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2012 Senior Housing Issue Brief

Published On: Apr 18, 2012


Section 202 of the Housing Act provides capital development grants and rental assistance contracts to not-for-profit sponsors to develop, build and maintain supportive housing for seniors with very low incomes. These communities can serve as a platform for the successful delivery of home- and community-based services.

Three and a half million elders live below the poverty level. A recent study by the Department of Housing and Urban Development (HUD) found 1.33 million seniors with worst-case housing needs. 

Increasing numbers of elders are homeless. There are still 10 seniors on the waiting list for every Section 202 unit that becomes available, according to AARP. And the population of people aged 65 and over will double by 2030.

In the face of this documented and growing demand for affordable housing for elders, years of level funding and a large spending cut for fiscal 2012 have resulted in fewer and fewer Section 202 units being built each year. It is clear that a comprehensive national policy for affordable housing and services is needed or the current senior housing crisis will intensify.

In addition to meeting the basic human need for shelter, the development of senior housing provides thousands of jobs that contribute to the nation’s economy. Combining affordable housing with home- and community-based services gives seniors with low and moderate incomes a cost-effective alternative to premature entry into nursing home care. 

Delaying or preventing nursing home care, hospitalizations and emergency room visits can result in significant savings to the Medicare and Medicaid programs.

For fiscal year 2013, President Obama has requested funding for the development of new Section 202 units. However, the funds requested would cover only operating assistance, diverting funds to provide rental subsidies for a segment of new units in a new senior housing development financed privately. 

The proposal seems to target assistance to frail elders or seniors with disabilities and the operating assistance would not be sufficient to fund even a service coordinator. We are concerned that the proposal would result in limited assistance that would not be widely available across the country.

We also are concerned about the fiscal 2013 budget resolution passed by the House of Representatives, which would ratchet down total federal discretionary spending by $19 billion below the cap allowed in the 2011 Budget Control Act. Since Section 202 is a discretionary program, a tighter spending cap could mean another large cut in already inadequate funding for the program.


To meet our nation’s senior supportive housing needs, LeadingAge urges Congress to take the following actions:

Provide at least $600 million in funding for the Section 202 program.
It is not enough to continue serving seniors already living in Section 202 housing or to simply provide operating assistance in housing already under construction. Demographic and economic reality requires the development of hundreds more new units. Within the Section 202 budget, Congress should allocate $200 million for the traditional capital advance program provided through a national competition; at least $91 million for new and renewed service coordinator grants; and $25 million for the Assisted Living Conversion Program.

Develop a rehabilitation program for older Section 202 PRAC projects.
Section 202 project-based rental assistance (PRAC) properties built years ago need access to capital for rehabilitation and repairs. We support legislation to enable these properties to take on debt for rehabilitation, use their property as security for a loan and use their PRAC payments to pay off a new mortgage.

Fully fund 12-month renewals of all rental assistance contracts and advance appropriations for payment continuity.
In order for providers to maintain safe, decent, sanitary housing for seniors, federal rental assistance payments must be timely and adequate. Partial funding of rental assistance contracts a few years ago led to chronically late payments that threw the management of these developments into chaos. A repetition of that situation is completely unacceptable.

Stimulate investment in the Low Income Housing Tax Credit (LIHTC) program.
Essential improvements requiring legislation include flat 4 percent and 9 percent tax credits, expanding the tax credit’s reach to rural areas and for preservation projects, and encouraging mixed-income projects. In addition to serving low and moderate income seniors, the tax credit program can be combined with the Section 202 program to provide much-needed gap financing to allow providers to serve the very low income and create mixed income communities. 

Enact housing preservation legislation to address the newest crisis of maturing mortgages.
The legislation would provide new tools to ensure preservation of affordable housing that might otherwise be lost when mortgages mature. 

Fully fund all other affordable housing programs. Seniors make up one half of Section 8 voucher holders and one-third of public housing residents. Congress must fully fund all affordable housing programs to avoid displacement and stem the tide of senior homelessness. Of particular concern are those programs serving rural seniors, the USDA Section 515 rural multifamily program and the HUD Rural Housing and Economic Development Program.

Provide dedicated funding for the National Housing Trust Fund.
HUD estimates that through the Section 202 program it covers just 80% of the full development cost of new affordable senior housing communities. Funding the National Housing Trust Fund will create much needed gap financing to reduce construction time.

Better coordinate housing and services programs through a comprehensive interagency policy.
HUD and the Department of Health and Human Services have been meeting for over a year to develop joint programs and strategies to provide services to seniors living in affordable housing settings. A coordinated interagency effort is needed to eliminate barriers to service and to streamline service delivery for the elderly in affordable housing settings.


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