In comments to HUD, LeadingAge welcomed the agency’s proposed changes to affordable housing property budgets for 2023, but urged the agency to go further.

In response to feedback from LeadingAge and others, HUD recently proposed a change to the calculation of Operating Cost Adjustment Factors, or OCAFs, which are used annually to adjust the operating budgets of certain HUD-assisted housing communities.

HUD’s proposed adjusted calculation results in higher OCAFs than in previous years, bringing the national average from 3.1% in 2022 to 6.1% in 2023. The proposed changes include using new and different data to calculate some of the nine weighted components that make up the annual increase rate. A key area of improvement is property insurance cost calculations, which LeadingAge had specifically advocated for.

However, despite the positive changes that HUD proposed, the 2023 OCAFs would still fall short of cost increases over the past year. For example, inflation rates were higher than 8% for more than half of 2022; similarly, the Social Security Cost of Living Adjustment (COLA) was set at 8.7% for 2023.

LeadingAge’s letter states: “In light of comparative increases, HUD’s adjustments to OCAF calculations for 2023 do not go far enough, and we urge the agency to consider additional adjustments, particularly in the areas of staffing, utilities, and insurance. For example, property insurance costs have risen dramatically since the onset of the COVID-19 pandemic, leaving many housing providers to face double-digit increases…While the proposed OCAFs are an excellent step in the right direction, we urge HUD to go further in future years to reasonably meet property expenses.”

Read LeadingAge’s December 15 comments to HUD here.