A range of programs exists to address the lack of affordable housing. These programs are not nearly enough to meet the demand from those who are housing cost-burdened. They encourage the preservation of existing subsidized housing units, as well as building new subsidized housing units. One key challenge is that many subsidized housing units are at risk of being converted to more expensive market-rate housing. Rising property values, especially in areas with proximity to community amenities, give landlords incentive to move away from the affordable housing market. As contracts expire, landlords often charge the highest market rents or sell their buildings. This can leave people with low and moderate incomes without access to affordable housing.
Federal, state, and local governments all play important roles in financing and implementing subsidized housing programs.
The largest source of funding for subsidized housing comes from the federal government. These subsidies are aimed at people with low incomes. Those earning up to 80 percent of the area median income (AMI) are considered low income. Those who earn between 30-50 percent of AMI are considered very low income. And those who earn less than 30 percent of AMI are considered extremely low income. Federal programs, however, are limited, and not everyone who qualifies receives a subsidy. In many communities, people with moderate incomes also face housing affordability challenges. Thus, many who need assistance cannot receive it. Another key challenge is the lack of coordination among the various programs.
The following is an overview of federal subsidized housing programs.
Public housing units: Built decades ago, these units are managed by state or local housing agencies and receive funding by the Department of Housing and Urban Development. A key focus has been to preserve these units or to ensure one-to-one replacement of affordable units when older public housing complexes are torn down.
Housing Choice Vouchers: Also known as Section 8 vouchers, they reimburse private landlords the difference between what the renter can afford and the cost of the housing (up to a maximum). Demand for these vouchers greatly surpasses their supply. And even among those who receive vouchers, securing appropriate housing that will accept the voucher can prove challenging.
Section 8 project-based rental-assistance contracts: These contracts allow private owners to rent some or all of their housing units to families with low incomes. Tenants pay 30 percent of their income toward rent, with the remainder (up to a maximum) covered by the government. Section 8 project-based housing subsidies are different from “tenant-based” Housing Choice Vouchers. Tenant-based voucher recipients may rent any private residence that meets program guidelines. Fifty percent of the families living in Section 8 project-based rental-assistance units are headed by people age 62 and older. Those who obtain subsidized housing through these contracts are at risk of losing their homes as contracts expire. This is especially the case in areas where rents have been rising, as landlords may prefer to move units to market-rate rentals. Landlords are then not obligated to accept below-market rents, and households with low incomes lose affordable housing options.
The Low Income Housing Tax Credit (LIHTC): This provides tax incentives for developers to offer affordable rental housing units at below-market rates. LIHTC has produced approximately 23 million affordable rental units. The LIHTC units remain affordable for 30 years. LIHTC provides housing for many households with low incomes (earning no more than 60 percent of the AMI). Older adults and people with disabilities are among those households that have benefited the most from this program. Projects that provide services are eligible for LIHTC, but payment for those mandatory services must be included in gross rent. As with other forms of subsidized rental housing, a landlord can charge residents no more than 30 percent of their monthly income. With program eligibility limited to those with incomes no more than 60 percent of the area median, rents would easily be pushed beyond the allowable ceiling by including the cost of services.
Section 202, Supportive Housing for the Elderly Program: This program provides capital advances and rent subsidies for rental housing with supportive services for people age 62 and older with very low incomes. Section 202 has been the principal federal program to build housing for people age 62 and older with very low incomes. Resident households must have at least one person who is 62 years or older and must have an income at or below 50 percent of the AMI. Waiting lists for Section 202 properties on average exceed one year. Long wait lists reflect the immense need for affordable housing with supportive services among older adults with low incomes.
