Subcommittee on Housing and Transportation

Hearing on S.2733 - The Affordable Housing for Seniors Act

Prepared Testimony of the Honorable William C. Apgar
Assistant Secretary of Housing & Federal Housing Commissioner
Department of Housing and Urban Development

2:00 p.m., Tuesday, July 18, 2000 - Dirksen 538

Mr. Chairman, Ranking Member Kerry, Members of the Subcommittee, my name is William Apgar and I am the Assistant Secretary for Housing/Federal Housing Commissioner at the United States Department of Housing and Urban Development (HUD). On behalf of HUD Secretary Andrew Cuomo, I am pleased to testify today at this important hearing on S. 2733, the Affordable Housing for Seniors Act.

Working in partnership, the Administration and Congress have made significant strides in recent years to ensure affordable housing for families and older Americans. The Affordable Housing for Seniors Act builds on this progress. In fact, many provisions of this bill would either ratify policies HUD already has in place or enact policies proposed in the Presidentís HUD budget this year. Other provisions extend current HUD initiatives or proposals to make them even more effective. Most importantly, the bill would increase the flexibility of HUDís Section 202 and 811 programs, and provide new resources for the preservation of affordable housing. We look forward to working with this Subcommittee to gain the passage of S. 2733, just as we worked closely with the House last year to gain passage of H.R. 202, the companion to the bill we are discussing today.

Housing Our Elders

The United States will go through an unprecedented demographic shift over the next fifty years. By 2050, as many as one in five Americans will be elderly (65 and over), compared with one in every 25 at the turn of the last century. By 2050, the elderly population will more than double to 80 million, with the "oldest old" (85 and over) making up almost one quarter of that population. Many of this group will be alone, many will be facing multiple chronic illnesses and will need to rely upon family, friends or community for support.

Too many senior citizens are forced out of their homes because they face catastrophic healthcare costs associated with aging Ė costs that drain their finances and make owning a home unaffordable. This housing crisis will likely affect millions of seniors in the new century Ė already, HUDís latest studies show that one and a half million elderly pay more than 50% of their income in rent or live in substandard housing.

The challenge now is to meet the housing needs of this rapidly expanding population of elders. Just as we work to save Social Security, we must also work to provide housing security for our seniors. Last year, the Administration and Congress won a significant victory through the passage of major elements of the Housing Security Plan for Older Americans as part of HUDís FY2000 budget. The Housing Security Plan offers a full range of options for the elderlyóa Continuum of Care. By combining new and existing HUD programs and improving coordination with other Federal assistance, the plan helps to create a comprehensive and cost-effective senior housing system that preserves security and independence as a seniorís healthcare needs and financial resources change.

The strategy addresses five stages in the continuum: First, helping seniors stay in their own homes when appropriate; second, ensuring the availability and quality of government assisted senior housing when staying at home is no longer possible; third, providing health and other support services in existing housing to avoid the need to move to nursing homes or other medical facilities unless absolutely necessary; fourth, ensuring that our nationís elderly remain an integral part of our communities; and fifth, making assisted living a housing option for low income seniors.

(1) Helping Seniors Stay In Their Own Homes. The first priority of the Plan is to help seniors remain in their own homes whenever possible. It is not uncommon for elderly Americans to be housing "rich" but cash "poor." To ease this dilemma, HUD uses its reverse mortgage program to focus on the needs of older homeowners. This important initiative allows seniors to convert the equity in their own homes into funds for needed health and safety home improvements, or for long-term health care needs. A recently released evaluation of HUDís reverse mortgage shows the program has quadrupled over the past seven years and boasts a 75% satisfaction rate.

(2) Ensuring The Availability And Quality Of Senior Housing. The Plan expands and refines the highly successful Section 202 Supportive Housing for the Elderly program. This program works with local non-profits to create housing tailored to the unique needs of seniors, offering rental assistance to a particularly vulnerable group who cannot easily access tenant-based voucher programs because of their special needs and limited mobility. The need for senior-tailored complexes is increasing at a tremendous pace, as the number of elders and the "oldest old" rapidly increases. To meet this need, the Section 202 program provides funding for new construction and improvement of HUD elderly housing. The Plan also proposes statutory changes that would expand the impact of this program and the overall supply of affordable rental housing by permitting a wider range of private funds to leverage HUD financing, through such mechanisms as Low-Income Housing Tax Credits.

    1. Community-Based Care. Because Americans are living longer, many enter a period where they are capable of living semi-independently but still need some social services as well as specially-designed buildings that make getting around easier. The nation can save the higher costs associated with full-time elder services and health care in two ways: transforming HUDís existing senior housing and expanding current social service programs. The Plan accomplishes this through grants to convert some existing Section 202 housing to assisted living so that these facilities can better meet the changing needs of their aging population Ė a proposal that was enacted last year. It also dramatically expanded the successful Service Coordinator program for the elderly, which currently benefits only residents of HUD-assisted housing. By further increasing funding and allowing Service Coordinators to serve lower income elderly in private homes and apartments in the same neighborhood, seniors will not have to leave their homes to get the supportive services they need.

