North Tampa Housing Development Corp.
Improving Housing For Florida Communities
Contract Renewal
Documents
Section 8 Contract Renewal Options
+ -    Option 1 – Mark-Up-to-Market
The Mark-Up-To-Market Option was introduced as an Emergency Initiative in June 1999 to provide owners of certain below-market properties located in strong markets, an incentive to renew the Section 8 contract and continue providing affordable housing.

Submission Requirements
The owner must submit the following information:
  • HUD Form - 9624 Contract Renewal Request Form
  • Rent Comparability Study
+ -    Option 1a
All properties that meet the following criteria are eligible for a Section 8 contract renewal under Mark-Up-To-Market:
  • Property Condition. A Real Estate Assessment Center (REAC) physical inspection score of 60 or above with no uncorrected Exigent Health and Safety (EHS) violations.
  • The Management must have an MOR rating of Satisfactory or above.
  • Ownership. The property owner must be a profit-motivated or limited-distribution entity.
  • A housing authority occupying the status of a “public body corporate and politic” under the state legislation under which it was created, or
  • A limited partnership with one or more nonprofit general partners or a sole general partner that is wholly owned and controlled by one of more nonprofit entities.
  • A limited liability company with one or more nonprofit managers or nonprofit managing members or a sole manager or managing member that is wholly owned or controlled by one or more nonprofit entities where the managing general partner is wholly owned and controlled by a nonprofit entity.
  • Market Rents. The RCS must demonstrate that the comparable market rents are at or above 100% of the FMR potential. Use the FMR figures calculated for the fiscal year in which the contract is expiring to demonstrate eligibility.
    • Excel Worksheets. Fillable worksheets are available on the internet for Owners and Contract Administrators. The site address is https://www.hud.gov/program_offices/housing/mfh/mfhsec8.
    • REMS. PM/CAs can use the Real Estate Management System (REMS) to establish initial eligibility. The worksheets in Appendices 3-1 and 3-2 are available in REMS.
  • Use Restrictions. The project does not have a low-and moderate-income use restriction that cannot be eliminated by unilateral action by the Owner. Examples of use restrictions would be the existence of a Rent Supplement Contract, prior or present Flexible Subsidy assistance, or Low-Income Housing Tax Credits.
  • Once a contract has received its initial renewal under MAHRA, the Owner may request to enter into Mark-Up-To-Market at any time.
  • Nonprofit Transfers: In addition to the qualifying criteria above, HUD will use its discretionary authority to mark rents up to market to facilitate a change in ownership from a for-profit Owner or limited-dividend Owner to a nonprofit; or from one nonprofit Owner to another nonprofit Owner.
+ -    Option 1b
For Owners who request participation in Option One-B, and for Owners of projects that request an increase in rents above the cap on comparable rents of 150% of FMR, HUD will consider these requests if the project meets at least one of the following three characteristics:
  • Vulnerable Populations. The tenants of the property are a particularly vulnerable population, demonstrated by a high percentage (at least 50%) of the units rented to elderly families, disabled families, or large families (large family is defined as a family of five or more persons);
  • Vacancy Rates. The property is located in a low-vacancy market area (or in a rural area with no comparable rental housing) where there is a lack of affordable housing and where Housing Choice vouchers would be difficult to use. The determination of a low vacancy area should be made using the most recent available data on the rental inventory, renter households, rental vacancy rates and other factors as appropriate. A market with a rental vacancy rate of less than 3 percent is considered a low vacancy area. Confirm the vacancy rate with HUD staff/CA staff; or
  • Community Support. The property is a high priority for the local community as demonstrated by a contribution of State or local funds to the property. This matching requirement may be in the form of tax abatements, capital improvement funds etc.
+ -    Option 2 – Rents at or Below Comparable Market Rents
Owner’s eligible for an Option 2 contract must ensure that the current contract rents are at or below the comparable market rents as demonstrated through an RCS.

