Manage and Prepare HUD HAP Proposals
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Section 8 Contract Renewals
Renewal of Section 8 Contract – Owner must send one of the below Letters
to Tenants.
-
One-Year Notification Letter-Owner Intends to
Renew
-
One-Year Notification Letter-Owner Does Not
Intend to Renew
Caution:
After an O/A commissions a RCS, which cost thousands of dollars, and O/A
compares RCS Market Rent Potential to currently approved Section 8 Contract Rent
Potential it may be discovered the RCS Market Rate Rent Potential is less
than current
Potential. In this case, a complete RCS would NOT qualify to be used for a
request for increase in rents when renewing a Section 8 Contract.
What is the O/A alternative;
DO NOT commission a complete RCS, but requests the Appraiser to provide LIMITED
RCS GRIDS. After an O/A reviews RCS GRIDS with their Appraisers make a
determination if a complete RCS is feasible.
Also, there is a
HUD qualifying analyses of Owners’
RCS Grids Market Rents that may trigger a HUD commissioned Independent RCS. It
is important O/A use the suggested
LIMITED RCS
GRIDS procedure. I suggest discussing this proactive pre-review with LIMITED RCS
GRIDS with your Appraiser. When assisting preparation of renewal proposals for
clients, I found that in some cases O/A did NOT do their due diligent ahead of
time before accepting a complete RCS for submission of a request for renewal of
their Section 8 Contracts which resulted in HUD reduced their current rents
substantially.
HUD revised Section 8 Contract Renewal Policy Guide (Guide) is a
maze of instructions. While traversing the Guide one can become lost or confused
when Owners/Agents are doing their “Due Diligence” in deciding which Option
under the Guide to choose for renewals/annual rent adjustments of their Section
8 Contract.
There are so many “what if” questions that should be answered
before making an Option choice. Choosing the incorrect Guide Option could be
costly that may not benefit the Owner, especially if you commission a Rent
Comparability Study (RCS). You may not be aware there are alternative approaches
to commissioning RCSs.
In my experience as a HUD Housing Consultant, HUD Budget-Based
Rent Increase (BBRI) Worksheet submissions to HUD Contract Administrators/HUD
whether with a Contract Renewal or just a BBRI request Owners/Agents miss the
mark and do not include all Budget Expenses they are entitled to.
If
your original Section 8 Contract was effective in the 1980s and 1990s and is
approximately a 20year Contract; your Contract Renewal Proposal is due for
submission to Contract Administrator 120 days prior to expiration of the
Contract and must be renewed pursuant to guidelines in revised HUD Section 8 Renewal Policy Guide (Guide).
The Guide reflects major changes to amendment to the Housing Act;
Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA),
Title V of the HUD Fiscal Year 1998 Appropriations Act, Pub. L. 105-65, enacted
on October 27, 1997. MAHRA
established new policies for the renewal of Section 8 project-based contracts
based on market rents instead of the Fair Market Rent (FMR) standard.
A
Rent Comparability Study (RCS) is required to be submitted with certain
renewal Options. The
Owner must submit the RCS to HUD (or the Section 8 Contract Administrator (CA)
if there is one) no later than 120 days before the expiration of the Section 8
contract. Early submissions are allowed. Owners should not submit their requests
no more than 180 days before the Section 8 Contract expires. Owners should
submit the RCS along with the other information required in this GUIDE. If a RCS
is submitted, HUD recommends the renewal request be submitted 180 days before
the contract expires, because HUD may commission an Independent RCS when
processing the request.
Keep in mind, if under the current unexpired Contract your annual
rents maybe adjusted through application of HUD published Annual Adjustment
Factors (AAF). Pursuant to the current revised Guide, request for Contract
Renewals (and annual rent adjustments through the term of your renewed
Contract) rents will be adjusted through Budget-based rent increase (BBRI)
requests or application of HUD published Operating Cost Factors (OCAF).
In
particular, Budget-Based Rent Increase (BBRI) requests must be prepared pursuant
to Chapter 7 of HUD Servicing Handbook, and requests must be submitted on HUD
approved Budget Worksheet, accompanied by required HUD forms. HUD BBRI formula
consists of 2-components; a HUD Budget Worksheet and HUD Rent Computation
Worksheet. To arrive at Owners’ BBRI Annual Gross Rent Potential, the HUD
formula considers projected budget expense line items, other expense adjustments
and Owners’ Annual Return on Initial Equity.
Further,
if Tenants receive Utility Allowances (UA), HUD published new instructions
requiring owners to request annual UA adjustments.
If
you need my assistance in preparing a Proposal for Contract renewal, please
contact me.
Alvin
L. Sutherlin
Housing
Consultant
Post
Office Box 162
Mount
Rainier, MD 20712-0162
Office
Address: 4104-29th Street
Mount
Rainier, MD 20712-1820
301-277-3465
ALVINL.SUTHERLIN@VERIZON.NET
http://hud-consultant.com
References:
http://hud-consultant.com/References.html
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Management Agents who manage several HUD projects with Housing Assistance Payments (HAP) Contracts, their
Contracts either have been renewed under the new HUD Section 8 Renewal Policy Guide,
Guidance for the Renewal of Project-Based Section 8
Contracts, or
are due shortly for renewal or will expire within the next year or two.
During terms
of HAP Contracts, each year O/A are required to request rent/budget authority
adjustments through submission of Budget Worksheets or OCAF Worksheets for those HAP Contracts that were renewed under the new HUD Section
8 Renewal Policy Guide,
Guidance for the Renewal of Project-Based Section 8
Contracts.
I am offering my services to O/A on negotiated terms that could
reduce costs attributable to managing and preparing proposals for
submission to HUD/Contract Administrators (HUD/CA). My services include, but not
limited, to the following.
- I will track expiration dates of HAP contracts, and notify
O/A in a
timely manner to prepare proposals for HAP Contract renewals,
- I will
track anniversary dates of HAP contracts, and notify O/A in a
timely manner to prepare proposals for annual HAP Contract
rent/budgetary adjustments,
- Advise
O/A of any published HUD Notices affecting programs that
relate to HAP Contracts.
- With
assistance of O/A Accounting Departments and Contract Coordinators, I will prepare
a Budget or OCAF approaches to determine which one will be to Owners’ advantage.
- I will
examine budget expense line items to determine if they include all expenses
Owners are entitled to, pursuant to Data Definition for an Audited AFS in
accordance with HUD requirements.
O/A are required to submit requests for HAP Contract renewals and annual rent/budgetary
adjustments to HUD/CA 120-days prior to expiration dates or anniversary
dates of HAP Contracts.
HUD Section 8 Renewal Policy Guide
sets forth new guidelines that O/A must follow when requesting
renewal
of HAP Contracts
and annual rent/budgetary adjustments to HAP Contracts. I can assist O/A in preparing requests for renewals or
annual rent adjustments to HAP Contracts, using the required HUD Forms on O/A
letterhead stationary. All O/A have to do is sign-off on collaborative proposals and mail them
to HUD/CA.
Contact me and we can discuss
your HUD Contract inventory and
mutual arrangement that could be
financially beneficial to you and me.
Contact
me by phone 301-277-3465
alvinl.sutherlin@verizon.net
My Resume
See
Testimonials from Clients
Date Updated:
09/27/2023 03:42:45 AM |
