Southwest Housing Compliance Corporation

Option 1: Request Renewal Under The Mark Up To Market Procedure

Option 1 is divided into Option 1-A and Option 1-B. The following information should be considered when considering eligibility under the Mark up to Market procedure:

Option 1-A

Rents may be renewed at the lesser of comparable market rents or 100% of the FMR.

Eligibility Requirements:

  1. Must Produce a Rent Comparability Study (RCS)
  2. A Real Estate Assessment Center (REAC) physical inspection score of 60 or above with no uncorrected Exigent Health and Safety (EHS).
  3. Profit motivated or a limited distribution ownership.
  4. Comparable Market Rents at or above 100% of the Fair Market Rent (FMR) potential.
  5. The project does not have a low-and-moderate income use restriction that cannot be eliminated by unilateral action by the owner.

Option 1-B

To further preserve the affordable housing stock, HUD has the discretionary authority to mark rents up to market for projects that meet certain criteria but do not qualify under Option 1-A.

For owners who request participation in Option 1-B, and for owners of projects that request an increase in rents above the cap on comparable rents of 150% of FMR, HUD will consider these requests if the project meets at least one of the following three characteristics.

  1. Vulnerable Populations: The tenants of the property are a particularly vulnerable population, demonstrated by a high percentage of units rented to elderly families, disabled families, or large families.
  2. Vacancy Rates: The property is located in a low-vacancy market where there is a lack of affordable housing and where tenant-based vouchers would be difficult to use.
  3. Community Support: The property is a high priority for the local community as demonstrated by a contribution of state or local funds to the property.

Requests for Option 1-B are processed and approved by the Program Center after recommendation from SHCC.