Section 202 Supportive Housing for the Elderly Program

Background

The Section 202 Supportive Housing for the Elderly program has been the principal federally-funded construction program for very low-income people age 62 and older. 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 area median income.

The program provides capital grants to nonprofit sponsors for the construction of multifamily housing units. The grants do not have to be repaid as long as the project remains affordable for at least 40 years. This funding covers the construction of new units or the acquisition and/or rehabilitation of existing units.

The program also provides project rental-assistance contracts (PRACs) to ensure the ongoing operations of these properties. PRACs cover the difference between the monthly rent charged and the resident’s contribution, which is limited to 30 percent of their income. PRACs are available on a three-year term and are renewed on a yearly basis as funds are available.

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 low-income older adults 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 HUD-funded service coordinators, many projects lack the staff and supportive features needed to serve the growing number of frail residents who reside in Section 202 housing. Since fiscal year 2000, Congress has addressed this problem by providing funds to convert some of the Section 202 inventory to assisted living residences (see Chapter 8, Long-Term Services and Supports—Assisted Living and Residential Care). However, this further erodes the stock of affordable housing for older adults who do not need that level of support.

Since 2012 no funds have been appropriated for the capital construction grants. HUD currently funds only 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 low-income older adults who need affordable and adequate housing.

Section 202 Supportive Housing for the Elderly Program: Policy

Capital funding and program purpose

In this policy: Federal

Congress should restore capital funding as part of the Section 202 housing production program for older adults.

Congress should ensure that Section 202 housing serves the wide range of older adults with low incomes.

Increasing and improving Section 202 properties

In this policy: Federal

Congress should provide funds and allow innovative financing methods to increase production levels under the Section 202 program and to assist in the rehabilitation of existing units. This includes the continuation of capital grants for the production of new units.

The Department of Housing and Urban Development (HUD) should encourage the development of Section 202 units in proximity to transit and in areas with services and amenities. New nonfederal funding methods and requirements should not reduce federal funding.

Congress should modify the Section 202 program to encourage the development of service-intensive housing, the development of mixed-use and mixed-income projects, and the adaptive reuse of abandoned, military surplus, donated, or historic properties for assisted living and congregate housing.

In addition to much needed direct federal funding, Congress should provide for matching grants to state and local governments that use nonfederal funds to improve and upgrade Section 202 properties.

HUD should adopt strategies to reduce the development time for Section 202 housing, including streamlined procedures and improved field-staff training.

In addressing the renewal of Section 8 rental-assistance contracts associated with Section 202 projects, HUD and Congress should take into account the need to recapitalize existing projects for basic modernization and to serve older adults with low incomes. Income requirements should be relaxed only for projects that can demonstrate either that they are meeting a need for service-enriched housing or that there is no need for housing targeted to people with low incomes.

Operating assistance for Section 202 projects

In this policy: Federal

Congress should establish an operating assistance fund to allow Section 202 projects built after 1974 to continue to serve low-income older adults after the expiration of Section 8 contracts.

Refinancing options should address the need to retrofit projects to accommodate aging residents and to provide operating subsidies sufficient to serve very low-income households.

Program priorities

In this policy: Federal

Funding should be prioritized for projects that preserve affordable housing for longer periods of time, rehabilitate existing properties to create more affordable units, or renew rental-assistance contracts.

Incentivize federal, state, and local partnerships to increase housing services and supports for older adults to age in place

In this policy: Federal

HUD should enhance the Section 202 program by working with state and local governments to develop greater capacity to serve frail older adults and people with disabilities through Federal Housing Administration credit enhancement, existing block grants, matching grants, and improved local planning, while also maintaining the program’s ability to provide housing for older adults across the spectrum of ability and need for supports.