MAHRAA section 524 offers most project owners the choice of renewing their Section 8 contracts under two separate provisions:
* Section 524(b)(1) [formerly Section 524 (a)(2)] provides an option only for projects exempt from debt restructuring under MAHRAA. Renewal rentals are not capped at the market rent levels and are the lesser of--
It would appear that HUD is trying to avoid increasing future rents using the OCAF adjustment factor to above-market rents, as was the case prior to MAHRAA. A proportionate amount of any OCAF adjustment must be applied to the reserve for replacements and, therefore, will not be available to meet other operating costs.
Although MAHRAA does give HUD the authority to increase current contract rents to market, HUD notice 99-32 (December 1, 1999) limits the rent to the OCAF-adjusted rent or a budget-based rent not to exceed comparable market rents, with one exception.
MAHRAA provides a number of approaches to help projects offset the effects of the rent reductions.
98-34) that no original issue discount taxable income is generated because projects subject to MAHRAA are exempt from IRC section 7872.