Submission Requirements:
  • Owner's Contract Renewal Request Form, Form HUD 9624.
  • Owners may request a contract term from one to twenty years.
  • The OCAF Rent Adjustment Worksheet, Form HUD 9625.
  • An RCS prepared following the instructions found in Chapter Nine of the Section 8 Renewal Policy Guidebook.
  • If applicable, a budget-based rent increase request prepared in accordance with the requirements of HUD Handbook 4350.1, Chapter 7, and Attachment 5 of the Section 8 Renewal Policy Guidebook (Only required for properties submitting a budget for the first time).
    • Please note, current debt service is to be used for all Rent Adjustments.
+ -    Option 3 – Referral to RECAP
The Office of Affordable Housing Preservation was established to assure the smooth continuation of the Mark to Market program (M2M). The Office of Affordable Housing Preservation operates to achieve the following goals:
  • Preserve affordability and availability of low income rental housing.
  • Reduce the costs of Federal Housing Assistance.
  • Enhance HUD's Administration of Federal Housing Assistance.
  • Address financially and physically troubled projects.
  • Correct management and ownership deficiencies.
+ -    Option 3a – RECAP Lite
A renewal of the contract without debt restructuring, with the rents reduced to comparable market rents.
  • Lites are renewed under Section 524 of MAHRA with contract rents adjusted annually. Contract rents are adjusted annually, per the renewal contract, by application of an OCAF or, if HUD approves, on a budget basis.
Submission Requirements
The owner must submit the following information:
  • HUD Form- 9624 Contract Renewal Request Form including a certification that project rents exceed comparable market rents.
  • Rent Comparability Study.
  • Last REAC Physical Inspection Report.
  • Last Audited Financial Statement.
+ -    Option 3b – RECAP Full
A debt restructuring and contract renewal with the rents reduced to comparable market rents.
  • Upon closing, Fulls are renewed under Section 515 of MAHRA (generally, up to 20 years with an obligation on the Owner to accept offers to renew the contract during the term of the affordability and use restrictions required by section 514(e)(6) of MAHRA). RECAP Fulls only permit annual OCAF rent adjustments. Where an Owner has executed a 20-year Full contract, there is no RCS required during the term of the contract. Owners are required to combine contracts (including those that expire in later fiscal years) under an RECAP Full contract.
Submission Requirements
The owner must submit the following information:
  • HUD Form- 9624 Contract Renewal Request Form.
  • Certification of Reduction of Rents in Accordance with Rent/Debt Restructuring (Appendix 5-2).
+ -    Option 4 – Renewal of Projects Exempted from RECAP
Option Four is for project types that are not eligible for RECAP even though the contract rents may exceed market. These properties are known as "exception properties" and are renewable under Section 524(b) of MAHRA. Projects without FHA-insured loans are exempt, as are certain FHA-insured properties. Owners who have projects that are exempt from RECAP and have contract rents that exceed market rents should consider this option. Eligible projects that wish to renew under this option will renew their rents at the lesser of the projects current rents adjusted by an operating cost adjustment factor (OCAF) or the budget based rent as described in HUD Handbook 4350.1 chapter 7 and appendix 5.

Who is Exempt from RECAP?
State or Local Government financing Projects for which the primary financing or mortgage insurance was provided by a unit of State government or a unit of general local government and is not insured under the National Housing Act (FHA)
202/8 and 515/8 Elderly and Rural Housing Projects currently financed under Section 202 of the Housing Act of 1959 or Section 515 of the Housing Act of 1949
SRO Mod Rehab (Single Room Occupancy) Projects that have an expiring contract under Section 8 of the U.S Housing Act of 1937 pursuant to Section 441 of the Stewart B. McKinney Homeless Assistance Act
Section 512 (2) of MAHRA A project that is not subject to a HUD held or insured mortgage
Risk Sharing loans 542 (b) and (c) of Housing and Community Dev. Act of 1992 Projects financed under the risk-sharing loan programs under Section 542(b) and (c) of the Housing and Community Development Act of 1992
*See the Section 8 Renewal Guide Ch. 6 Section 6-1


Refer to HUD's Section 8 Renewal Policy Handbook for more information and to determine project eligibility.

Submission Requirements For an Initial Renewal:
  • HUD Form 9624 Contract Renewal Request Form.
  • OCAF Worksheet (HUD Form 9265).
  • Budget-based Worksheet (Budget-based Rent Adjustment Checklist).
  • Rent Schedule.
  • Utility Allowance Analysis in accordance with HUD Notice 2015-04, if applicable.
  • RCS, if applicable.
Submission Requirements For a Subsequent Renewal:
  • Contract Renewal Cover Sheet and the Renewal Worksheet for Option 4 for Subsequent Renewal contained in the Contract Renewal Request Form (HUD Form 9624).
  • OCAF Worksheet (HUD Form 9265).
  • Budget-based Worksheet (Budget-based Rent Adjustment Checklist).
  • Rent Schedule.
  • RCS, if applicable.
+ -    Option 5- Renewal of portfolio Reengineering Demonstration or Preservation Projects
Option Five is for the renewal of projects that previously went through the Portfolio Reengineering Demonstration Program or those that entered into long-term use agreements with HUD under the Preservation Program (LIPHRA and ELIPHRA).

Eligibility for Option 5 is limited to two types of properties:
  1. Preservation Projects: Owners that entered into a long term use agreement with HUD as part of the Preservation Program, HUD agreed to certain items which were outlined in the Preservation property's approved Plan of Action (POA). In a majority of Preservation contracts, the POA allows for either a budget-based rent adjustment or an Annual Adjustment Factor (AAF) rent adjustment.
  2. Demonstration Projects: Initial Renewal: HUD is no longer doing initial renewals under the Portfolio Reengineering Demonstration Program.
Refer to HUD's Section 8 Renewal Policy Handbook for more information and to determine project eligibility.

Submission Requirements:
  • HUD Form 9624 Contract Renewal Request Form.
  • Option 5 Worksheet.
  • OCAF (if provided for in POA).
  • RCS, if applicable.
  • Rent Adjustment maybe subject to an RCS as outlined within the Plan of Action.