Option 1: Request Renewal Under The Mark Up To Market Procedure

Option 1 is a good way to bring rents up to market, if you are eligible. Option 1 is divided into Option 1-A and Option 1-B.

Get started with the Option 1 Calculation Worksheet or read more about it...

Third Party Rent Comparability Study

It is important to note that HUD will also hire an independent third-party appraiser to perform a Rent Comparability Study, and the Project Manager will rely on the information contained in the third-party RCS in determining rents. Therefore, it is important to review your Rent Comparability Study carefully to ensure the results are reflective of market conditions in your area. There is no appeal process when there are differences between comparability studies.

The renewal contract will be the Mark-Up-To-Market renewal contract with a minimum of a five-year term. Only OCAF Rent Adjustments are allowed during the term of the contract.

Option 1-A

Rents may be renewed at the lesser of comparable market rents or 150% of the Fair Market Rents (FMRs).

Eligibility Requirements:

• A Real Estate Assessment Center (REAC) physical inspection score of 60 or above with no unresolved Exigent Health and Safety (EHS) items.
• Profit motivated or a limited distribution ownership.
• Comparable Market Rents at or above 100% of the FMR potential.
• The project does not have a low-and-moderate income use restriction that cannot be eliminated by unilateral action by the owner.

Submission Requirements:

• Contract Renewal Request Form (HUD Form 9624)
• Rent Comparability Study (RCS)

Option 1-B

To further preserve the affordable housing stock, HUD has the discretionary authority to mark rents up to market for projects that meet certain criteria but do not qualify under Option 1-A.

For owners who request participation in Option 1-B, and for owners of projects that request an increase in rents above the cap on comparable rents of 150% of FMR, HUD will consider these requests if the project meets at least one of the following three characteristics.

1. Vulnerable Populations: The tenants of the property are a particularly vulnerable population, demonstrated by a high percentage of units rented to elderly families, disabled families, or large families.
2. Vacancy Rates: The property is located in a low-vacancy market where there is a lack of affordable housing and where tenant-based vouchers would be difficult to use.
3. Community Support: The property is a high priority for the local community as demonstrated by a contribution of state or local funds to the property.

Requests for Option 1-B are processed and approved by the Program Center after recommendation from SHCC.

Submission Requirements:

• Contract Renewal Request Form (HUD Form 9624)
• Rent Comparability Study (RCS)

HUD Guidance

Chapter Three of the Section 8 Renewal Policy has complete guidance regarding Options 1-A and 1-B.