HUD-9636 Basic Renewal Contract One-Year Term

Attachment 11-2

U.S. Department of Housing and Urban Development
Office of Housing

Project-based Section 8
HOUSING ASSISTANCE PAYMENTS

BASIC RENEWAL CONTRACT
MULTI-YEAR TERM

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

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Multi-Year Term
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Attachment 11-2

TABLE OF SECTIONS

1 CONTRACT INFORMATION

1

PROJECT

1

TYPE OF RENEWAL

1

2 TERM AND FUNDING OF RENEWAL CONTRACT

2

3 DEFINITIONS

3

4 RENEWAL CONTRACT

4

a Parties

4

b Statutory authority

4

c Expiring Contract

4

d Purpose of Renewal Contract

5

e Contract units

5

5 EXPIRING CONTRACT – PROVISIONS RENEWED

5

6 CONTRACT RENT

6

a Initial contract rents

6

b Contract rent adjustments

6

(1) OCAF or Budget-Based Rent Adjustments

6

(2) Comparability adjustments

7

(a) Applicability

7

(b) Fifth year adjustment (comparability adjustment at expiration
of each 5-year period, if applicable)
7

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Multi-Year Term
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(c) Mid-term adjustment (discretionary comparability adjustment
within 5-year term)
8
(d) Adjusting contract rent

8

(3) Procedure for rent adjustments during renewal term

8

(4) No other adjustments

9

7 OWNER WARRANTIES

9

8 OWNER TERMINATION NOTICE

9

9 HUD REQUIREMENTS

9

10 STATUTORY CHANGES DURING TERM

9

11 PHA DEFAULT

10

12 EXCLUSION OF THIRD-PARTY RIGHTS

10

13 WRITTEN NOTICES

11

SIGNATURES

12

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Attachment 11-2

U.S. Department of Housing and Urban Development
Office of Housing

Project-based Section 8

HOUSING ASSISTANCE PAYMENTS
BASIC RENEWAL CONTRACT1
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.

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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
6

a

The Renewal Contract begins on
7
of
years.

and shall run for a period

b

Execution of the Renewal Contract by the Contract Administrator is
an obligation by HUD of $
,8 an amount sufficient to provide
9
housing assistance payments for approximately
months of
the first annual increment of the Renewal Contract term.

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c

3

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.
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
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Attachment 11-2

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

b

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.

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
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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

e

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.

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;

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c
6

(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.

The Renewal Contract includes those provisions of the Expiring
Contract that are renewed in accordance with this section 5.

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.

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(b)

(2)

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.
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(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 budgetbased 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.

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(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

8

9

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.

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.

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

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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

12

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.

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.

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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.

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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 __________________

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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
of Contract Units of Bedrooms

Contract
Rent

Utility
Allowance

Gross
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:

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EXHIBIT B
DISTRIBUTIONS LIMITATION

FOR PROJECT NOT SUBJECT TO DISTRIBUTIONS LIMITATION:
If the project is not subject to any limitation on distributions of project funds,
either pursuant to an FHA Regulatory Agreement or pursuant to the Expiring
Contract, neither HUD nor the PHA may impose any additional limitation on
distributions of project funds during the term of the Renewal Contract.
FOR PROJECT SUBJECT TO DISTRIBUTIONS LIMITATION:
If the project is subject to any limitation on distributions of project funds pursuant
to an FHA Regulatory Agreement or pursuant to the Expiring Contract, such
limitation on distributions shall continue to be applicable during the term of the
Renewal Contract, provided that the owner may take an increased distribution in
accordance with the Section 8 Renewal Policy Guidance for Renewal of ProjectBased Section 8 Contracts, (the "Guidebook").
However, owners of Section 8 properties must maintain the property in good
condition, as demonstrated by a REAC score of 60 or higher, in order to take
increased distributions.
The owner shall comply with the distribution limitations. The maximum
distribution to the owner shall be equal to the total of:
1

The limited distribution permitted pursuant to the FHA Regulatory
agreement or the Expiring Contract, plus

2

Any increased distribution as approved by HUD in accordance with the
Guidebook.

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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.

1

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.
3.

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.”
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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.

OMB Control #2502-0587 Exp. 09/30/2014
"Public reporting burden for this collection of information is estimated to average .75 hours. This includes the time for collecting,
reviewing, and reporting the data. The information is being collected for purposes of determining new rents in an assisted property
and will be used for that purpose. Response to this request for information is required in order to receive the benefits to be derived.
This agency may not collect this information, and you are not required to complete this form unless it displays a currently valid OMB
control number. No confidentiality is assured.”

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