Contract Renewal Questions

My Contract is coming up for Renewal. What do I do? How do I know which option to Choose?

Your first step should be to look at the Section 8 Renewal Policy Guide . We have an Option Eligibility page with submission requirements.

Your Contract Renewal Paperwork should be submitted 120 days prior to your contract expiration. Your CMS will process the renewal and rent adjustment, if applicable, by first confirming your eligibility, and then determining the completeness of your submission. If necessary, the CMS will contact you for more information.

What do I need to send in? Do you have a checklist for complete package requirements?

Visit our Option Eligibility page for this information.

How long can the contract term be?

Generally, contract terms shall be for one year to five years, subject to appropriations. The contract can be up to 20 years with HUD approval (contract not to exceed the remaining life of the mortgage).

  • If an Owner chooses a contract term of more than one year, the contract will be funded for one year with the balance of the years selected by the Owner being subject to annual appropriations.
  • The effective date of the new contract is the day following the expiration date of the previous contract.

Why is the CMS asking me about SAMs registration?

Per the Section 8 Renewal Policy Guide, the Owner’s certification regarding suspension or debarment on the renewal worksheet (HUD-9624) must be verified by using the System for Award Management (SAM). To ensure that your Entity has
been registered or updated in SAM, go to https://www.sam.gov/portal/public/SAM/#1. If you elect to opt out of public display, you will have to provide the CMS with a current printout to show that there are no active exclusion records.

Why am I being asked to verify Mortgager Entities on page 2 of the rent schedule?

We need verification of the names and titles listed on page 2 of the previous approved rent schedule for the Principals Comprising Mortgagor Entity section. The CMS will ask the O/A to confirm if any changes should be made from the previous approved rent schedules. Please ensure the Active Partners Performances System (APPS) has been updated with changes in the organization of the participant entity. for Quick Tips on the APPS system, click here:  http://portal.hud.gov/hudportal/documents/huddoc?id=appsquicktips.pdf

What can be submitted to show that I am authorized to sign paperwork, Rent Schedules, and HAP Contracts?

The Owner or someone authorized to sign for the Owner/Entity should sign rent adjustment/renewal paperwork, Rent Schedules, and HAP Contracts. To verify signature authorization, we ask for a legal document in which someone has signed as the Owner/Entity. This can include Articles of Incorporation, Partnership Agreement, Management Certification, HAP Assignment, etc. For 202 properties with Board Members that may frequently change, documentation of the submission of the 2530 to HUD can be submitted as verification. The titles and members must be verified annually, so the CMS will ask if the board members are still active. Navigate has a Signature Authorization Form to allow the authorized person that signs for the Owner/Entity to authorize other individuals to sign paperwork, Rent Schedules, and HAP Contracts.

Rent Comparability Study (RCS)

Depends on which renewal options you are eligible for and the age of the current RCS ( RCS has a term of 5 yrs).
  • Options 1A, 1B, 2, 3A, and 3B require an RCS.
  • Options 4 and 5 may require an RCS. You should be able to find out in your plan of action for Option 5b, Preservation properties, that require an AAF adjustment.
  • Also, in certain cases a Pre-MAHRA property may have to submit an RCS when completing an AAF.
Where can I find a list of HUD approved appraisers?

Click on the following link for a list of approved appraisers: HUD Approved Appraisers

Why is my CMS asking for a new RCS when I submitted a RCS 2 years ago? My RCS should be valid for the next 3 years?

Some multi-year contracts stipulate that at the end of each 5-year period, rents for the project are to be adjusted to comparable rents. Such fifth year adjustments may result in a negative (decrease) or positive (increase) of contract rents for one or more unit sizes. To ensure contract rents are adjusted to comparables at the expiration of each 5-year period, the Owner must submit an RCS. Any Option 1 or Option 2 contract renewal request over 5 years MUST submit a new RCS, even if the previous RCS is less than 5 years old. This includes early termination/renewal requests. If the project has an existing RCS that is not at the end of its 5-Year life cycle, the Owner is required to obtain a new RCS for use in adjusting rents to comparables. This will align the RCS and the 5-year period for the project for future fifth year adjustments. Project funds may be used to obtain this new RCS.

