> **OCAF Worksheet Instructions**
>
> These instructions are for use by Owners of projects that require an
> Operating Cost Adjustment Factor (OCAF) calculation (rent adjustments,
> "lesser of" test, etc.). Each entry of the OCAF Worksheet is explained
> below.
>
> NOTE:

-   All calculations should be taken out to the third decimal point
    (1.023).

-   Rounding to the nearest dollar figure can take place in Step Three
    when the new rents are calculated with the Increase Factor.

-   If using the electronic spreadsheet, there are three worksheets,
    each with a separate tab at the bottom of the page.

# Step One

> Calculate the current Section 8 rent potential for expiring contracts.
> Enter information only for the Section 8 units in the project that are
> expiring.

## A

> Enter the unit type (1-BR, 2-BR, etc.) with the contract/stage number.
> When entering information please distinguish between similar units
> with different rents. For example, if there is an expiring contract
> with one bedroom apartments that have different rents enter 1BR-a,
> 1BR-b, etc. If an Owner elects to combine the contracts into a single
> contract and there are units of the same bedroom type in the combined
> contracts, they should be combined into one rent level that will set
> the rent at an average that yields the same adjusted rent potential.
> For example: *total rent for combined contracts* *total \# units =
> Average (# of units X rent = total rents)*

## B

> Enter the number of units that correspond to the unit type and
> contract/stage number.

## C

> Enter the current monthly Section 8 contract rent (including
> utilities, if applicable) for the corresponding unit type.

## D

> Multiply the current Section 8 contract rent (C) by the number of
> units (B) to get the monthly current Section 8 rent potential for the
> unit type. (If using the electronic spreadsheet, these calculations
> will be made automatically.)

## E

> Add all of the sums of Column D to get the monthly expiring Section 8
> contract rent potential for the contract(s)/stage(s). (If using the
> electronic spreadsheet, this calculation will be made automatically.)

## F

> Multiply the sum of the monthly expiring Section 8 contract rent
> potential in (E) x 12 to get the annual rent potential for the
> expiring contract(s). (If using the electronic spreadsheet, this
> calculation will be made automatically.)

# Step Two

> Calculating the Increase Factor adjusted by the OCAF for the Expiring
> Contract(s).

## G

> Enter the annual rent potential for those Section 8 contracts that are
> not being renewed if there are multiple Section 8 contracts at the
> property and some are not being renewed at this time.

## H

> Enter the annual rent potential for the non-Section 8 units in the
> property if the property is not 100% Section 8.

## 

## I

> Add the annual Section 8 rent potential for the expiring Section 8
> contract(s) (F), the total annual rent potential for non-expiring
> Section 8 units (G), and the total annual rent potential for
> non-Section 8 units in the property (H) to calculate the total annual
> rent potential at the property. (If using the electronic spreadsheet,
> this calculation will be made automatically.)

## J

> Divide the annual Section 8 rent potential for the expiring Section 8
> contract(s) (F) by the total rent potential of the project (I) to find
> out what portion of the property's total annual rent potential is for
> the expiring Section 8 contract(s). (If using the electronic
> spreadsheet, this calculation will be made automatically.)

## K

> Enter the Debt Service, use the project's current debt service,
> including new debt service for loans made for capital needs and or
> transfers (See Chapter 15 of the Section 8 Renewal Policy Guide) and
> the MIP for FHA loans. The Owner must provide this information. The
> HUD project manager may confirm this information by reviewing the
> project's file. For a project that receives Interest Reduction
> Payments, enter the Total Annual 1% Project Debt Service.

## L

> Multiply the debt service (K) by the portion of the overall rent
> potential for the expiring Section 8 contract (J) in order to subtract
> the correct amount of debt service from the rent potential. (If using
> the electronic spreadsheet, this calculation will be made
> automatically.)

## M

> Subtract the annual expiring Section 8 share of debt service (L) from
> the total annual rent potential for the expiring Section 8 contract(s)
> (F) in order to calculate the annual expiring Section 8 rent potential
> attributed to operations. The rent adjustment must be for the portion
> of the rent that is attributable to operations, there should be no
> rent increase on the portion of the rent that covers the debt service
> since this is a static figure. (If using the electronic spreadsheet,
> this calculation will be made automatically.)

## 

## N

> Enter the currently published OCAF for your area. If the OCAF is 2.3%,
> enter 1.023.

## O 

> Multiply the annual expiring Section 8 rent potential attributable to
> operations (M) by the currently published OCAF for the area (N). (If
> using the electronic spreadsheet, this calculation will be made
> automatically.)

## P

> Add the expiring Section 8 portion of the debt service (L) to the
> adjusted rent attributable to operations (O) to obtain the adjusted
> contract rent potential. (If using the electronic spreadsheet, this
> calculation will be made automatically.)

## Q

> If applicable, compare the adjusted contract rent potential with the
> Market Rent Potential (from the RCS and reflected in the Renewal
> Request Forms). Enter the lesser of the adjusted contract rent
> potential or the Market Rent Potential. ***NOTE:*** This step may not
> be applicable in all cases. If no RCS was required, enter the adjusted
> contract rent potential.

## R

> Divide the adjusted contract rent potential (or market rent potential,
> if applicable)(Q) by the total annual rent potential for the expiring
> Section 8 contract(s) (F) to adjust the adjusted OCAF. Due to the fact
> that the OCAF was applied only to the portion of the expiring Section
> 8 rent potential attributable to operations, the adjustment factor
> that will be applied to each of the rents will be slightly less than
> the published OCAF. (If using the electronic spreadsheet, this
> calculation will be made automatically.)

# Step Three

> Calculate the OCAF Adjusted Rent Potential for Expiring Section 8
> Contract(s).

## S

> Enter the unit type(s) and contract/stage number (as in A). (If using
> the electronic spreadsheet, these will be entered automatically.)

## T

> Enter the number of units (as in B). (If using the electronic
> spreadsheet, these will be entered automatically.)

## U

> Enter the current Section 8 monthly contract rents (as in C). (If
> using the electronic spreadsheet, these will be entered
> automatically.)

## V

> Multiply the Increase Factor (R) by the monthly contract rent (U) to
> obtain the OCAF adjusted rent. (If using the electronic spreadsheet,
> these calculations will be made automatically.)

## W

> Multiply the OCAF adjusted monthly rent (V) by 12 to obtain the annual
> adjusted rent for each unit type. (If using the electronic
> spreadsheet, these calculations will be made automatically.)

## X

> Multiply the annual OCAF adjusted rent (W) by the number of units (T)
> to obtain the adjusted annual rent potential for each unit type in
> each contract/stage. (If using the electronic spreadsheet, these
> calculations will be made automatically.)

## Y

> Add the total of the adjusted annual rent potential for each unit type
> in each contract/stage to calculate the total annual adjusted rent
> potential for the expiring contract(s). (If using the electronic
> spreadsheet, this calculation will be made automatically.)