HUD released an updated Section 8 Renewal Policy Guide and Summary of Changes on May 18, 2012 and has since issued a request for comments on the updated guide in the Federal Register. The Section 8 Renewal Policy Guide governs how expiring Section 8 project-based assistance contracts are renewed, an essential component to preserving low income rental housing affordability and availability. Comments on the updated guide are due to HUD by November 13, 2012 and should be sent to: Reports Liaison Officer, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, Room 9120.

Click here to read the Federal Register notice.

Significant Changes to Section 8 Renewal Policy Guide: Two of the page changes within the guide have an impact on budget-based rent adjustment requests in Option Four. The first requires the use of current debt service in an Owner’s budget-based rent increase request and the other permits a budget-based rent increase at the annual anniversary date only if the proposed rents do not exceed comparable market rents. The effective date for both of the page changes is 150 days after May 18, 2012 (which is October 15, 2012). Any budget-based rent increase request postmarked prior to October 15, 2012 can be processed under the previous guidance. Any budget-based rent increase postmarked October 15, 2012 or thereafter must abide by the new guidance. This new requirement applies to all Option Four contracts, even multiyear contracts signed prior to May 18, 2012.

Other changes include discontinuation of the use of Attachment 20 which allowed the Renewal Contract to be extended, elimination of Note 1 following Section 3-2 D which required rents for an Option One B renewal to be restricted to use restricted levels, new requirement for the use of current debt service in an Owner’s budget-based rent increase, among other changes.

HUD also recently announced that page changes regarding appraisers have been suspended. More specifically, Sections 9-23, 9-24, and 9-25 of the guide detailed new procedures for appraisers if the market rents in the owner’s rent comparability study (RCS) exceed 110 percent of the Fair Market Rent. HUD is considering further revisions to the guidance and effective September 7, 2012, these requirements are suspended.

Click here to read the updated Section 8 Renewal Policy Guide.