Rent Adjustments

What are my options for a rent adjustment?

You need to look at your HAP contract or Plan of Action to determine this.
Rent Adjustment methods available are:
OCAF Rent Increase
BBRI
AAF
UA Adjustment *Now required for all renewals & rent adjustments*

Do you have a checklist for complete package requirements?

Yes. We have checklist for each rent adjustment method.

Amend Rents Checklist

Click on the links below to find out more about each method and the submission requirements:

Where can I find the forms I need to submit?

Visit our Resource Center for everything needed to process your rent adjustment or contract renewal.

What is the currently published OCAF?

Here is the link to the current OCAF factor: OCAF Factors

What do I include for the debt service? And what do I need to send for backup?

The debt service is calculated by

Principal + Interest + MIP – IRP
(This needs to be an annual amount, if monthly, multiply times 12)

You can submit a current monthly statement or an Amortization schedule for backup.

I renewed my contract last year for five years but my CMS mailed me a reminder letter requesting that I submit a request for a rent adjustment. Why?

Even though your contract was renewed for five years, funding is obligated on an annual basis. Years two through five of the contract term are considered Amend Rents years. You need to submit your Amend Rents request at least 120 days before the anniversary date of your contract to ensure funds are obligated for the next year of your contract.

What if I disagree with the proposed rent adjustment amount?

Your Contract Management Specialist will notify you of any changes made to your calculations on the approval letter. If you disagree with the budget approved rents on the rent schedule Navigate sends to you for signature, see Section 11, Chapter 7 of the 4350.1, Procedures for Appealing Budgeted Rent Increase Adjustments.

I do not want an increase in my rents, can I send a letter requesting the rents to remain at current?

Properties eligible for the Auto OCAF may have the option to elect a zero budget-based rent adjustment in lieu of the OCAF adjustment. Electing this option will result in renewed funding at current rents and the OCAF adjustment may not be recouped retroactively in the future. Electing this option does not mean that a budget worksheet needs to be submitted.

I have submitted my renewal/rent adjustment request package to Navigate. What is the next step?

Your Contract Management Specialist will contact you if any additional information is needed to complete your request. Once approved, you will receive an approval letter with your renewed rents.

  • For rent adjustments, you will receive the new rent schedules and Revised Exhibit A documents for signature with the approval letter. We will await funding from HUD and once funding and the signed documents have been received, we will forward the fully executed documents for your records.
  • For contract renewals, you will receive the approval letter only, and once funding is received, we will forward the contracts and rent schedules to you for signature. Once the signed documents have been returned to Navigate, we will sign them and send the HAP contracts to HUD to be fully executed. Once the fully executed contracts have been received from HUD, we will forward your fully executed contract and rent schedule for your records.

Utility Allowances

I received notification I need to submit a Utility Allowance request every year. Why?

Owners of multifamily housing properties that receive subsidy assistance, and for which HUD provides a utility allowance, are required to adjust their properties’ utility allowances every year at the time of the annual and special adjustments of contract rents. Multifamily property owners must establish baseline utility allowances for each of their bedroom sizes once every third year, which are determined by using the baseline utility analysis outlined in Notice H-2015-04. For the two years after the baseline is established, O/As have the option to perform a factor-based utility analysis, as described in Notice H-2015-04.

What if I have not requested changes to my utility allowance, do I still need to do a utility analysis and provide a recommendation?

Yes, with each request for a rent adjustment, the property owner is required to complete an analysis of the current Utility Allowance. Even if the analysis results in the UA remaining at current, you must submit your analysis to be reviewed.

Budgets

HUD Handbook 4350.1 Chapter 7 says I need to explain all increases over 5% when I submit a Budget Based rent increase request. Does that apply to increases from last fiscal year’s audited figures to the proposed amounts or from this year’s actuals to the proposed amounts?

It applies to both. You should explain why the increase occurred (e.g. higher rates, new staff, etc.) and provide any back up documentation that you have (e.g. letters from utility companies, insurance providers, salary schedules, etc.)

Where can I find the budget worksheet?
What do I need to submit with my budget worksheet?

We have a checklist available for your reference.


Our latest blog posts.