Attachment 11-2
PREPARATION OF CONTRACT
Reference numbers in this form refer to notes at the end of the contract text. These endnotes are instructions for preparation of the Basic Renewal Contract. The instructions are not part of the Renewal Contract
TABLE OF SECTIONS
1 CONTRACT INFORMATION
PROJECT
TYPE OF RENEWAL
2 TERM and funding OF RENEWAL CONTRACT
3 DEFINITIONS
4 RENEWAL CONTRACT
a Parties
b Statutory authority
c Expiring Contract
d Purpose of Renewal Contract
e Contract units
5 EXPIRING CONTRACT – PROVISIONS RENEWED
6 CONTRACT RENT
a Initial contract rents
b Contract rent adjustments
(1) OCAF or Budget-Based Rent Adjustments
(2) Comparability adjustments
(a) Applicability
(b) Fifth year adjustment (comparability adjustment at expiration of each 5-year period, if applicable)
(c) Mid-term adjustment (discretionary comparability adjustment within 5-year term)
(d) Adjusting contract rent
(3) Procedure for rent adjustments during renewal term
(4) No other adjustments
7 OWNER WARRANTIES
8 OWNER TERMINATION NOTICE
9 HUD REQUIREMENTS
10 STATUTORY CHANGES DURING TERM
11 PHA DEFAULT
12 EXCLUSION OF THIRD-PARTY RIGHTS
13 WRITTEN NOTICES
SIGNATURES
MULTI-YEAR TERM
1 CONTRACT INFORMATION2
Project
Section 8 Project Number:
Section 8 Project Number of Expiring Contract:
Fha Project Number (if applicable):
Project Name:
Project Description:3
TYPE OF RENEWAL
Check this box for a project renewed under Section 524(a) of MAHRA (not including a Mark-Up-To-Market renewal).
Check this box for a project renewed at exception rents under Section 524(b)(1) of MAHRA.
Parties to Renewal Contract
Name of Contract Administrator4
Address of Contract Administrator
Name of Owner5
Address of Owner
2 Term and funding of renewal contract
a The Renewal Contract begins on 6 and shall run for a period of 7 years.
b Execution of the Renewal Contract by the Contract Administrator is an obligation by HUD of $ ,8 an amount sufficient to provide housing assistance payments for approximately 9 months of the first annual increment of the Renewal Contract term.
c HUD will provide additional funding for the remainder of the first annual increment and for subsequent annual increments, including for any remainder of such subsequent annual increments, subject to the availability of sufficient appropriations. When such appropriations are available, HUD will obligate additional funding and provide the Owner written notification of (i) the amount of such additional funding, and (ii) the approximate period of time within the Renewal Contract term to which it will be applied.
3 DEFINITIONS
ACC. Annual contributions contract.
Anniversary. The annual recurrence of the date of the first day of the term of the Renewal Contract.
Contract rent. The total monthly rent to owner for a contract unit, including the tenant rent (the portion of rent to owner paid by the assisted family).
Contract units. The units in the Project which are identified in Exhibit A by size and applicable contract rents.
Fifth year anniversary. The Renewal Contract annual anniversary that falls at expiration of each 5-year period of the Renewal Contract term.
Fifth year comparability adjustment. An adjustment of contract rents by the contract administrator at the Fifth Year Anniversary. The contract rent for each unit size is set at comparable rent as shown by comparability analysis.
HAP contract. A housing assistance payments contract between the Contract Administrator and the Owner.
HUD. The United States Department of Housing and Urban Development.
HUD requirements. HUD regulations and other requirements, including changes in HUD regulations and other requirements during the term of the Renewal Contract.
MAHRA. The Multifamily Assisted Housing Reform and Affordability Act of 1997 (Title V of Public Law No.105‑65, October 27, 1997, 111 Stat. 1384), as amended.
Mid-term comparability adjustment. An adjustment of contract rents by the contract administrator within each 5-year period of the Renewal Contract term (in addition to the comparability analysis and adjustment at the Fifth Year Anniversary). The contract rent for each unit size is set at comparable rent as shown by comparability analysis.
OCAF. An operating cost adjustment factor established by HUD.
PHA. Public housing agency (as defined and qualified in accordance with the United States Housing Act of 1937. 42 U.S.C. 1437 et seq.).
Project. The housing described in section 1 of the Renewal Contract.
Renewal Contract. This contract, including applicable provisions of the Expiring Contract (as determined in accordance with section 5 of the Renewal Contract).