Section 202 properties provide an important source of housing for older adults with low incomes across a wide range of abilities and needs, simultaneously serving both frail and non-frail populations in an integrated community. Despite considerable progress in adding service coordinators funded by the Department of Housing and Urban Development (HUD), many projects lack the staff and supportive features needed to serve the growing number of frail residents who reside in Section 202 housing. No funds were appropriated for the capital construction grants between 2012–2019. In 2020, this changed. HUD currently funds rental-assistance contracts, support-service coordinators (who help connect residents with health providers), assisted living conversion projects, and emergency rehabilitation for a small fraction of existing properties. The lack of construction investment for new units severely limits efforts to house a growing population of older adults with low incomes who need affordable and adequate housing.
Section 811, Supportive Housing for People with Disabilities Program: This is similar to Section 202 but targets people with disabilities of all ages.
The National Housing Trust Fund: Funds to build or preserve rental housing for people with extremely low incomes are available through this program.
The HOME Investment Partnerships Program: States and localities can use this flexible block grant to address affordable housing shortages.
Community Development Block Grants (CDBG): This program provides funding flexibility and can be used for a number of community development needs. CDBG funds cannot be used for new construction. However, they can be used to rehabilitate housing or to develop infrastructure in low-income neighborhoods. In some cases, CDBG funds can be combined with the HOME program to support affordable housing units.
Choice Neighborhoods Initiative (CNI): The successor to the HOPE VI program that was eliminated in 2012, CNI is designed to create housing and livable communities in distressed neighborhoods. CNI requires a one-for-one replacement of units. Each community receiving a CNI grant must submit a comprehensive plan to detail how it will redesign its community according to the program’s primary goals.
Section 515: Run by the Department of Agriculture’s Rural Housing Service, this program provides low-interest loans to fund the construction of apartments for renters with extremely low incomes in rural areas. Much of the existing affordable Section 515 stock is also at risk of being lost. As assistance contracts expire, owners convert their units to market-rate rentals. Displacement can have serious consequences for existing residents. Although they are given priority on the waiting list for Section 515 housing elsewhere, residents may find that alternative units are unavailable.
Section 504: The Rural Housing Service Section 504 program provides home-repair assistance to homeowners in rural areas. It has had four times as many eligible applicants as it has available funds.
State and local roles
State and local governments also play essential roles in expanding affordable housing options for older adults and protecting their rights. They coordinate policy and administer federal housing programs. In addition, all states and the District of Columbia have housing finance agencies. These agencies help fund the construction of affordable single-family and multifamily housing. Almost all states and over a half-million localities have housing trust funds. These trusts support new construction, home repair, and rental rehabilitation.
SUBSIDIZED HOUSING: Policy
SUBSIDIZED HOUSING: Policy
Subsidized housing expansion
Policymakers should preserve the existing stock and expand the availability of affordable, accessible, safe housing, particularly for those with the most severe cost burdens. This can be accomplished through:
- one-to-one replacement of public housing units that are torn down;
- increased availability of housing vouchers, housing trust funds, tax credits, and other mechanisms to promote and develop new subsidized housing;
- policies to preserve existing subsidized housing units; and
- public and private incentives to preserve and create more affordable, accessible units.
Congress should provide enough funding for subsidized housing to meet demand among those who qualify. At a minimum, it should provide enough funding to maintain the existing number of units and to assist all renters who have severe rent burdens (spending more than half their gross income on rent).
Policymakers should prioritize funding for projects that preserve affordable housing for longer periods of time, rehabilitate existing properties to create more affordable units, or renew rental-assistance contracts.
Congress should provide matching grants to encourage state and local governments to preserve their housing that is insured or assisted by the Department of Housing and Urban Development (HUD).
State and local policymakers should use tax credits, bond proceeds, and redevelopment funds to encourage the development of housing for people with low incomes. They should also establish their own housing trust funds if they have not already done so (see also Livable Communities Financing).
People who receive subsidized housing should receive assistance for security deposits and the first and last months’ rent.
Vouchers should be allowed in shared housing. This includes Housing Choice Vouchers and other forms of housing vouchers.
