Feds Kill Funds for Most Successful Senior Housing Project

When construction started in mid-October on Heritage Park Senior Village in Taylor, Michigan, it marked the end of 55 years of effort by the federal government to make sure low-income elders can live out their years in decent housing.

The development getting underway 18 miles southwest of downtown Detroit is one of the very last to be constructed under a federal housing program that dates back to 1959.

The Section 202 Supportive Housing for the Elderly Program produced 20,000 housing units per year at its peak in the 1970s. It provided public housing agencies and nonprofit groups with grants that covered the cost to build decent rental housing, as well as subsidies for people who were too poor to pay market-rate rents for comparable housing.

Obama’s Rush to Cut Funds

But three years ago, at the height of the new congressional obsession with budget cutting, the Obama Administration stopped requesting money for new construction under the program. Funding continues at a reduced level to renew existing rental subsidies on existing properties, as well as for repairs and improvements to those properties.

But federal support for new Sec. 202 construction has ended, with little prospect it will ever be revived.

It was not for lack of need, which is very great and growing substantially. It was not because there was something wrong with the program. There was not. In fact, federal officials and many of the nonprofits that sponsored Sec. 202 projects have said it was the most successful federal housing production program in history.

"There were no issues with the program," said Alayna Waldrum, who works on legislation for Leading Age, an association working on housing and other issues affecting the elderly. "The primary reason was the rush to cut as much funding as they possibly could," she added.

If you thought elders were a powerful political force because they vote, think again. Advocates say there was not a single member of Congress prepared to stick his or her neck out to rally support for new construction of Sec. 202 housing.

Like other Sec. 202 projects before it, Heritage Park Senior Village will serve households in which at least one member is age 62 or older. Residents will pay no more than 30 percent of their adjusted income on rent. The 77-unit building is being developed by Volunteers of America, which operates 149 Sec. 202 projects with 7,718 units.

Sec. 202 housing is open to households that earn no more than 50 percent of their area’s median income, and most of the tenants are dependent on Social Security for most or all of their income.

The private market no longer produces any new housing affordable to people at that income level, and much of the older housing stock that was affordable has been demolished and replaced with upscale developments.

Secure Housing Transformed Lives

The buildings the program has produced for over 50 years offer modest apartments with basic architecture. But those properties have transformed the lives of many older Americans.

Tenants of Sec. 202 have a ready community of peers so they’re rarely lonely and disconnected, a common problem for elders living alone. The tenants have well-maintained homes with security and social activities. They receive help connecting with social and health services. Most importantly, they have economic security. They no longer have to worry that their savings will run out and they’ll have nowhere to live.

No one disputes that cutting the program's funding is completely contrary to common sense. In 2002, the congressional Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century called the shortfall of such housing a “quiet crisis.” It called for building 40,000 units per year to house the growing numbers of low-income elders. But instead of ramping up, Congress tamped down--all the way to nothing.

“The bottom line is that, with the end of new construction under Sec. 202, we are very close to the point where we will begin losing affordable seniors housing faster than it is being developed,” said Thomas Slemmer, president and CEO of Columbus, Ohio–based National Church Residences, one of the nation’s largest nonprofit providers of affordable seniors housing.

Existing Sec. 202 buildings are getting old, considering that the program began in 1959. So an increasing number of properties will be lost to obsolescence each year.

For every person who gets into a government-subsidized apartment, there are 10 households waiting for one. Demand is highest in urban areas. In places with large proportions of low-income elders, often-ethnic seniors, it’s off the charts.

“It is very hard to tell seniors in desperate need of housing that the wait in most cases is two to three years,” said Steve Protulis, executive director of the nonprofit Elderly Housing Development and Operations Corporation, based in Fort Lauderdale, Fla.

Demand Will Skyrocket

In the coming years, demand for affordable housing among low-income elders will skyrocket, said Robin Keller, vice president of real estate development for Volunteers of America. The number of older Americans is quickly increasing, and their financial resources have declined overall, she said.

The 65-plus population in the United States will leap to 55 million by 2020, up from 40 million in 2010. The number of those 85 and older will increase even more sharply by then, almost tripling from 3 million to 8.75 million.

Households headed by people 65 or more reported a median income in 2010 of $45,763. But older women living alone had a median income of only about $15,000. They are the primary users of Sec. 202 housing, and their numbers are growing.

Among Social Security beneficiaries, the average monthly benefit is $1,269, or about $14,000 per year. In almost any U.S. metropolitan area, those who rely heavily on Social Security cannot afford any housing available on the private market.

In 2011, one in three renter households with a member over 65 paid more than half of their income for rent and utilities, according to the U.S. Census Bureau’s American Housing Survey.

Penny Wise, Pound Foolish

Sec. 202 properties are designed as independent-living facilities where residents can cook their own meals and take care of themselves. But the properties also help people live active, socially rich lives, which helps them stay healthier longer, reducing or postponing their need for medical care.

Every Sec. 202 property has a system in place for connecting residents with outside services, such as health care, transportation, education and social activities.

The federal government is converting some of the rental apartments in Sec. 202 properties to much needed assisted living, where frail elders get help with their essential daily activities. But funding for this sort of transformation is very limited.

By 2020 an estimated 1.3 million low-income elders will require assistance with such daily activities as eating or using a toilet, and Sec. 202 properties are generally well suited to be adapted for this care.

“Sec. 202 housing is a bargain,” said Slemmer. “Stable living environments can lower health care costs on their own, but when you factor in the work our managers do to link tenants with services, it is an even greater savings.”

He and other Sec. 202 sponsors note that people living in their properties do not need nursing care until very late in life compared with people in other living situations.

“If we keep people in affordable housing with social service coordinators connecting them to low-cost or free services, it keeps them out of nursing homes, where the daily cost is much higher,” one project sponsor said.

Without enough Sec. 202 units to meet the needs of a growing population of low -income elders, more and more older adults will make their way into nursing homes, whether they really need to or not, with depressing personal results and the cost shifted to tax-supported Medicaid.