On Tuesday, November 15, HUD published the Notice establishing the 2023 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 MAHRA for eligible multifamily housing projects having an anniversary date on or after February 11, 2023. HUD is also soliciting public input on two proposed technical changes to its OCAF calculation method.

As stated in the Notice, HUD seeks public input on two (2) proposed technical changes to its OCAF calculation method:

1. Vintage of data

To calculate the inflation factor for each of the nine cost components that comprise the OCAF, HUD uses year-over-year data, pulling data as of May of each year. Beginning with the 2024 OCAFs, HUD will begin to pull data in August of each year, to reduce the time lag between when OCAFs are calculated and when they go into effect.

***Note: To provide for OCAFs that are relatively generous in 2023, given historically high inflation levels, HUD calculated the cost component inflation factor for most of the cost components using a time period that exceeds 1 year. HUD used the most recent available data at the time of calculation for the numerator. For the denominator, HUD used the figure for the time period that was used in the calculation of the 2022 OCAFs. Going forward, HUD will revert to using year over-year data for each component, subject to data availability.***

2. Insurance component data source

To calculate the inflation factor for the insurance component, HUD has used the Bureau of Labor Statistics Consumer Price Index, Tenants and Household Insurance Index. Beginning with the 2023 OCAFs, HUD instead uses the industry data for Direct property and casualty insurers-Commercial multiple peril insurance series from the Bureau of Labor Statistics, Producer Price Index, as it is the best metric for insurance costs for properties of leased rental housing.

With respect to these proposed changes to OCAF methodology, HUD will consider all comments submitted by December 15, 2022. Unless HUD receives comment that would lead to the reconsideration of these proposed changes, the changes will become effective on February 11, 2023. 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.

 2023 OCAFs are below, and the Notice can also be found HERE: