Note: HUD does not accept the RHS utility analysis. The owner must submit a utility…

• h.

• Prepare a contract renewal.

• 1. The AE/CA establishes the renewal rent per requirements for the renewal option selected.
• 2. For the appropriate term:

  • a) Less than one year;

  • b) One year; or

  • c) Multiyear.

• 3. For the expiration date of the contract:

The contract expiration date must be on the last day of the month.

• 4. For the effective fiscal year for records effective October 1 in iREMS:
  • If a contract or amend rents record expires on September 30, the last day of the fiscal year, the effective date of the new contract or

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Amend Rents record is October 1, the first day of the new HUD fiscal year.

• 5. For all Option One Renewal Contracts and for Option Two Renewal Contract where the term of the Renewal Contract is 20 years, insure that Exhibit B of the Basic Renewal Contract is attached to allow access to increased distributions.
• 6. For contracts which are renewed following an early termination insure that the Preservation Exhibit is attached to the Renewal Contract and for any contract renewed following the early termination of a non-MAHRA contract insure that HUD-93184 “Rider to Original Section 8 Housing Assistance Payments Contract” is attached to the Renewal Contract.

• B. Annual Rent Adjustments for Multiyear Contracts for Projects Participating In and Eligible for Auto OCAF in years of Amend Rents

Projects eligible for Auto OCAF rent adjustments are projects with contracts in years of Amend Rents and at the fifth-year adjustment to comparables. Projects may have renewed under any of the following Options:

• Option One

• Option Two — Project renewed under a Multi-Year Term Contract

• Option Three

• Option Four — Projects renewed under a Multi-Term Contract

• Option Five — Demos with restructured loans only, for life of Use Agreement.

1. For projects that have tenant paid utilities, the owner must submit an analysis of the project’s Utility Allowance (see Housing Notice 2015-04) so that processing may be completed and any resulting change be effective on the date of the contract anniversary. To utilize the Auto OCAF process to its maximum benefit, owners are encouraged to submit their analysis prior to 150 days from contract anniversary, but should not submit more than 180 days. In the event the owner’s utility analysis results in a possible decrease in the utility allowance(s) to the tenants, owners must follow the tenant notification procedures in 24 CFR Part 245.

2. At 150 calendar days before the anniversary date of the contract, the AE/CA will receive a system notification to process an Auto OCAF. The AE/CA will:

   • a. Access the Amend Rents record in iREMS and review the calculation of contracts rents performed by iREMS. Make any adjustments necessary based on current documentation.

• b. Generate the Auto OCAF letter to the owner/agent (O/A) (Form HUD9626 for Options One and Three, Form HUD-9627 for Options Two and Four), and the Exhibit A Rent Schedule. Review documents for accuracy.

  • c. Send letter and Exhibit A to O/A.

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3. Upon receipt of the letter and the Exhibit A, the owner will review the OCAF adjusted rents and calculations and:

   • a. Elect to receive the Auto OCAF rent adjustment, or

   • b. Request a budget-based rent adjustment (if permitted under the terms of the renewal contract governing contract rent adjustment). An O/A may request a zero budget-based rent adjustment to maintain current rents. By checking the appropriate box on HUD 9626 or HUD-9627 an owner does not need to submit a budget if requesting a “$0” budget based rent increase.

4. Should the O/A select the Auto OCAF rent adjustment, the O/A must complete and return to AE/CA a signed HUD-Form 9626 or HUD-Form 9627.

5. Should the O/A select a budget-based adjustment, the O/A must return to AE/CA:

   • a. Signed HUD-Form 9626 or HUD-Form 9627.

   • b. All documentation required for a budget-based rent adjustment as defined in HUD Handbook 4350.1, Chapter 7.

6. Upon receipt of the O/As submission, AE/CA:

   • a. Should review O/As rent adjustment documentation.

   • b. If acceptable, update iREMS.

   • c. If the rent increase does not exceed five percent, then the CA processes the increase. If the rent increase equals or exceeds five percent, then the CA should forward the request to the AE for review.

   • d. Execute Rent Schedule Low Income Housing, Form HUD-92458, and return to O/A.

• C. Annual Rent Adjustments for Multiyear Contracts for Projects not Participating in Auto OCAF

  1. Before submitting the annual rent adjustment request under 2. Below, the owner must follow the tenant notification procedures in 24 CFR Part 245 Subpart D if the rent increase is not an OCAF rent adjustment. Whenever an owner’s utility analysis results in a possible decrease in the utility allowance(s) to the project tenant notification procedures in 24 CFR Part 245 must also be followed even if the rent adjustment was made by the OCAF. Should a notice need to be issued for both a rent increase and a utility allowance decrease, a single notice is sufficient if the owner clearly identifies both items in the notice.

  2. At least 120 days but no earlier than 180 days before the anniversary date of the contract, the owner submits:

     • a. OCAF Rent Adjustment Worksheet, Form HUD-9625;

     • b. An analysis of the project’s Utility Allowances (See Housing Notice 201504 or subsequent notices); and

     • c. If applicable:

       • 1. A RCS; and/or

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• 2. A budget-based adjustment, prepared in accordance with paragraph 2-15 of this Guide or a RHS approved budget that does not exceed comparable market rents.

3. The AE/CA should complete the review of an owner’s submission within 30 calendar days.

• a. If applicable, review the RCS and the charts on the worksheet (HUD9625) to verify that the calculations provided include only those Section 8 units in the expiring contract and ascertain the accuracy of the computations.

  • b. Prepare an amended Exhibit A, Rent Schedule, for the MAHRA contract to be issued to the owner and update iREMS. If applicable:

    • 1. The resulting rents cannot exceed the OCAF-adjusted RCS.
    • 2. The OCAF-adjusted RCS serves as the market cap.
    • 3. If the rents are above the OCAF adjusted RCS rents or market rents determined by an alternative method (See Chapter 9), HUD will not approve the budget-based request. The owner would receive the OCAF adjustment or could resubmit the budget that is limited to market. This requirement is not applicable when processing Option Five preservation projects.
    • 4. If a budget-based rent increase does not exceed five percent then the CA processes the increase. If a budget-based rent increase equals or exceeds five percent, then the CA should forward the request to the AE for review.

4. Under Option One, Mark-Up-To-Market, Option Two, Contract Renewals for Other Projects with Current Rents at or Below Comparable Market Rents, and Option Five, Portfolio Re-engineering Demonstration Program (Demo) contracts, if the contract is for a period greater than five years:

   • a. The owner submits a new RCS at the end of each 5-year life cycle of the RCS. The new RCS must be reviewed in accordance with the instructions in Chapter 9 of this Guide.

   • b. If rents are:

     • 1. Above market, the AE/CA will reduce the rent to the comparable market rent.
     • 2. Below market, the AE/CA will increase the rents to comparable market rents.