Federal programs & compliance
OCAF
Operating cost adjustment factor — the annually published HUD factor that adjusts renewed Section 8 HAP contract rents each year, state by state.
Definition
The operating cost adjustment factor is HUD's annual rent-adjustment mechanism for renewed project-based Section 8 contracts, published each year by state in the Federal Register. On the contract anniversary, the factor is applied to the portion of contract rent not attributable to debt service, so the adjustment tracks operating-cost inflation rather than the whole rent. Procedures — and the alternative budget-based adjustment — are set out in the Section 8 Renewal Policy Guidebook.
OCAF adjustments ride on contracts renewed under 42 U.S.C. § 1437f and the PBRA program rules at 24 C.F.R. Parts 880–886.
Why it matters in an underwrite
OCAF is the revenue-growth assumption on most renewed HAP assets — a published factor unrelated to local market rent growth. Because it applies only to the non-debt-service portion of rent, effective growth runs below the headline factor on leveraged deals. Trending HAP rents at market growth rates overstates NOI; underwrite the adjustment mechanism the contract actually carries, and check whether a budget-based adjustment is available when operating costs outrun the factor.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.