HAP contracts and renewals (project-based Section 8)

A HAP contract — Housing Assistance Payments — is the funding spine of a project-based Section 8 property: HUD pays the owner the difference between what tenants can afford (30% of adjusted income) and the contract rent, unit by unit, month by month. About 1.3 million households live under these contracts.

The capital-markets event is the contract's expiration and renewal. Original 20–40-year contracts from the 1970s–80s have long since rolled into renewal regimes under MAHRA (the 1997 renewal statute), typically in 1-, 5-, or 20-year increments, funded by annual congressional appropriations. At each expiration the owner chooses: renew (under one of several MAHRA options, some of which mark rents to market — up or down), or opt out and convert the property toward market rate, with tenant protections and enhanced vouchers cushioning the transition.

Reading expiration data correctly requires one technical distinction: HUD's files carry both the current funding increment's end date (often months away, an artifact of annual appropriations) and the overall contract term's expiration. The funding increment is administrative noise; the overall term is the real decision point. Our dataset uses the overall term.

Because a HAP contract travels with the property independently of LIHTC, a single building can face two separate clocks — a year-15 equity event and a HAP expiration — and the interaction (an owner weighing an opt-out while an investor exits) is where preservation risk concentrates. Expiring HAP contracts run roughly 60,000–90,000 assisted units per year over the coming decade.