2-6. CONTRACTS

• A. Copies of MAHRA renewal contracts are found on HUDCLIPS:

  1. Option One uses:

     • Renewal HAP Contract for Section 8 Mark-Up-To-Market Project, Form HUD-9638

  2. Option Two may result in the use of the:

     • Basic Renewal Contract — One Year, Form HUD-9636, or

     • Basic Renewal Contract — Multi-Year Term, Form HUD-9637

  3. Option Three may result in the use of one or more of the following:

     • Basic Renewal Contract — One Year, Form HUD-9636,

     • Basic Renewal Contract — Multi-Year Term, Form HUD-9637,

     • Interim (Full) Mark-To-Market Renewal Contract, Form HUD-9640,

     • Interim (Lite) Mark-To-Market Renewal Contract, Form HUD-9641,

     • Previous Mod Rehab Projects, Form HUD-9644,

     • Full Mark-To-Market Renewal Contract, Form HUD-9642, or

     • Watch List Renewal Contract, Form HUD-9643

  4. Option Four may result in the use of the following:

     • Basic Renewal Contract — One Year, Form HUD-9636,

     • Basic Renewal Contract — Multi-Year Term, Form HUD-9637

  5. Option Five uses:

     • Basic Renewal Contract - One Year, Form HUD-9636,

     • Basic Renewal Contract – Multi-Year Term (For DEMO Projects) , Form HUD-9637, or

     • Preservation Renewal Contract, Form HUD-9639

• B. Expiring Contract Provisions Renewed.

Except as specifically modified by the MAHRA Renewal Contract, all provisions of the expiring contract are renewed.

• 2-7. CONTRACT TERMS

• A. General Contract Terms. The term of the contract is one or more years. HUD believes long-term, multiyear contracts assist in preserving affordable housing and, therefore, the Regional Center Director’s approval is not required when the owner requests a renewal for a multiyear term.

Chapter Two – Published March 2023

8

1. The maximum term of the contract is 20 years. A CA can renew a Section 8 HAP contract for up to five years. If an owner wishes to renew the contract for more than five years, the CA must refer the contract to the AE for final approval.

2. The minimum term for a contract is one year except in the case of a MUTM contract which requires a minimum five-year term.

3. In cases where there is a Use Agreement that mandates a particular renewal option, the maximum term of the Renewal Contract must be coterminous with the Use Agreement. For example, if six years remain on a Use Agreement, the maximum term of the Renewal Contract cannot exceed six years. However, owners can ask that a Use Agreement be extended to facilitate a preservation transaction.

4. If an owner chooses a contract term of more than one year, the contract will be funded for one year, or increments thereof, with the remaining years, or increments thereof, subject to sufficient appropriations.

5. The effective date of a renewal contract is the day after the Expiring Contract expires.

   • a. For renewals of Lites, the original contract is terminated at the end of the month following the month in which the owner is offered a new contract at the market rents.

• b. For renewals in conjunction with a full debt restructuring, the new contract will become effective on the earlier of the expiration of the interim contract or the first day of the month following closing.

6. The AE/CA must ensure that the expiration date of all new renewal contracts is the last day of the month.

7. The term of a multiyear contract need not be in whole years. There may be occasions where the last rental adjustment period may be less than 12 months. For example, a project has an existing Use Agreement with a remaining life of 2 years and 7 months. In this example, the last rental adjustment is for the remaining term of the contract, 7 months. Therefore, the owner would receive a prorated OCAF adjustment for the 7 months. See Section 2-9.B.2. below for instructions on calculating a pro-rated OCAF.