Reminder

The Owner must post their intent to renew or opt-out of the Project-Based Section 8 HAP Contract at least 12 months before the contract expires. CMS should review the letters prior to posting to tenants to ensure language contained in the letter is consistent with Appendix 11-3 of the Section 8 Renewal Policy Guide

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Contact

Jenny Higgs
Contracts Manager
360.616.7220

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About Section 8 Contract Renewals

HUD renews Section 8 project-based housing assistance payments (“HAP”) contracts with owners of multifamily rental housing.  The project-based rental assistance makes up the difference between what an extremely low-, low-, or very low-income household can afford and the approved rent for an adequate housing unit in a multifamily project. Eligible tenants must pay the highest of 30 percent of adjusted income, 10 percent of gross income, or the portion of welfare assistance designated for housing or the minimum rent established by HUD.

Originally, the assistance was provided in connection with new construction or substantial rehabilitation or to support existing projects. Authority to use project-based rental assistance in connection with new construction or substantial rehabilitation was repealed in 1983.  While funding is no longer available for new commitments, funding is available for the renewal of Section 8 HAP contracts for units already assisted with project-based Section 8 renewal assistance. Renewals are funded on an annual basis through appropriations acts.

Applicability

As HAP contracts come to an end, owners must apply for HAP contract renewals to have units remain with Section 8 project-based assistance.

There are several options available when completing your contract renewal. Each of these options have different requirements and should be considered closely. They include:

    • Option 1: Mark up to Market (MU2M)
    • Option 2: Contract Renewals for Other Projects with Current Rents at or Below Comparable Market Rent
    • Option 3: Referral to Recap
    • Option 4: Renewal of Projects Exempt from or not Eligible for Debt-Restructuring
    • Option 5: Renewal of Portfolio Reengineering Demonstration or Preservation Projects
    • Option 6 is not a contract renewal but rather a choice to opt-out of the program

About Rent Adjustments

Contract rent under each Section 8 HAP contract must be adjusted during the HAP contract term in accordance with the HAP contract and HUD requirements.

Types of Rent Adjustments:

    • Budget-based adjustments
    • Annual Adjustment Factor (AAF)
    • Operating Cost Adjustment Factor (OCAF)
    • Auto-OCAF
    • Special Adjustments

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