Note: In cases where a CA makes the determination that contract rents exceed comparable…

• B. Currently At-Market Projects: Prior to Sunset, any project that had above-market rents at the time of the initial renewal on or after October 1, 1998, may be eligible for a full debt restructuring even if the current rents are at-or below-market. An owner of such project can request a debt restructuring as follows:

  1. Owners with Watch List contracts may request re-entry into Recap for restructuring, but must have a binding commitment as set forth in Section 5-2, above, prior to Sunset, for any restructuring to occur after Sunset. If approved by Recap for re-entry, terminate the Watch List Renewal Contract and issue the Interim (Full) Mark-to-Market Renewal Contract.

  2. Owners who were originally eligible for Recap, but whose rents were reduced without the benefit of debt restructuring may request entry into Recap prior to Sunset. Generally, this group includes any project, including previously approved Lite projects, that had above market rents at the time of the initial renewal and are otherwise eligible. Use the Interim (Full) Mark-to-Market Renewal Contract.

• C.

• Required Owner Submissions:

1. For Lite Rent Restructuring: The owner submits a Contract Renewal Request Form (HUD-9624), including a certification that project rents exceed comparable market rents (or exceeded comparable rents on or after October 1, 1998), and neither the owner nor any affiliate is suspended nor debarred. If the owner or any affiliate is suspended or debarred, the project may continue to be eligible for a Lite. (Refer to Chapter 6, “ Approvals, Ineligibility and Appeals”, of the Recap Operating Procedures Guide.) The AE/CA executes the Interim (Lite) Mark-toMarket Renewal Contract for a term determined by Recap, not to exceed 12 months.

An owner requesting a Lite is also required to submit:

• a. A physical inspection report,

• b. A copy of the most recent audited financial statements (all financial statements must be official electronic submissions to HUD); and

Chapter Five – Published March 2023

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• c. A RCS.

2. For Full Debt Restructuring: The owner submits a Contract Renewal Request Form, including a certification that project rents exceed comparable market rents (or exceeded comparable rents at a renewal on or after October 1, 1998), and that neither the owner nor any affiliate is suspended nor debarred. If the owner is suspended nor debarred, a request for a debt restructuring may be rejected by the Secretary, unless the debt restructuring includes a transfer of the project to a HUDapproved purchaser. If any affiliate is suspended or debarred, the project may continue to be eligible for contract renewal with restructuring at the Secretary’s discretion. (Refer to Chapter 6, “Approvals, Ineligibility and Appeals” of the Recap Operating Procedures Guide.)

• D. The AE/CA:

1. If the project is entering Recap for a debt restructuring, the AE/CA executes the Interim (Full) Mark-to-Market Renewal Contract and forwards it to Recap for processing. The Interim (Full) Mark-to-Market Renewal Contract expires by its terms upon the earlier of: 1) twelve (12) months; 2) last day of the month of closing under the Restructuring Commitment; 3) upon a final determination as defined in MAHRA and the Regulations (“Final Determination”) that results in the discontinuance of the Restructuring process or that the owner is in default under the renewal contract.

   2. If a project subject to a Watch List Renewal Contract (HUD-9643) is re-entering Recap, the AE/CA terminates the Watch List Renewal Contract and replaces it with the Interim (Full) Mark-to-Market Renewal Contract for a specific period determined by Recap to complete the processing.

   3. If a completed Lite project wants to return to Recap for a debt restructuring, the AE/CA executes the contract for a specific period (12 months or less) determined by Recap to complete the processing. Use the Interim (Full) Mark-to-Market Renewal Contract to complete the processing.

• E. Extensions of Interim Contracts:

  1. Recap/Participating Administrative Entity (PAE)/HUD Delays: The AE, Recap or the PAE may request an extension of the Interim Contract at above market rents for any project that has exceeded the one year period. Extensions at above market rents may not exceed the approved expiration date. Recap projects with approved extensions must use the appropriate interim contract.

  2. Owner Delays: There will be no extension at above-market rents when HUD determines that the owner is the cause of the delay. In these cases, where additional time is required, the AE/CA will extend the Interim Full Renewal contract at market rents. Recap will direct the AE/CA to extend the contract for a sufficient period required to bring the project to closing.