Option Four – Renewal of Projects Exempted from OAHP
Certain project types are not eligible for OAHP restructuring, even though the contract rents may exceed market. Projects without FHA-insured loans are exempt, as are certain FHA-insured properties.
The “Lesser of” Test
Projects submitting a renewal under Option Four are subject to the “Lesser of” test. The “Lesser of” test will set the renewal rents at the lesser of the current rent potential adjusted by the current OCAF rate or a budget based rent adjustment submitted in accordance with HUD Handbook 4350.1, Chapter 7.
If the budget based rent adjustment results in a decrease in the Section 8 rents then the renewal rents will be set at the decreased rents.
The following projects are considered exception projects and are eligible for renewal under Option Four:
For complete guidance and information regarding Option Four please read Chapter 6 of the Section 8 Renewal Policy guidebook. Information on submitting a budget based rent adjustment can be found in HUD Handbook 4350.1, Chapter 7.
· Budget Based Rent Adjustment (if applicable)
· Utility Allowance Analysis (if applicable)