Contract Renewal

The Mark-Up-To-Market Option was introduced as an Emergency Initiative in June 1999 to provide owners of certain below-market properties in strong markets an incentive to renew the Section 8 contract and continue providing affordable housing.

Submission Requirements:

• One-year written notice to tenants and HUD of the contract’s expiration (in accordance with Section 8 Renewal Guide Section 11-4.A.).
• Form HUD-9624 Contract Renewal Request Form, including:
• ✓ Cover Page with UEI# (signed/dated).
• ✓ Worksheet for Option One A OR One B (signed/dated).
• 30-day Tenant Notification for MU2M rents (24CFR Part 245 Subpart D).
• A New Rent Comparability Study (RCS).
• Owner’s RCS Certification.
• Utility Allowance, if applicable (UAF or Baseline, as required).
• 30-day Tenant Notification, if applicable due to UA decrease.
• Owner’s Certification of Compliance with the Tenant Comment Period dated at least 31 days after the notice (may be one combined notice for both UA and Rents).

All properties that meet the following criteria are eligible for a Section 8 contract renewal under Mark-Up-To-Market:

• Property Condition: A REAC physical inspection score of 60 or above with no uncorrected Exigent Health and Safety (EHS) violations.
• Management: Must have an MOR rating of Satisfactory or above.
• Ownership: The owner must be a profit-motivated or limited-distribution entity.
• A housing authority with “public body corporate and politic” status under state legislation.
• A limited partnership with nonprofit general partners or a sole general partner wholly owned and controlled by nonprofit entities.
• A limited liability company with nonprofit managers or nonprofit managing members.
• Market Rents: The RCS must show market rents at or above 100% of the FMR potential.
• PM/CAs can use the Integrated Real Estate Management System (iREMS) to establish initial eligibility.
• Use Restrictions: No restrictions preventing unilateral removal by the owner (e.g., Rent Supplement Contract, Flexible Subsidy, LIHTC).
• Once a contract receives its initial renewal under MAHRA, owners may request Mark-Up-To-Market at any time.
• Nonprofit Transfers: HUD may use discretion to mark rents up to market to facilitate ownership transfers to nonprofit entities.

Owners requesting participation in Option One-B, or an increase above the 150% cap on comparable rents, must meet at least one of these criteria:

• Vulnerable Populations: At least 50% of units rented to elderly, disabled, or large families (five or more persons).
• Vacancy Rates: Located in a low-vacancy market (<3% vacancy rate) where vouchers are difficult to use.
• Community Support: High local priority, demonstrated by State or local funding (e.g., tax abatements, capital improvement funds).

Owners eligible for an Option 2 contract must ensure that current contract rents are **at or below** comparable market rents, as demonstrated through an RCS.

Submission Requirements:

• Owners may request a contract term from **one to twenty years**.
• One-year written notice to tenants and HUD of the contract’s expiration (in accordance with **Section 8 Renewal Guide Section 11-4.A.**).
• Form HUD-9624 Contract Renewal Request Form:
  • ✓ **Cover Page** with UEI# (signed/dated).
  • ✓ **Worksheet for Option 2** (Initial or Subsequent) (signed/dated).
• Rent Comparability Study (RCS):
  • ✓ Either a **new RCS** or a renewal term **not to exceed the life of the existing RCS**.
  • ✓ Prepared following **Chapter 9 of the Section 8 Renewal Policy Guidebook**.
• Owner’s **RCS Certification** (New RCS only).
• OCAF Rent Increase: Form HUD-9625 OCAF.
• Budget-Based Rent Increase:
  • ✓ **Form HUD-9625 OCAF Worksheet** AND **Form HUD-92547-a Budget-Based Worksheet** OR **RHS-approved budget** if required.
  • ✓ If applicable, budget-based rent increase request **must follow HUD Handbook 4350.1, Chapter 7**, and **Attachment 5 of the Section 8 Renewal Policy Guidebook**.
  • ✓ **Current debt service must be used** for all rent adjustments.
• Utility Allowance, if applicable (**UAF or Baseline, as required**).

The **Office of Affordable Housing Preservation** was established to ensure the **smooth continuation** of the **Mark-to-Market (M2M) program**.

Key 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.**

A renewal of the contract **without debt restructuring**, with rents reduced to comparable market rents.

Key Details:

• RECAP Lite renewals fall under **Section 524 of MAHRA** with rents adjusted annually.
• Rent adjustments occur via **OCAF** or, if HUD approves, **a budget-based method**.