Section 8. Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
4 renewal contract
a Parties
(1) The Renewal Contract is a housing assistance payments contract (“HAP Contract”) between the Contract Administrator and the Owner of the Project (see section 1).
(2) If HUD is the Contract Administrator, HUD may assign the Renewal Contract to a public housing agency (“PHA”) for the purpose of PHA administration of the Renewal Contract, as Contract Administrator, in accordance with the Renewal Contract (during the term of the annual contributions contract (“ACC”) between HUD and the PHA). Notwithstanding such assignment, HUD shall remain a party to the provisions of the Renewal Contract that specify HUD’s role pursuant to the Renewal Contract, including such provisions of section 9 (HUD requirements), section 10 (statutory changes during term) and section 11 (PHA default), of the Renewal Contract.
b Statutory authority
The Renewal Contract is entered pursuant to section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f), and section 524 of MAHRA.
c Expiring Contract
Previously, the Contract Administrator and the Owner had entered into a HAP Contract ("expiring contract") to make Section 8 housing assistance payments to the Owner for eligible families living in the Project. The term of the expiring contract will expire prior to the beginning of the term of the Renewal Contract.
d Purpose of Renewal Contract
(1) The purpose of the Renewal Contract is to renew the expiring contract for an additional term. During the term of the Renewal Contract, the Contract Administrator shall make housing assistance payments to the Owner in accordance with the provisions of the Renewal Contract.
(2) Housing assistance payments shall only be paid to the Owner for contract units occupied by eligible families leasing decent, safe and sanitary units from the Owner in accordance with statutory requirements, and with all HUD regulations and other requirements. If the Contract Administrator determines that the Owner has failed to maintain one or more contract units in decent, safe and sanitary condition, and has abated housing assistance payments to the Owner for such units, the Contract Administrator may use amounts otherwise payable to the Owner pursuant to the Renewal Contract for the purpose of relocating or rehousing assisted residents in other housing.
e Contract units
The Renewal Contract applies to the Contract units.
5 EXPIRING CONTRACT – PROVISIONS RENEWED
a Except as specifically modified by the Renewal Contract, all provisions of the Expiring Contract are renewed (to the extent such provisions are consistent with statutory requirements in effect at the beginning of the Renewal Contract term).
b All provisions of the Expiring Contract concerning any of the following subjects are not renewed, and shall not be applicable during the renewal term:
(1) Identification of contract units by size and applicable contract rents;
(2) The amount of the monthly contract rents;
(3) Contract rent adjustments; and
(4) Project account (sometimes called “HAP reserve” or “project reserve”) as previously established and maintained by HUD pursuant to former Section 8(c)(6) of the United States Housing Act of 1937 (currently Section 8(c)(5) of the Act, 42 U.S.C. 1437f(c)(5)). Section 8(c)(5) does not apply to the Renewal Contract, or to payment of housing assistance payments during the Renewal Contract term.
c The Renewal Contract includes those provisions of the Expiring Contract that are renewed in accordance with this section 5.
6 Contract Rent
a Initial contract rents
At the beginning of the Renewal Contract term, and until contract rents for units in the Project are adjusted in accordance with section 6b, the contract rent for each bedroom size (number of bedrooms) shall be the initial contract rent amount listed in Exhibit A of the Renewal Contract.
b Contract rent adjustments
(1) OCAF or Budget-Based Rent Adjustments
(a) Except as provided in section 6b(2) below (concerning comparability adjustments at each Fifth Year Anniversary and discretionary comparability adjustments within each five-year term), during the term of the Renewal Contract the Contract Administrator shall annually, on the anniversary of the Renewal Contract, adjust the amounts of the monthly contract rents in accordance with HUD requirements by either of the following methods (as determined by the Contract Administrator in accordance with HUD requirements):
(i) Using an OCAF; or
(ii) At the request of the owner, based on the budget for the Project, as approved by the Contract Administrator in accordance with HUD requirements.
(b) Adjustments by use of the OCAF shall not result in a negative adjustment (decrease) of the contract rents. The OCAF shall not be used for adjustment of rent at each Fifth Year Anniversary (as determined in accordance with section 6b(2)(b) below).
Comparability adjustments
(a) Applicability. This section 6b(2) is applicable only if the contract has been renewed pursuant to Section 524(a) of MAHRA. This section 6b(2) does not apply to a project renewed at exception rents under Section 524(b)(1) of MAHRA (See section 1 of the Renewal Contract).
(b) Fifth year adjustment (comparability adjustment at expiration of each 5-year period, if applicable).
(i) This section 6b(2)(b) is only applicable if the term of the Renewal Contract is longer than five (5) years (from the first day of the term specified in section 2a).
