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

**HOUSING**

**Special Attention of:** **Notice** H 98-31 (HUD)

All Community Builders **Issued:** 9/16/98

All Multifamily HUB Directors **Expires:** 9/30/99

All Multifamily Program Center

Directors, All Project Managers

All Secretary\'s Representatives **Cross References:**

Contract Administrators, Owners

and Managers of Projects with

Expiring Section 8 Contracts

**Subject:** Section 8 Contracts Expiring Early in Fiscal Year 1999

> **[BACKGROUND:]{.underline}**
>
> Section 524 of the Multifamily Assisted Housing Reform and
> Affordability Act of 1997, title V of Pub. L. 105-65 (approved October
> 27, 1997), 42 U.S.C. 1437f note (MAHRA) (HUD\'s Fiscal Year (FY) 1998
> Appropriations Act) established new policies on renewal of Section 8
> project-based contracts for FY 1999 expirations.
>
> Renewal requirements are discussed in detail in HUD\'s Interim Rule
> for Multifamily Housing Mortgage and Housing Assistance Restructuring
> Program (Mark-to-Market) and Renewal of Expiring Section 8
> Project-Based Assistance Contracts, published in the [Federal
> Register]{.underline} on September 11, 1998.
>
> A distance learning broadcast on the FY99 contract renewal procedures
> is scheduled for **Tuesday, October 6, 1998,** from 2:00 to 5:00 EST.
> Further information regarding this broadcast will be forthcoming to
> field staff who can then notify interested owners in their area.
>
> The contract renewal requirements of the Interim Rule require that
> owners submit their contract renewal request at least 90 days prior to
> the expiration date. Because there is not sufficient time to satisfy
> these requirements, HUD is offering certain project owners the
> opportunity to have their contract renewed under section 405(a) of the
> January 26, 1996 Continuing Resolution (Pub. L. 104-99 (approved
> January 26, 1996))(see Notices H 96-89 and H 96-97).
>
> **[WHICH CONTRACTS CAN BE RENEWED UNDER 405(a):]{.underline}**
>
> Contracts (or stages) will be deemed eligible for renewal under 405(a)
> ***based on their contract expiration date.*** On approximately
> September 10, 1998, HUD Headquarters staff will provide a list of
> expiring contracts (or stages) to the appropriate Hubs and Multifamily
> Program Centers in order of their expiration. Headquarters staff has
> **estimated** that there is Sufficient authority
>
> Distribution: W-3-1
>
> to renew all of the contracts (or stages) that will expire between
> October 1 and November 30, 1998. Therefore, the list provided to the
> field staff will have all of these contracts listed. Being included on
> this list **is not a guarantee** that adequate funds are available.
> Contracts can be renewed under 405(a) only until the FY98 funding is
> used. All other renewals will be done in accordance with the FY99
> instructions in the interim rule. **NOTE: IN THE EVENT THAT SECTION
> 405(a) IS REPEALED BY CONGRESS, THE RENEWAL PROCEDURES OUTLINED IN
> THIS NOTICE ARE CANCELLED. IF REPEAL OF 405(a) OCCURS, RENEWAL OF
> CONTRACTS WILL HAVE TO FOLLOW FY 1999 RENEWAL PROCEDURES.**
>
> **[FIELD STAFF ACTIONS:]{.underline}**
>
> Upon receipt of the list of contracts eligible for renewal, field
> staff will be required to contact the project owners to see if they
> are interested in an early termination of their contract and renewal
> under 405(a). If the owner chooses to have the contract renewed under
> this section, all 405(a) requirements outlined in Notice H 96-89
> apply, including the fact that only units occupied by eligible
> families can be renewed.
>
> **[OWNERS\' OPTIONS:]{.underline}**
>
> Owners whose contracts are on the list will be contacted by the field
> staff and offered the option of **(1)** renewing under 405(a) or
> **(2)** following the FY99 procedures. If an owner chooses to renew
> under the FY99 procedures, there is a possibility of a lag in the
> provision of assistance, depending on how quickly the contract renewal
> processing can be completed. However, if the contract (or stage) is
> renewed under the 405(a) procedures, the next renewal must be done in
> accordance with the FY99 procedures or any others in effect at the
> time of expiration.
>
> Owners whose contracts are not on the list and not contacted by the
> field staff cannot renew their contracts under 405(a). The contracts
> will be renewed under the FY99 provisions.

Ira G. Peppercorn

General Deputy Assistant Secretary

for Housing