(4) Intergenerational Learning Centers. Throughout this continuum, we must ensure that our seniors remain connected to our communities - sharing their skills, knowledge and energy. To strengthen this connection, an eligible use of grant funding would be the physical establishment of Intergenerational Learning Centers to link two vital needs: affordable senior services and affordable child care. These Learning Centers will be located within and operated, at least in part, by residents of existing Sec. 202 and other assisted housing developments. These Centers will harness the skills of seniors to meet the country's critical need for affordable child care. And through HUD's existing Neighborhood Networks program, these Centers can also serve as a focus point for sharing Internet technology, allowing seniors and children to learn new skills together.

(5) Assisted Living. When seniors have to move from their homes into assisted living facilities to get the help they need, this Plan proposes HUD partner with HHS to better integrate housing assistance with Medicaid funding for services. In addition, a change to prior law that passed last year allows vouchers to cover the rent portion of assisted living costs. The more than 250,000 low income seniors who currently use vouchers are no longer locked out of an assisted living facility simply because a housing voucher issued by one part of the government cannot work in conjunction with Medicaid payments for assisted living services issued by another part of the same government.

After being proposed in the Administrationís FY 2000 budget, many of the elements of Housing Security Plan for Older Americans were incorporated into H.R. 202 and then enacted into law as part of the FY 2000 budget. The Service Coordinator program was significantly expanded through $50 million in grant funds, another $50 million was provided to convert some existing Section 202 developments to assisted living, and assisted living was made an eligible use for Section 8 vouchers. In HUDís FY2001 budget, the Administration aimed to build on last yearís success by reproposing elements of the Housing Security Plan that were not passed by Congress, including:

In addition to completing the Housing Security Plan proposed last year, however, the Administration also will continue to develop new tools in the Continuum of Care for lower income seniors. In the FY 2001 budget proposal for HUD, a major new element was added to the Plan: Assisted Living Production. Recent years have seen an explosion in assisted living as an alternative to nursing homes and other institutional forms of care. Yet lower-income seniors have been left out of this market, with the result that these seniors are often forced to live in housing that does not meet their service needs or move to more expensive alternatives that can be subsidized through Medicaid and other programs. Elements of the Housing Security Plan have begun to change this, but more is needed.

The Administration proposes to further expand access to assisted living for lower-income elderly persons by spurring the construction of new affordable assisted living facilities. With $50 million in five-year operating subsidies proposed for FY2001, over 1,500 low-income elderly households will get long-term access to affordable assisted living facilities. Because this funding will directly subsidize no more than 20 percent of the units in new mixed-income assisted living facilities, the program will create a total of 7,500 new assisted living units. As part of the program, HUD Section 232 mortgage insurance will encourage banks and developers who are currently only familiar with the higher-income assisted living market to enter the affordable market. And to ensure that States and localities will provide the needed service funding to complement HUDís funding, the $50 million in subsidies will go to States and localities that offer the most innovative proposals to combine their service funds with HUDís funding and award them both to qualified local developers.

The Affordable Housing for Seniors Act complements and builds on the efforts of the Administration and Congress to establish the Housing Security Plan for Older Americans. In particular, it would accomplish the following:


Preservation of Affordable Housing

While the Affordable Housing for Seniors Act focuses primarily on housing for older Americans, it also includes some important advances in the preservation of affordable housing that is not limited to seniors. These provisions also complement efforts the Administration and Congress have made in recent years.

In April of last year, Secretary Cuomo announced an emergency initiative to stop the loss of affordable housing through opt-outs from the project-based Section 8 program. This initiative convinced many owners to remain in the Section 8 program, significantly decreasing the rate of opt-outs. However, this Mark-Up-to-Market plan alone was not enough to preserve all affordable housing that was at risk of leaving HUDís affordable housing programs. Recognizing this, Secretary Cuomo proposed a series of legislative changes and joined with members of Congress in pledging to work towards a comprehensive solution to the loss of HUD-subsidized multifamily housing. Through bipartisan cooperation, historic legislation was passed as part of HUDís FY 2000 budget that built on the Administrationís efforts to preserve affordable housing. Accomplishments of the legislation included:

Just as it builds on the Housing Security Plan for Older Americans in the area of senior housing, the Affordable Housing for Seniors Act also builds on the efforts of the Administration and Congress in preserving HUD-subsidized affordable housing that is not limited to seniors. In particular, it would accomplish the following:

These and other initiatives in the Affordable Housing for Seniors Act are significant steps that extend the critical work of the Administration and Congress during recent years to ensure that all Americans have access to a decent, affordable home. HUD looks forward to continuing our work with you and the other members of this Committee on this critically important legislation.

This concludes my formal written statement, Mr. Chairman.

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