Please see the attached prepublication draft of the 2025 OCAFs notice. This official notice will be published Dec. 11. Below, please review the Summary and the Changes to OCAF Methodology section of the notice. HUD is seeking input on technical changes to its OCAF calculation methodology, specifically the Insurance component data source. This continues to be a policy focus where HUD leadership is responding to member concerns about insurance cost and coverage.
SUMMARY: This notice establishes operating cost adjustment factors (OCAFs) for project-based assistance contracts issued under section 8 of the United States Housing Act of 1937 and renewed under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA) for eligible multifamily housing projects having an anniversary date on or after February 11, 2025. OCAFs are annual factors used to adjust section 8 rents renewed under section 515 or section 524 of MAHRA. Additionally, OCAFs are part of an allowable method of rent adjustment for project[1]based voucher contracts pursuant to the provision at section 8(o)(13)(I) of the United States Housing Act of 1937 that was implemented June 6, 2024. Through this notice HUD also seeks public input on the technical changes to its OCAF calculation method
II. Changes to OCAF Methodology HUD seeks public input on the following technical changes to its OCAF calculation methodology. Insurance component data source. To calculate the inflation factor for the insurance component, HUD has since 2023 used the industry data for Direct Property and Casualty Insurers- Commercial Multiple Peril Insurance series from the Bureau of Labor Statistics, Producer Price Index (PPI). Beginning with the 2025 OCAFs, HUD instead will use the year-to-year change in actual cost data from audited financial statements, as it better captures the significant rise in property insurance costs that multifamily properties have faced in recent years. Specifically, HUD will use actual State-level data, except for States that have fewer than 100 multifamily properties with submitted audited financial statements in 2022 and 2023. For those States, HUD instead uses the HUD Regional average change in actual insurance expenditures. By contrast, HUD’s former methodology of using the PPI failed to capture significant geographic variations in the cost of insurance, as it is a national index. With respect to these changes to OCAF methodology, HUD will consider all comments submitted not later than 30 days from the date of publication of this notice. Unless HUD receives comment that would lead to the reconsideration of these changes, the changes will become effective on February 11, 2025. If HUD receives adverse comment that leads to reconsideration, HUD will notify the public via a revised notice issued immediately following the close of the comment period.