On November 30, 2023, HUD issued a notice in the Federal Register – “Notice of Certain Operating Cost Adjustment Factors for 2024” – that establishes the 2024 operating cost adjustment factors (OCAFs) for project-based assistance contracts issued under Section 8 of the United States Housing Act of 1937. The new national average increase of the new OCAFs comes in at 5.3 percent. The OCAFs provided in this HUD notice are applicable to eligible projects having a contract anniversary date on or after February 11, 2024. The OCAF (Operating Cost Adjustment Factors) is a factor that is established by HUD each year in the Federal Register and is applied to the existing contract rent (less the portion of the rent that is paid for debt service). OCAFs are used to streamline the rent increase process.
Recent OCAF national average increases
- 2019: 2.9 percent
- 2020: 2.2 percent
- 2021: 2.5 percent
- 2022: 3.1 percent
- 2023: 6.1 percent
While the 2024 increase isn’t as much as the previous year, the national average shows an increase of 5.3 percent. This is nearly double what was considered “normal” before the pandemic.
How OCAFs are determined
HUD says that OCAFs are calculated as the sum of weighted component cost changes for electricity, employee benefits/employee wages, fuel oil, goods/supplies/equipment, insurance, natural gas, property taxes, and water/sewer/trash using publicly available indices. The agency HUD uses the best current price data sources for the nine cost categories in calculating annual change factors. State-level data for electricity, fuel oil, and natural gas from Department of Energy surveys are relatively current and continue to be used. Data on changes in employee benefits/employee wages, goods/supplies/equipment, insurance, property taxes, and water/sewer/trash costs are available only at the national level. State-by-state OCAFs are available in the HUD notice.
