Resident Concerns: Inquiry Categories

Renewal of Portfolio Reengineering Demonstration or Preservation Projects

Option 5 is split into two different options, Option 5a Portfolio Reengineering Demonstration and Option 5b Preservation Projects.

Option 5a, Demonstration projects

This option covers any project that has completed the Demo program, as evidenced by a recorded Use Agreement. If the owner entered into the Demo program but did not execute and record a Demo Use Agreement, it is not eligible to renew under Option 5.

Option 5b, Preservation Projects

Preservation Project renewals consist of Section 236 and 221d3 BMIR properties whose owners entered into Long-term Use Agreements with HUD under either Title II Emergency Low Income Housing Preservation Act of 1987 (ELIPHA), or Title VI, Low-income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA).

Properties can only renew under Option 5 if they are already in an Option 5 contract. No new properties may submit paperwork to renew under this option.

Option 5 Renewal Rent Adjustments Methods

The rent adjustment method available to you will be listed in the individual project’s Plan of Action (POA) and/or Use Agreement.

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 5 Checklist here for a detailed list of Option 5a or 5b submission requirements, or download it along with our Option 5 Resource Bundle below.

Initial Referral to RECAP

You may remember when this option was known as OAHP. OAHP expired in 2017 and is now known as the Office of Recapitalization, or RECAP.

Option 3 is split into two different options, Option 3a RECAP Lite, or Option 3b RECAP Full.

Typically, we see a Referral to RECAP when a property comes in to renew under Option 2, has an Active FHA loan with HUD, and the property’s current rents are above the Rent Comparability Study the property has procured.

RECAP will make the determination whether the property must have their rents reduced to market, or can still make debt payments on their FHA loan?

Option 3a RECAP Lite

RECAP Lite is used when there is no debt restructuring and the property rents get reduced to the Rent Comparability Study rents. During renewal years, an Option 3a can adjust their rents by the OCAF or with a budget, pending HUD approval.

Option 3b RECAP Full

Full RECAP is used when debt re-structuring is required. Upon closing of full debt restructuring, a Housing Assistance Payment (HAP) Contract is typically issued for 20 years and must be continually renewed under Option 3b until the property’s Use Agreement expires. Budget-based rent adjustments under this option are not allowed. Rents are adjusted by the OCAF only. Properties are not allowed to terminate a Option 3b contract early to reissue under a different option.

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 3a or 3b Initial Renewals Checklist here for a detailed list of submission requirements, or download it along with our Option 3 Initial Resource Bundle below.

Contract Renewals for Other Projects with Current Rents at or Below Comparable Market Rents

Subject to HUD approval, owners may request to adjust their rents by a budget-based rent adjustment, limited by the market. In this instance, a budget is processed in lieu of the OCAF.

Both for-profit and Non-profit owners can submit a request for Option 2.

To request rental adjustments based on the Operating Cost Adjustment Factor see the ‘Option 2 OCAF Only’ tab above. To proceed with a budget-based Option 2 renewal continue to the steps below.

To qualify for Option 2

Owners must have:

• Aggregate current rent levels under the expiring contract must be at or less than the comparable market rents (this is determined with a Rent Comparability Study), or
• The property’s aggregate current rents exceed the comparable market rents, but the property is exempt from Mark-to-Market (Option 3) restructuring and the Owner is willing to reduce their rents to the comparable market rents.

Renewal requests of over 5 years require HUD approval. For properties with a contract term that exceeds 5 years, the property will need to obtain a new Rent Comparability Study at the end of the 5^th year and the rents will be adjusted to the comparable market rents.

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 2 Budget Checklist here for a detailed list of submission requirements, or download it along with our Option 2 Budget Resource Bundle below.

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