(ii) At the expiration of each 5-year period of the Renewal Contract term (“Fifth Year Anniversary”), the Contract Administrator shall conduct a comparability analysis of existing contract rents. At such Fifth Year Anniversary of the Renewal Contract, the Contract Administrator shall make any adjustments in the monthly contract rents, as reasonably determined by the Contract Administrator in accordance with HUD requirements, necessary to set the contract rent for each unit size at comparable market rent. Such adjustment may result in a negative adjustment (decrease) or positive adjustment (increase) of the contract rents for one or more unit sizes.
(iii) To assist in the redetermination of contract rents at each Fifth Year Anniversary, the Contract Administrator may require that the Owner submit to the Contract Administrator a rent comparability study prepared (at the Owner’s expense) in accordance with HUD requirements.
(c) Mid-term adjustment (discretionary comparability adjustment within 5-year term)
In addition to the comparability analysis and adjustment of contract rents at the Fifth Year Anniversary, HUD may, at HUD’s discretion, require or permit the Contract Administrator to conduct a comparability analysis and adjustment of contract rents (“mid-term adjustment”), one more time within each 5-year period of the Renewal Contract term
(d) Adjusting contract rent
At the time of a fifth year or mid-term comparability adjustment, the Contract Administrator shall make any adjustments in the monthly contract rents, as reasonably determined by the Contract Administrator in accordance with HUD requirements, necessary to set the contract rent for each unit size at comparable rent. Such adjustment may result in a negative adjustment (decrease) or positive adjustment (increase) of the contract rents for one or more unit sizes.
(3) procedure for rent adjustments during renewal term
(a) To adjust contract rents during the term of the Renewal Contract (including an OCAF or budget-based adjustment in accordance with section 6b(1), or a fifth year or midterm adjustment in accordance with section 6b(2)), the Contract Administrator shall give the Owner notice with a revised Exhibit A that specifies the adjusted contract rent amounts.
(b) The revised Exhibit A shall specify the adjusted contract rent amount for each bedroom size as determined by the Contract Administrator in accordance with this section. The adjustment notice by the Contract Administrator to the Owner shall specify when the adjustment of contract rent is effective.
(c) Notice of rent adjustment by the Contract Administrator to the Owner shall automatically constitute an amendment of the Renewal Contract.
(4) No other adjustments
Except for contract rent adjustments in accordance with this section, there shall not be any other adjustments of the contract rents during the term of the Renewal Contract. Special adjustments shall not be granted.
7 OWNER WARRANTIES
a The Owner warrants that it has the legal right to execute the Renewal Contract and to lease dwelling units covered by the contract.
b The Owner warrants that the rental units to be leased by the Owner under the Renewal Contract are in decent, safe and sanitary condition (as defined and determined in accordance with HUD regulations and procedures), and shall be maintained in such condition during the term of the Renewal Contract.
8 OWNER TERMINATION NOTICE
a Before termination of the Renewal Contract, the Owner shall provide written notice to the Contract Administrator and each assisted family in accordance with HUD requirements.
b If the Owner fails to provide such notice in accordance with the law and HUD requirements, the Owner may not increase the tenant rent payment for any assisted family until such time as the Owner has provided such notice for the required period.
9 HUD REQUIREMENTS
The Renewal Contract shall be construed and administered in accordance with all statutory requirements, and with all HUD regulations and other requirements, including changes in HUD regulations and other requirements during the term of the Renewal Contract. However, any changes in HUD requirements that are inconsistent with the provisions of the Renewal Contract, including the provisions of section 6 (contract rent), shall not be applicable.
10 STATUTORY CHANGES DURING TERM
If any statutory change during the term of the Renewal Contract is inconsistent with section 6 of the Renewal Contract, and if HUD determines, and so notifies the Contract Administrator and the Owner, that the Contract Administrator is unable to carry out the provisions of section 6 because of such statutory change, then the Contract Administrator or the Owner may terminate the Renewal Contract upon notice to the other party.
11 PHA DEFAULT
a This section 11 of the Renewal Contract applies if the Contract Administrator is a PHA acting as Contract Administrator pursuant to an annual contributions contract (“ACC”) between the PHA and HUD. This includes a case where HUD has assigned the Renewal Contract to a PHA Contract Administrator, for the purpose of PHA administration of the Renewal Contract.
b If HUD determines that the PHA has committed a material and substantial breach of the PHA’s obligation, as Contract Administrator, to make housing assistance payments to the Owner in accordance with the provisions of the Renewal Contract, and that the Owner is not in default of its obligations under the Renewal Contract, HUD shall take any action HUD determines necessary for the continuation of housing assistance payments to the Owner in accordance with the Renewal Contract.
