HUD Recap Office Announces Assistance for RAD Projects Encountering Extraordinary Costs

By Ed Gramlich, NLIHC Senior Advisor 

HUD’s Office of Recapitalization (Recap) announced via an email on September 15 that owners of Rental Assistance Demonstration (RAD) properties may request a one-time exception to the use of the standard Operating Cost Adjustment Factor (OCAF). RAD allows public housing agencies (PHAs) to voluntarily convert public housing developments to either Section 8 Project-Based Vouchers (PBVs) or Section 8 Project-Based Rental Assistance (PBRA). When public housing is converted under RAD, the property receives an annual rent increase based on the HUD-determined OCAF. 

Recap notes that OCAF amounts have been insufficient in recent years due to rising operating costs. Therefore, to help address this shortfall, a RAD property may request a one-time “Alternative OCF” by demonstrating that cost increases are beyond the owner’s control and are causing severe financial harm. If Recap approves an Alternative OCF, the adjustment will take effect at a project’s next anniversary date—but only if funds are available. For public housing that converted to PBVs, the increase must be funded by the existing budget authority of a PHA serving as the Contract Administrator. For public housing that converted to PBRA, the increase would be funded from HUD’s PBRA appropriation. 

The rent as adjusted by the Alternative OCF will become the new operating cost baseline to be adjusted each year through the remaining term of the current Housing Assistance Payment (HAP) contract. 

Read the Recap email here.  

View HUD’s RAD website here.  

More information about RAD is on page 4-58 of NLIHC’s 2025 Advocates’ Guide, and on NLIHC’s public housing webpage.