Summary:
Describes the basic content of the essential “bible” to the contract
renewal process, the Section 8 Renewal Policy, explains where and
how a copy can be obtained and important tips as to its effective
use by property owners in completing the renewal process.
The Section 8 Renewal Policy was published by HUD on January 19, 2001 and sent to all owners of project based Section 8 housing in early 2001. This guidebook summarizes a number of important housing policy laws and regulations and HUD Notices into a single resource from which owners can understand the complex procedure of renegotiating their HAP contract.
The contents of the guidebook is as follows:
Chapter 1:
Introduction
This Chapter provides the legislative history of the Multifamily
Assisted Housing Reform and Affordability Act (MAHRA). It also
provides a chronological listing of HUD’s rule making and
administrative policies for implementing statutory requirements
associated with Section 8 expiring contract renewals.
Chapter 2:
Contract Renewals
This chapter outlines the various ways a contract can be renewed and
provides six options available to owners with expiring Section 8
contracts. It defines initial and subsequent renewals and explains
how rent adjustments are made during the term of a multi-year
section 524 contract. This chapter also discusses contract terms,
rent calculations for short-term renewals and instructions for
combining contracts.
Chapter 3: Owner
Option One, Mark-Up-To-Market
This Chapter provides instructions for renewing a contract under the
Mark-Up-To-Market option. It identifies who is eligible for renewal
under this option and how to process the renewal request. Owners
must meet certain eligibility criteria that are outlined in the
chapter. This chapter also provides information on how to calculate
owner distributions and future rent adjustments.
Chapter 4: Owner
Option Two, Other Contract Renewals with Current Rents at or Below
Comparable Market Rents
This Chapter provides instructions for renewing a contract in cases
where a contract’s current rents are at or below comparable market
rents but the contract is not being renewed using the
mark-up-to-market option. It outlines who is eligible to renew under
this option and identifies documentation to be submitted by the
owner to HUD/Contract Administrators for review. It also provides
processing instructions and guidance for future rent adjustments.
Chapter 5, Owner
Option Three, Referral to the Office of Affordable Housing
Preservation (OAHP)
This Chapter discusses the procedures
by which a project with rents above comparable
market rents is referred to the Office of OAHP for processing and
renewal. The chapter identifies items an Owner must submit with
their renewal request and it outlines what steps will be taken by
OAHP if a restructuring agreement is not reached between the owner
and OMHAR.
Chapter 6, Owner
Option Four, Renewal of Projects Exempted From OAHP
This Chapter identifies “exception”
projects. Exception projects are ineligible for OAHP and as such,
they are exempt from having to conduct rent comparability studies
and lower rents to comparable market rents. This chapter outlines
the Owners’ renewal submission requirements and provides
instructions for initial and subsequent renewals.
Chapter 7, Option
Five, Renewal of Portfolio Reengineering Demonstration or
Preservation Projects
This chapter details how to renew a contract that has been through
the Demonstration program. It provides instructions for renewal in
cases where the project had its rents reduced and or had its
mortgage restructured and it provides instructions for processing a
renewal in instances where the project failed to have a rent
reduction or debt restructuring. It also provides guidance for
renewing Preservation contracts according to the approved Plan of
Action (POA).
Chapter 8, Option
Six, Opt-Outs
This Chapter provides instructions for processing Owner opt-outs.
Opt-outs are expiring Section 8 project-based contracts whose owners
elect not to renew the contract. This Chapter identifies owners’
responsibilities to the tenants and provides processing
instructions.
Chapter 9, Rent
Comparability Studies (RCS)
This Chapter provides instructions for conducting and reviewing rent
comparability studies.
Chapter 10,
Residual Receipts
This Chapter identifies the steps that must be taken, when
appropriate, to assure that residual receipts are returned to HUD.
Chapter 11,
Resident Issues
This Chapter outlines all of the steps that must be followed to
ensure that tenants are protected during the renewal process. This
chapter defines housing conversion actions and identifies
notification requirements an owner must meet. It also describes the
differences between a regular voucher and an enhanced voucher.
Chapter 12,
Physical Condition of the Property
This Chapter discusses how a project’s physical condition impacts
the contract renewal process.
Chapter 13, HUD’s
Refusal to Renew/Section 8 Contract Owner’s Dispute and Appeal of
Rejection
This Chapter outlines the circumstances under which HUD may refuse
to renew an expiring Section 8 contract, and it provides owners with
an appeal process to follow in cases where their request to renew is
rejected.
Chapter 14, RHS/515
Projects
This Chapter outlines how to renew a Farmers Home 515 project.
Chapter 15,
Nonprofit Rent Increases
This Chapter outlines the procedure for providing budget-based rent
increases to nonprofit owners. The Chapter identifies eligibility
requirements for “marking up to budget” and provides instructions
for future rent adjustments.
Chapter 16, Other
Issues
This Chapter discusses miscellaneous issues that have not been
included in previous chapters of this guide. This Chapter includes
rent increases for non-Section 8 rents, and REMS reporting
requirements. It also addresses the effect of refinancing FHA
insured properties on Mark-to-Market eligibility and how any new
debt should be addressed in a projects operating budget.
Owners must read and understand the Section 8 Renewal Policy guidebook before attempting to renew an expiring HAP contract so as to insure that their actions represent the most appropriate and applicable choice for their property.
The Section 8 Renewal Policy contains complete explanations of the six possible renewal options as well as all of the required forms needed to complete a renewal. To order a copy of the guide: Click on this link
Contact me by phone 301-277-3465, fax 925-380-4578 or by email at alvinl.sutherlin@verizon.net and I can discuss the status of your project.
