Operating Cost Adjustment Factor - OCAF
OCAFs are annual factors used to adjust Section 8 rents renewed under section 524 of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA). HUD calculates the average, per unit, change in operating cost (excluding debt service and bad debt expense), by state, for all projects submitting consecutive valid audited financial statements.
Projects that renewed their Section 8 contracts under Option 1 and 2 are subject to the comparability test and are capped at the gross rent potential determined by the RCS used at the time of renewal. Projects who were required to submit an RCS with their renewal may also need to resubmit a new RCS if it is 5 years old.
In February 2012, HUD implemented the Auto-OCAF program. Properties eligible for Auto-OCAF will receive an Auto-OCAF Notification Letter from their contract administrator stating what the new rents will be. The owner only needs to sign the letter and return it along with new rent schedules to their contract administrator to accept the new rents. If the property has a utility allowance, the owner must also submit a new UA analysis with the Auto-OCAF acceptance letter.
For those properties not eligible for the Auto-OCAF, OCAF submissions are due 120 days before the anniversary of the contract expiration date. For example, a contract with an expiration date of December 31, 2020, would have an anniversary date of December 31st, therefore their submission would be due September 2nd.
The effective date of the new OCAF rate is February 11 of the current fiscal year for that year’s OCAF. If you contracts current effective date were on or after February 11, you would use the OCAF rate for that fiscal year.
Generally, projects that have renewed their Section 8 Contracts under the current Section 8 Renewal Policy guidelines are eligible to receive OCAF. You should consult your contract to see if you are eligible for an OCAF.
For complete guidance and information regarding OCAF please consult the Section 8 Renewal Policy guidebook.
· Most Recent Mortgage Statement or Amortization Schedule to determine the Project’s Debt Service
· Utility Allowance Analysis (if applicable)
· Rent Comparability Study (RCS)
· RCS Cover Letter (if applicable)
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