HUD OCAF Rent Adjustment Factors Use Project Data for First Time, Big State Differences Result.

Below the radar, HUD's annual adjustment factors in a Notice announced in late October HERE (effective in February of 2008) contained a BIG change in the data used to calculate Operating Cost Adjustment Factors (OCAF) used to annually change subsidized rents in Multifamily [cylinder] programs.

Instead of using a method that used 9 national indices that attempted to track components of operating costs, for the FIRST time in my 20+ year recollection, HUD is now using actual operating cost changes in multifamily properties aggregated to the state level , AFTER eliminating outliers with high or low expense levels.

The notice is NOT clear [to me] as to which "multifamily" project expense data was used. For example, it seems possible that that bond financed MF NON FHA insured properties may not have been included as in the past HUD did NOT have access to financial statements for those properties. Those properties represent a big percentage of all Multifamily HUD assisted projects in Oregon.

As a result of new methodology , there is a BIG differences this year for OCAF for Washington 6% , Idaho 6.1% and Oregon 3.3%. For example for two identical projects with a $3,500 a year current operating expense , Oregon projects where OCAF would be used would receive an annual rent increase of $98 LESS per unit than would a similar project in Idaho ($116 vs $214).

I will attempt to clarify and see if the data used for Oregon is available for public review and post an update of what I find out at a later date.