Find guidance and required documentation for renewing expiring Section 8 Project-Based contracts. This page covers renewal types, rent adjustments, utility allowances, and all related processes for both Kentucky Housing Corporation (KHC) and the U.S. Department of Housing and Urban Development (HUD).
These instructions apply to all Contract Administrators (CA) who are responsible for overseeing contract renewals.
General Renewal Requirements
The Section 8 Renewal Policy Guide provides instructions for all Contract Administrators (CAs) and owners.
- Owners are required to submit renewal documentation to KHC at least 120 days prior to the contract's expiration.
- Owners must also notify tenants by letter no later than one year prior to the contract expiration date. A copy of this letter, which must include the information from Chapter 11 of the Renewal Guide (see Appendices 11-1 and 11-2), must be provided to KHC.
Renewal Processes and Details
Select a topic below to find information on each part of the renewal and rent adjustment process.
Renewal Types and Rent Adjustments
Contracts can be renewed for a one-year or up to a 20-year term. We encourage longer terms to preserve affordable housing.
- Subsequent Renewals
The renewal of a contract at the end of its term under the Multifamily Assisted Housing Reform and Affordability Act (MAHRA). - Annual Adjustments (Amend Rents)
Adjustments to contract rents during a multi-year contract. These may be a published OCAF or a budget-based request. - OCAF (Operating Cost Adjustment Factor)
The new OCAF rate is typically published by HUD in October to be effective February 11th of the following year.
Per the Section 8 Renewal Policy Guide (Chapter 2-9, B.1a), a project cannot receive more than one full OCAF increase within a 12-month period.
Utility Allowance (UA) Adjustments
Per HUD Notice 2015-04, owners must review and adjust their property's utility allowances every year at the time of the annual rent adjustment. Owner certifications in lieu of a utility analysis are not permitted.
- Baseline Analysis
Owners are required to establish a baseline utility allowance for each bedroom size once every third year. - Year Two and Three Analysis
For the two years after a baseline, owners must use HUD's most currently published Utility Allowance Factor (UAF).
Contract Execution Process (DocuSign)
HUD now requires all contracts to be routed via DocuSign.
- KHC will request the rent schedule (unsigned) from the Owner/Agent (OA).
- Once funding is received, KHC will draft the contract.
- The OA must complete and return the PBCA Contract Routing Slip (in Word format) with the names, titles, and email addresses of all signers.
- KHC will send the contract to the OA for review. It is imperative to review this carefully, as any errors found after routing will require the process to be canceled and restarted.
- After review, the contract is sent to HUD for routing through DocuSign.
- A contract is not considered fully executed until it is signed by all parties and submitted to HUD’s Ft. Worth Office.
Rent Comparability Studies (RCS)
An RCS is required for certain renewal types.
- Timeline
An RCS takes a minimum of 60 days (30+ days for the appraiser, 30+ days for KHC's 3rd-party review). Please respond timely, as the review process can take longer if the reviewer has questions for the appraiser. - Required Documents
An RCS cannot be submitted for review without the RCS Cover Letter and RCS Checklist.
The appraiser's initial assessed rents are not final. The approved rents may be higher or lower depending on the 3rd-party review.
Terminate Existing/Issue New Contract (TEIN)
A TEIN is most often used for a change of ownership.
- Any change of ownership must first be approved by HUD. Please contact your HUD Account Executive for details.
- Once KHC receives permission from HUD, we can begin the contract process.
- The entire process takes a minimum of 90 days, but usually longer. (Remember, an RCS alone takes 60+ days). This timeline is separate from any other processes HUD must complete for the TEIN.
Budget-Based Rent Increases (BBRI)
Options 2 and 4 allow for Budget-Based Rent Increases (BBRI).
- A BBRI requires a Rent Comparability Study (RCS).
- The owner will receive the lesser of the RCS rents or the calculated Budget Rents.
- You must include profit/loss numbers, year-to-date expenses, and the proposed budget on HUD's Budget Worksheet (Form HUD-92547-A).
For additional information, please contact Carrie Bryan Geraldino.
UA Baseline Requirements (In-Depth)
For properties with a utility allowance, a baseline analysis must be performed once every three years. This analysis is a detailed process and should be prepared four to six months prior to the anniversary date of your contract.
Key Requirements for a Baseline Submission:
- Data Period
Each unit used in the analysis must have 10-12 months of utility data. At the time of contract renewal, this data should generally be no more than 18 months old. - Excluded Units
You must exclude units that have been vacant for more than 2 months, units receiving an increased utility allowance as a reasonable accommodation, or units receiving a flat utility rate (in most cases). - Sample Size Justification
If you cannot meet HUD's required sample size for a specific bedroom count, you must provide a written justification explaining why the excluded units could not be used (e.g., "vacant >2 months," "tenant refused release"). - Required Documentation
KHC requires the actual bills or reports used to complete the baseline. A one-page summary from the utility provider is not sufficient.
Questions?
If you have any questions or concerns about the renewal process, please contact us. For specific questions regarding Budget-Based Rent Increases, please contact Carrie Bryan Geraldino.