Owners of Rental Assistance Demonstration (RAD) projects sometimes face extraordinary financial challenges. When this happens, the standard Operating Cost Adjustment Factor (OCAF) may not cover rising expenses. HUD allows owners to request an Alternative Operating Cost Factor (Alternative OCF) to address these issues.
The Submission Process
Beginning September 30, 2025, RAD project owners may submit requests for an Alternative OCF through the RAD Resource Desk (RRD). This submission occurs during Post-Closing Processing. Owners must:
- Start a new request in the RAD Property Transaction Page.
- Name the request “Project Name AOCF 2025.”
- Select the Post-Closing Activity “Exception of the OCAF as the Operating Cost Factor.”
From there, owners will answer a series of questions and provide documentation that demonstrates good cause for the adjustment. For RAD Project-Based Vouchers, a certification from the HAP Contract Administrator is also required.
Review and Eligibility
The Office of Recapitalization reviews all Alternative OCF requests. Two outcomes are possible:
- If documentation shows good cause, the Alternative OCF is approved.
- If documentation does not adequately demonstrate need, the request is denied.
Owners should plan ahead. Each request takes at least six months to process, and any approved increases are limited to available funding. The Public and Indian Housing Shortfall Prevention Team also determines whether sufficient funds are available for rent adjustments.
Next Steps After Approval
If approved, HUD’s Recap Office calculates the Alternative OCF using administrative data. Owners may then accept or decline the adjustment in the RAD Resource Desk.
- If accepted, HUD issues a formal approval letter.
- If declined, Owners may submit additional information and request reconsideration.
It is important to note:
- Alternative OCFs reset the rent baseline.
- Owners cannot claim adjustments for missed or under-calculated OCAF increases from prior years.
For owners, the ability to request an Alternative OCF provides flexibility during extraordinary economic conditions. It ensures RAD projects remain financially sustainable while protecting residents from instability. Still, the process is not immediate. Reviews require at least six months, and approved rent adjustments depend on available funding.
