Following advocacy by LeadingAge and other groups, the Department of Housing and Urban Development (HUD) has announced a new rent relief option for affordable housing properties going through the agency’s preservation program known as the Rental Assistance Demonstration (RAD).

LeadingAge had worked with housing members and with HUD’s Office of Recapitalization to support a pathway for an alternative rent adjustment for financial relief post RAD-conversion.

RAD allows properties to convert from a Section 202 Project Rental Assistance Contract (PRAC), which is limited in its ability to attract private capital for property upgrades and rehab, to an elderly-designated version of HUD’s Section 8 platform to advance long-term investment and affordability.

However, converted properties are locked into annual rent increases determined by HUD’s Operating Cost Adjustment Factor (OCAF), a calculation that may not be granular enough to meet the financial needs of converted properties based on their particular market and circumstances.

According to HUD’s September 15 RADBlast and published overview, and confirmed with HUD by LeadingAge, the new process will apply to both Public Housing Authorities (PHAs) and RAD for 202 PRAC properties experiencing “extraordinary circumstances justifying an exception.” Instead of the traditional OCAF, HUD will review and approve properties for an “Alternative Operating Cost Factor” (AOCF), which will become the new baseline for OCAF-based increases in subsequent years. The relief is available only one time over the course of the 20 year contract for properties as an emergency rent correction.

HUD will host office hours on September 25 at 2pm ET to review the new rent relief provision, and LeadingAge will discuss it during our upcoming housing calls, in particular our Housing Policy/Advocacy calls. Reach out to Juliana Bilowich, LeadingAge’s Sr. Director of Housing Operations and Policy, for more information.