Policymakers should support programs that help voucher recipients secure appropriate housing, such as housing mobility counseling and incentive programs.
Mandated rent increases in public housing should consider the impact on all residents, including those with very low and extremely low incomes.
Public housing residents should have the “right of return” when public housing is converted to subsidized housing.
HUD should develop, maintain, and promote the use of a publicly available national database of federally subsidized housing.
Congress should modify the Low Income Housing Tax Credit (LIHTC) program to enable greater flexibility in the development of housing projects for older adults.
Funding from trust funds, legal awards, settlements, or new federal programs dedicated to creating or preserving affordable housing should not be used to replace existing funding sources. It should be used only for intended purposes.
Local governments should convert or develop suitable surplus public properties into subsidized housing for vulnerable populations.
Policymakers should prioritize surplus state, county, municipal, school district, and military properties development or conversion into housing.
People who are displaced from subsidized housing due to expiring assistance contracts or prepayments should receive relocation assistance. This includes tenants displaced from the 515, Section 8, and LIHTC programs.
The Rural Housing Service (RHS) should target assistance under the Section 515 and Section 504 programs to underserved groups, particularly older farm workers and older adults from historically disadvantaged racial and ethnic groups.
HUD and local public housing authorities should maintain utility allowances and ensure that these allowances keep pace with rising utility costs.
Subsidized housing options in livable communities
Policymakers should increase the availability of subsidized housing in mixed-use, walkable communities. These communities should offer alternatives to driving and promote successful aging in place. This includes the use of incentives.
State and local governments should establish or expand existing housing trust funds. The funds should promote housing options in livable communities, including locations near transit, and the use of universal design, visitability, and inclusive design features.
Policymakers should support the development of housing that allows people to age in their communities through the use of universal design, visitability, inclusive design, green buildings, and transit-oriented development.
HUD should adopt and implement a measure of housing affordability that includes housing costs and transportation costs.
State and local policymakers should preserve affordable housing in areas near transit, services, shopping, and other community amenities.
Subsidized housing with services
Policymakers should increase the availability of subsidized housing with services. This includes providing service coordinators and supportive housing arrangements in subsidized housing.
Federal, state, and local policymakers should collaborate to develop greater capacity to serve frail older adults and people with disabilities, including in the Section 202 program.
The Department of Housing and Urban Development should prioritize projects that incorporate services and features that increase the ability to age in place.
Congress and states should authorize the use of funds for modifications to enhance service delivery, accessibility, and safety for those who seek to age in place.
Congress should change the definition of the income rent cap under the LIHTC program for service-enhanced housing (such as assisted living). It should either raise the 30-percent-of-income rent cap, which is inappropriate for housing models that include basic services in the monthly rent, or modify the definition of rent so that it does not include the cost of basic services.
The RHS should allow staff to provide personal care services, including medication management.
Subsidized housing program coordination and consolidation
Policymakers should coordinate and consolidate existing housing programs to improve service delivery, safeguard assets, and cost efficiency. This includes creating a streamlined system for developing and coordinating policy on housing and services for older adults and people with low and moderate incomes.
Congress should refrain from converting the Section 202 or Section 8 Housing Choice Voucher programs into a block grant. Policymakers should increase the production of specialized supportive housing.
Protections for renters of foreclosed properties
Policymakers should mitigate the effects of foreclosures on renters. Policymakers should establish protections for renters living in foreclosed homes, including:
- providing renters of foreclosed properties with adequate time to find new housing;
- ensuring that new landlords of foreclosed properties continue to pay for utilities and maintenance; and
- only allowing eviction for just cause.
Mitigation of neighborhood effects of foreclosures
Policymakers should mitigate the negative impacts of foreclosures on neighborhoods. Strategies should consider the needs of older adults. They should ensure safety, safeguard service delivery, and prevent isolation. The approaches should include buying and rehabilitating foreclosed homes both to stabilize the neighborhoods around them to provide additional affordable housing.