Option 4 Rural Housing

Renewal of Projects Exempt from or Not Eligible for Debt Restructuring for Rural Housing Service 515 Projects

Known as the “Exception Rents” option, Option 4 Rural Housing is a good option for Owners when they have properties above market.

For-profit and Non-profit owners can submit a request for Option 4 Rural Housing.

To qualify for Option 4 Rural Housing, owners must:

  • Have a property that is exempt from debt restructuring under Section 515(h) of MAHRA; or
  • The property does not meet the definition of an “eligible multifamily housing project” under Section 512(2) of MAHRA

Owners of Section 515/8 projects who are requesting a contract renewal under Option 4 pursuant to 524(b)(1) of MAHRA must submit their project budget approved by RHS. HUD Account Executives and Performance Based Contract Administrators are not required to review and approve these budgets. If the budget has been approved by RHS, the budget-based rent will be accepted.

Properties can choose a term of 1 to 20 years for a contract renewal. Anything over 5 years requires HUD approval. In long term contracts, the property will be eligible for the Auto OCAF during rent adjustment years. If the property would like to adjust their rents with a budget during a rent adjustment year, a Rent Comparability Study would be required.

Utility Allowance Analysis

A Full Baseline Utility Allowance with all supporting data collected from utility companies or tenants is required at minimum every 3 years but can be prepared and submitted annually.
Download the Baseline Utility Allowance Worksheet

For the two years following the most recent Baseline Utility Allowance, owners and agents have the option to again obtain data from utilities or tenants to determine utility allowances, or to perform a Factor-Based Utility Analysis, adjusting the allowance using a state-specific increase factor called the Utility Allowance Factor (UAF) provided by HUD.
Download the UAF Calculation Worksheet

What is required for your submission?

Access our Option 4 Rural Housing Checklist here for a detailed list of submission requirements, or download it along with our Option 4 Resource Bundle below.

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