about a project's eligibility to restore a HAP contract, please call your regional HUD Multifamily Account Executive.
Option 1: Increase to Market
Eligibility: This alternative is offered to owners whose agreement rents are listed below comparable market leas as identified by a rent comparability research study. An owner might request that their eligible existing HAP agreement be terminated and restored under this option.
Term: Between 5 and 20 years.
Renewal Rent Increase: At HAP renewal, rents are set at market similar levels, as determined by an owner's RCS. Rents are capped at 150% of Fair Market Rents unless the owner meets certain criteria to certify under the discretionary requirements 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: Mark up to Budget
Eligibility: This choice is readily available to owners whose contract leas are listed below or equivalent to equivalent market leas. An owner may decrease 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 leas might not go beyond market comparable levels, as demonstrated by a lease comparability research study.
Comparability Adjustment: At each 5th year anniversary of the HAP contract renewal, the agreement leas are gotten used to current market levels. The owner must send a lease comparability study which is utilized 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 option is available to particular jobs whose leas surpass market similar levels as determined 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 restructure an owner's mortgage so that financial obligation service is lowered to a level that can be supported by market comparable levels. If tasks can
Term: twenty years.
Annual Rent Increase: At HAP renewal, rents are reduced to a market comparable level as shown by a rent comparability study.
Mortgage Restructuring: The owner may ask for that their qualified mortgage be reorganized into a main mortgage and secondary debt. The brand-new primary mortgage will be sized so that market equivalent leas are sufficient to support the debt service on that mortgage. Use constraints will stay in place at the residential or commercial property so long as the secondary financial obligation balance remains. If the task can remain financially feasible despite a lease reduction 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 website. All questions regarding a HAP renewal under Option 3 ought to be directed to m2minfo@hud.gov.
Option 4: Exception Projects
Eligibility: This option is readily available to jobs which are exempt from restructuring under MAHRA. This generally implies that the job is exempt to an FHA-insured mortgage, but instead has a traditional 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 spending plan (capped by market leas as determined by a Rent Comparability Study), whichever is lesser.
Annual Rent Adjustment: The agreement leas will be adjusted up each year by the Operating expense Adjustment Factor released for the locality. This multiplicative rent adjustment is released by HUD in October of each year and is effective in February of the list below year. The OCAF is based on a variety of market signs and is intended to record the impacts of inflation and other market factors on the expense of operating rental housing.
Forms and documents for Option 4:
Section 8 Renewal Policy Guidebook, Chapter 6
Option 5: Preservation Projects
Eligibility: Certain projects subject to a long-term HUD usage contract are required to restore 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 upon HAP contract requirements.
Rent Increase at HAP Renewal: The rents upon HAP renewal depend upon each project's particular HAP contract, Use Agreement and, if suitable, Strategy. Please examine those files and contact your HUD Account Executive with questions concerning alternatives for your residential or commercial property.
Annual Rent Adjustment: Which lease change mechanisms are offered to your job vary depending on the HAP agreement, Use Agreement, and Strategy. Please evaluate those files and contact your HUD Account Executive with questions relating to choices for your residential or commercial property. Many Preservation jobs may request a budget-based lease increase to assist with unanticipated scenarios at a residential or commercial property or to attend to physical conditions requires.
Forms and files for Option 5:
- The job's Use Agreement need to be examined to determine 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 might elect to not restore their HAP agreement upon expiration. This does not apply to owners subject to a contractual responsibility to renew the HAP contract resulting from an Use Agreement that is connected to the residential or commercial property.
An owner should offer HUD and renters notification 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 opt out of restoring their HAP contract can be found at Chapter 8 of the Section 8 Renewal Policy Guide. Please keep in mind that state and regional laws may affect an owner's capability to opt-out of renewing their HAP contract. 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 preparing to pull out of HAP contract renewal, please examine the 8( bb) Preservation Tool. This program allows HUD to make sure that inexpensive housing stays readily available in your neighborhood even if you do not want 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 qualified to renew their HAP agreement under Option 1 or 2 might 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 rewards for the project of a HAP agreement to a nonprofit, mission-oriented owner. The Capital Repairs program ensures that the HAP renewal These programs supply a range of benefits to owners who want to make sure long-term preservation of the housing assistance at their residential or commercial property.
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Section 8 Contract Renewal Options
Jacinto Canady edited this page 4 days ago