Submission Requirements:

• One-year written notice to tenants and HUD (per **Section 8 Renewal Guide Section 11-4.A.**).
• Form HUD-9624 Contract Renewal Request Form:
  • ✓ **Cover Page** with UEI# (signed/dated).
  • ✓ **Worksheet for Option 3a Lite** (signed/dated).
• A **Rent Comparability Study (RCS)**.
• Owner’s **RCS Certification**.
• Latest **REAC Physical Inspection Report**.
• Most recent **audited financial statements**.
• Utility Allowance, if applicable (**UAF or Baseline**).
• 30-day tenant notification (if required due to **UA decrease**).
• Owner’s Certification of Compliance with Tenant Comment Period (dated **at least 31 days after** notice).

A **debt restructuring and contract renewal** where rents are reduced to comparable market levels.

Key Details:

• Upon closing, Full renewals fall under **Section 515 of MAHRA** (typically **up to 20 years**).
• The owner must accept renewal offers during the **affordability and use restriction period** per **Section 514(e)(6) of MAHRA**.
• RECAP Fulls **only allow annual OCAF adjustments**.
• Owners with a **20-year Full contract do not require an RCS** during its term.
• Owners **must combine contracts** (including those expiring later) into an RECAP Full contract.

Submission Requirements:

• Form HUD-9624 Contract Renewal Request Form:
  • ✓ **Cover Page** with UEI# (signed/dated).
  • ✓ **Worksheet for Option 3b Full** (signed/dated).
  • ✓ **Certification** that project rents exceed comparable market rents.
• Utility Allowance, if applicable (**UAF or Baseline**).
• 30-day tenant notification (if required due to **UA decrease**).
• Owner’s Certification of Compliance with Tenant Comment Period (dated **at least 31 days after** notice).

Option Four applies to project types that **are not eligible for RECAP**, even if their contract rents exceed market rates. These properties, known as **"exception properties,"** are renewable under **Section 524(b) of MAHRA**. Projects **without FHA-insured loans** are exempt, as well as certain FHA-insured properties. Eligible projects may renew at the lesser of their **current rents adjusted by OCAF** or **budget-based rent** as described in HUD Handbook 4350.1, Chapter 7 and Appendix 5.

Who is Exempt from RECAP?

Exemption Category	Details
State or Local Government Financing	Projects primarily financed by State or Local Government **not insured under the National Housing Act (FHA)**.
202/8 and 515/8 Elderly & Rural Housing	Projects 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 with **expiring contracts under Section 8**, pursuant to **Section 441 of the Stewart B. McKinney Homeless Assistance Act**.
Section 512(2) of MAHRA	Projects **not subject to a HUD-held or insured mortgage**.
Risk Sharing Loans (542b & 542c)	Projects financed under the **risk-sharing loan programs in Section 542(b) and 542(c)** of the Housing & Community Development Act of 1992.

*See Section 8 Renewal Guide Ch. 6, Section 6-1 for further details.

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

Submission Requirements for Initial or Subsequent Renewal

• One-year **written notice** to tenants and HUD of contract expiration (**Section 8 Renewal Guide Section 11-4.A.**).
• Form HUD-9624 Contract Renewal Request Form:
  • ✓ **Cover Page** with UEI# (signed/dated).
  • ✓ **Worksheet for Option 4** (Initial or Subsequent) (signed/dated).
• Documentation of **current debt service**.
• Form **HUD-9625 OCAF Worksheet** AND Form **HUD-92547-a Budget-Based Worksheet** OR **RHS-approved budget** (for **515 Rural Development properties**).
• Supporting **documentation required** for all **line items increasing $500 or $5 or more**.
• A **Rent Comparability Study (RCS), if applicable**.
• **Rent Schedule**.
• Utility Allowance Analysis **per HUD Notice 2015-04**, if applicable.

Option Five applies to projects that previously went through the **Portfolio Reengineering Demonstration Program** or entered into **long-term use agreements with HUD** under the **Preservation Program (LIPHRA and ELIPHRA)**.

Eligibility for Option 5

1. **Preservation Projects:** Owners with a **long-term use agreement** under HUD’s Preservation Program. The approved **Plan of Action (POA)** outlines allowed **budget-based rent adjustments** or **Annual Adjustment Factor (AAF) increases**.
2. **Demonstration Projects:** HUD is **no longer issuing initial renewals** under the **Portfolio Reengineering Demonstration Program**.

Refer to HUD’s Section 8 Renewal Policy Guidebook for eligibility details and more information.

Submission Requirements

• HUD **Form 9624 Contract Renewal Request Form**.
• **Option 5 Worksheet**.
• **OCAF adjustment**, if provided for in the **Plan of Action (POA)**.
• **Rent Comparability Study (RCS)**, if applicable.
• Rent adjustment **may require an RCS**, as outlined in the **Plan of Action**.