Subcommittee on Housing and Transportation

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

Prepared Testimony of the Honorable John LaFalce (D-NY)
Member of Congress

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

I appreciate the opportunity to testify before the Senate Housing Subcommittee on the challenge of providing affordable housing and related services for our nation's low income seniors, disabled, and families.

According to HUD's Worst Case Housing Needs Report, 5.4 million families -- containing some 12.3 million individuals - have "worst case housing needs," that is, they pay over 50% of their income for rent or live in severely substandard housing. This includes over 1.5 million seniors with worst case housing needs. And, our nation's strong economic growth is not diminishing the problem of housing affordability; in fact, in many urban areas, skyrocketing rents are exacerbating the problem. With the aging of our nation's population, combined with growing health care needs, these challenges are likely to grow.

That is why I commend Senators Santorum, Kerry, and Sarbanes for introducing S. 2733, the "Affordable Housing for Seniors and Families Act."

This legislation includes a number of critical provisions to preserve our existing stock of federally assisted affordable housing, to promote the development of innovative mixed income, mixed finance housing, and to expand the availability of health care and related services to low-income seniors and disabled.

Before I comment in detail on this legislation, I would like to point out that this Congress has already taken action on a number of important elderly and disabled housing provisions, through enactment of Title Five of last year's VA-HUD appropriations conference report. In particular, I was pleased to see this enacted bill include a number of provisions from legislation I introduced early last year, H.R. 1624, the "Elderly Housing Quality Improvement Act."

For example, the VA-HUD conference report included Section 2 of H.R. 1624, which authorizes a new capital grant program to convert federally assisted elderly housing projects to assisted living facilities. Assisted living provides a broad range of individualized services to help seniors age in place and maintain their independence - in the process providing a higher quality of life at a lower cost than nursing home care. Capital grants allow sponsors of existing assisted housing to upgrade their facilities, in order to offer this higher level of care.

Last year's VA-HUD spending bill included authorizing language to create this new capital grant program, and provided $50 million for grants in fiscal year 2000. Unfortunately, only Section 202 projects were made eligible for these funds. As we renew funding for this program this year, I hope we can expand eligibility to include other assisted elderly housing, such as Section 236 projects, as provided for under the authorizing legislation. This is in fact the approach taken by the recent House-passed VA-HUD bill for FY 2001.

I am also pleased that last year's VA-HUD bill included Section 5 of H.R. 1624, to allow the use of portable Section 8 vouchers to pay the rental cost component of assisted living facilities. As a result, hundreds of thousands of senior citizens who have Section 8 vouchers can now use these vouchers, if they so chose, in assisted living facilities -- at no added cost to the federal government.

Last year's VA-HUD bill also included Section 3(d) of H.R. 1624, allowing Section 236 projects which are not federally insured to keep their excess income, a critical source of funds for non-profits without access to capital. Unfortunately, this provision was made effective for only one year. I note that S. 2733 includes a provision to make this permanent. Congress ought to approve that provision.

Finally, last year's VA-HUD bill included important bi-partisan housing preservation provisions to address the risk of Section 8 opt-outs and to authorize enhanced vouchers to protect tenants living in those properties which do "opt out."

Let me now turn to unfinished business of this Congress, which is the subject of S. 2733 and this hearing. S. 2733 accomplishes a number of important objectives. First, Section 401 of S. 2733 creates a new matching grant program, to provide federal funds, on a matching basis to states and localities, to preserve afffordable housing which is at risk of being lost. This section tracks a bill filed last year by Representative Vento, and later added to H.R. 202 in committee.

This initiative leverages scarce federal resources to preserve affordable housing, leaving the ultimate decisions to states, localities, and non-profit entities who are in a position to identify projects that best merit preservation.

S. 2733 also includes a number of provisions to encourage innovative mixed income, mixed finance approaches to elderly and disabled housing. These include clarifying that other federal funds may be used in conjunction with Section 202 and 811 funding, setting aside a portion of Section 202 and 811 funding for mixed income projects, clarifying that for non-profit controlled limited partnerships may be eligible for 202 and 811 funds, allowing higher income elderly tenants in 202 properties with vacancy problems, and encouraging the development of on-site commercial facilities in 202 and 811 developments which benefit tenants.

Finally, I would like to call attention to two very important provisions in S. 2733. Section 341 of this bill [similar to Section 4(c) of H.R. 1624] would allow federally funded service coordinators to serve other eligible elderly and disabled in the local community - instead of just those living in the project of the grant sponsor. This would improve the flexibility and effectiveness of the service coordinator program, and would allow communities with smaller elderly housing projects to pool resources and take advantage of economies of scale.

And, Section 101 of S. 2733 explicitly provides for a cost sharing of refinancing savings for Section 202 properties, with a guarantee that the non-profit sponsor can keep at least 50% of the refinancing savings. This guarantee provides an incentive to refinance higher interest federal loans, and helps non-profit sponsors gain access to funds for critical capital repair and maintenance needs.

In closing, I thank the Subcommittee for the opportunity of testifying, and commend the authors of S. 2733 for their work on this legislation. There is still time left this year to take action on these provisions. I urge Congress to do so.

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