12 EXCLUSION OF THIRD-PARTY RIGHTS
a The Contract Administrator does not assume any responsibility for injury to, or any liability to, any person injured as a result of the Owner's action or failure to act in connection with the Contract Administrator’s implementation of the Renewal Contract, or as a result of any other action or failure to act by the Owner.
b The Owner is not the agent of the Contract Administrator or HUD, and the Renewal Contract does not create or affect any relationship between the Contract Administrator or HUD and any lender to the Owner or any suppliers, employees, contractors or subcontractors used by the Owner in connection with implementation of the Renewal Contract.
c If the Contract Administrator is a PHA acting as Contract Administrator pursuant to an annual contributions contract (“ACC”) between the PHA and HUD, the Contract Administrator is not the agent of HUD, and the Renewal Contract does not create any relationship between HUD and any suppliers, employees, contractors or subcontractors used by the Contract Administrator to carry out functions or responsibilities in connection with contract administration under the ACC.
13 WRITTEN NOTICES
a Any notice by the Contract Administrator or the Owner to the other party pursuant to the Renewal Contract shall be given in writing.
b A party shall give notice at the other party’s address specified in section 1 of the Renewal Contract, or at such other address as the other party has designated by a contract notice. A party gives a notice to the other party by taking steps reasonably required to deliver the notice in ordinary course of business. A party receives notice when the notice is duly delivered at the party’s designated address.
SIGNATURES
Contract administrator (HUD or PHA)
Name of Contract Administrator
By: ___________________________________________________________
Signature of authorized representative
Name and official title
Date __________________
U.S. Department of Housing and Urban Development
By:
Signature of authorized representative
Name and official title
Date ________________________
Owner
Name of Owner
By:
Signature of authorized representative
Name and title
Date __________________
EXHIBIT A
IDENTIFICATION OF UNITS ("CONTRACT UNITS")
BY SIZE AND APPLICABLE CONTRACT RENTS
Section 8 Contract Number:
FHA Project Number (if applicable):
Effective Date of the Rent Increase (if applicable):
Number Number Contract Utility Gross
of Contract Units of Bedrooms Rent Allowance Rent
NOTE: This Exhibit will be amended by Contract Administrator notice to the Owner to specify adjusted contract rent amounts as determined by the Contract Administrator in accordance with section 6b of the Renewal Contract.
Comments:
INSTRUCTIONS FOR PREPARATION OF RENEWAL CONTRACT
The following instructions are not part of the Renewal Contract.
Endnote numbers are keyed to references in the text of the Renewal Contract.
? This form of Renewal Contract is to be used for initial and subsequent renewals of an expiring Section 8 project-based HAP contract under the authority of Section 524(a) or 524(b)(1) of MAHRA for a term of two years or more. Attachment 11-1 is to be used for renewals under the authority of Section 524(a) or 524(b)(1) of MAHRA for a renewal term of one year.
This form may not be used for Mark-Up-To-Market Renewals. The HUD prescribed form of Mark-Up-To-Market Renewal Contract must be used for this purpose.
Section 2 of the Renewal Contract specifies the contract term.
2 To prepare the Renewal Contract for execution by the parties, fill out all contract information in section 1 and section 2.
33. Enter a description of housing that will be covered by the Renewal Contract. The description must clearly identify the Project by providing the Project’s name, street address, city, county, state, and zip code, block and lot number (if known), and any other information, necessary to clearly designate the covered Project.
4 Enter the name of the Contract Administrator that executes the Renewal Contract. If HUD is the Contract Administrator, enter “United States of America – Department of Housing and Urban Development (HUD)”. If the Contract Administrator is a public housing agency (“PHA”), enter the full legal name of the PHA.
5 Enter the full legal name of the Owner. For example: “ABC Corporation, Inc., a Maryland corporation.”
6 The Renewal Contract must be entered before expiration of the Expiring Contract. Enter the date of the first day after expiration of the term of the Expiring Contract.
7 Enter a whole number of two or more years.
8 Enter the amount of funding obligated.
9 Enter a whole number of months.
Basic Renewal Contract
Multi-Year Term
REV-11-05-2007
| File Type | application/msword |
| File Title | Section 524(a) Contract |
| Author | Peter J. Giaquinto |
| Last Modified By | Preferred User |
| File Modified | 2007-12-11 |
| File Created | 2007-12-11 |