The U.S. Department of Housing and Urban Development (HUD) has announced adjustments aimed at helping housing providers manage increasing operational costs, including insurance expenses. The changes involve updates to the operating cost adjustment factors (OCAFs) for multifamily properties under the Section 8 program. These adjustments are designed to reflect rising market-wide expenses while maintaining affordable rental rates.
HUD Agency Head Adrianne Todman emphasized the importance of these adjustments, stating, "As I have traveled across the nation, I have heard from property owners who have difficulty maintaining affordable rents while keeping up with rising expenses, impeding our efforts to boost the supply of available affordable homes."
This initiative is part of a broader effort by the Biden-Harris Administration to tackle escalating insurance costs and associated risks. In 2023, HUD launched its Green and Resilient Retrofit Program (GRRP), providing over $1.1 billion for energy efficiency and climate resilience upgrades in HUD-assisted multifamily properties. Additionally, HUD has revised its multifamily insurance deductibles to mitigate wind and storm coverage costs.
In July, HUD organized a summit with various stakeholders to discuss solutions for rising insurance premiums and diminishing coverage options. Julia R. Gordon, Assistant Secretary for Housing and Federal Housing Commissioner, remarked on the situation: "The escalating cost of property expenses and insurance is a growing concern for families and affordable housing providers across the country."
According to HUD data, insurance costs for assisted multifamily properties have nearly doubled over five years on average, with significant increases noted along the Gulf and Atlantic coasts.
The new OCAFs will be applicable from February 11, 2025, onwards for eligible projects with contract anniversaries on or after this date. HUD is also seeking public feedback on the methodology used for calculating these adjustments until January 11, 2025.
