RAD Category Search
RAD Category Search
Notice Listings on Adjustments to Contract Rents (OCAF)
Notice Section 1.6.B PBV Contract Terms Notice Section 1.6.B.6 Method of Adjusting Contract Rents Notice Section 1.7.A.6 Method of Adjusting Contract Rents
Documents on Adjustments to Contract Rents (OCAF)
Questions on Adjustments to Contract Rents (OCAF)

OCAFs for PBV Properties

I have a PBV property which converted through RAD. How do I obtain the OCAF adjusted rents for this property?

Following conversion to PBV, the project’s contract rents are eligible for an annual OCAF adjustment at each HAP contract anniversary. The administering PHA (or independent entity, if the project is owned by the administering PHA) will be responsible for processing the OCAF and ensuring the owner is receiving the updated rent amounts. Please see the following instructions found in the “RAD PBV OCAF Adjustment Tool (Post-Closing)” spreadsheet available on the RAD Resource Desk Document Library: “Per the RAD Notice and the HAP Contract,  the RAD contract rents are adjusted at each anniversary of the HAP contract by the Operating Cost Adjustment Factor (OCAF). 24 CFR  983.301 and 983.302 do not apply. For RAD PBV properties, contract rents are the lesser of reasonable rent and the OCAF-adjusted rent. HUD calculates and publishes the OCAF each year in the Federal Register.  The OCAF is applied to the portion of a contract rent not committed to debt service.  As a result, the rent adjustment can be more complex than simple multiplication. Further, the Federal Register notice states when the OCAF for each year takes effect - typically, a specified date in February. As a result, a contract with an anniversary date on January 1 or February 1 will usually use the OCAF for the prior year (e.g. a contract with a HAP anniversary date of January 1 will be adjusted on January 1 of 2018 by the 2017 OCAF).” This spreadsheet can assist in calculating what the rents should be, but this Tool is for internal calculation purposes only and does not need to be submitted to HUD.

OCAF Adjustments Prior to Closing

Prior to closing, how are my CHAP rents increased by OCAF?

HUD will increase the RAD contract rents included in the CHAP each year by the published OCAF. For properties awarded under the original 60,000 unit cap with initial contract rents based on FY 2012 funding levels (“FY 12 RAD rent base year”), the first OCAF adjustment occurred in 2014 and will occur each year thereafter until closing. Thus, for a project in this category that closes with a HAP effective date of January 1, 2017, the initial contract rents are based on 2012 funding, increased by the 2014, 2015, 2016, and 2017 OCAFs. For properties awarded above HUD’s original 60,000 unit cap but subject to the increased 185,000 cap with initial contract rents based on FY 2014 funding levels (“FY 14 RAD rent base year”), the first OCAF adjustment occurred in 2015 and will occur each year thereafter until closing. Thus, for a project in this category that closes with a HAP effective date of January 1, 2017, the initial contract rents will be based on 2014 funding, increased by the 2015, 2016, and 2017 OCAF. Note: Because the OCAF adjustments are generally published in October for the following calendar year, beginning in CY 2017 HUD plans to update all CHAP rents by the applicable OCAF adjustments before the start of the calendar year.