Subcommittee on Housing and Transportation

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

Prepared Testimony of Ms. Mary Jane O'Gara
Board Member

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

Good afternoon, Mr. Chairman and members of the Subcommittee on Housing and Transportation. My name is Mary Jane O'Gara. I live in Omaha, Nebraska, and I serve as a member of AARP's Board of Directors. AARP appreciates the tradition of strong, bipartisan support for housing programs serving older Americans that has characterized this Subcommittee's work. We hope that the same bipartisan spirit will extend to the current efforts to craft the best legislation for meeting the future housing needs of older persons.

AARP strongly supports S 2733, the Affordable Housing for Seniors and Families Act,

as well as HR 202, the Preserving Affordable Housing for Senior Citizens into the 21st Century Act. AARP commends Senators Santorum, Sarbanes and Kerry for introducing S 2733. These two measures are essentially companion bills. HR 202 passed the House with widespread bipartisan support last year. Both S 2733 and HR 202 recognize the special needs of Americans age 62 years of age and over -- especially the frail elderly who comprise the fastest growing segment of the older American population. Importantly, the bills also recognize and support the affordable housing needs of other vulnerable populations.

Projections by the U.S. Census Bureau indicate that by the year 2020, the number of persons age 65 and older will grow to over 53 million. This would represent a 55 percent increase from the 34 million estimated for 1998. Changes in the distribution of the nation's older population are also occurring. Presently, the aging of the older population is driven by large increases in the number of persons age 75 and older. More specifically, in 1998, there were an estimated 4 million persons age 85 and older. The Census Bureau projects this figure to reach approximately 6.5 million by the year 2020. This would represent an increase of 62 percent for the 85-plus age category alone.

It is especially relevant for the purposes of today's hearing to recognize that as the elderly population increases, the proportion who have difficulty performing one or more basic activities of daily living - such as bathing, dressing, or eating -- will also be increasing. An analysis prepared for AARP by the Lewin Group estimated that in 1994 there were over 1.7 million elderly persons, 65 years of age and older, who had difficulty performing two or more such daily activities. The same study estimated that by the year 2020, the number of similarly aged persons with two or more of these impairments would increase to 2.8 million - a 65 percent increase from 1994.

In my remarks today, I want to focus on several important housing needs addressed by S 2733 that will directly affect older Americans. I wish to highlight the need for prompt and comprehensive action by the Congress by referring to a soon-to-be released study that focuses on the Section 202 program. The Section 202 program is the only federally-funded, new construction housing program specifically designed to address the needs of elderly residents. This study was conducted by the University of Illinois and sponsored by AARP. The study surveys the effects that demographic forces, modernization needs, and several legislative changes have had on Section 202 housing projects during the ten-year period from 1988 to 1998. The first attachment to my written testimony includes a detailed summary and explanation of key study findings. (AARP would be happy to provide the Subcommittee with copies of the full report when it is released).

From the perspective of frail older persons, housing and services are often the keys to continued independence and dignity. Comparisons of the 1998 survey findings with those from the 1988 survey document:

long waiting lists and low vacancy rates that indicate a strong, continuing demand for Section 202 housing;

increasing average ages and frailty levels of residents, to which managers are responding with additional service coordinators and accessibility features designed to meet changing needs; and

expanding capital needs, especially in the oldest projects, which have the oldest residents and greatest modernization and retrofitting requirements.

The essential conclusion to be drawn from this report is that adapting Section 202 housing to the changing needs of its residents can mean - for them -- the critical difference between maintaining an apartment in a supportive community surrounded by one's own friends and belongings, or admission to more expensive nursing home care -- often involving sharing a room with a stranger.

Section 202 Refinancing and Conversion to Assisted Living

AARP strongly supports the provisions of S 2733 regarding the refinancing of older Section 202 projects. Title I addresses a mounting concern over the lack of financial resources currently available for preserving older Section 202 units. AARP supports debt refinancing as proposed in S 2733 because the legislation allows up to 50 percent of federal project assistance savings to be applied to project retrofitting, modernization, and increasing needed services for frail residents.

The Association also sees the authorization in S 2733 of a modest number of grants for conversion of elderly and public housing projects to assisted living facilities as a positive beginning. Managers in the Section 202 survey characterized 22.3 percent of their residents as frail, up from 13.0 percent in 1988. The average age of tenants has increased from 75.0 to 78.2 years in the same period. AARP will be releasing another study shortly that examines a range of financial, service delivery and management strategies being used by a variety of subsidized housing projects for the elderly --- including Section 202, public housing and Section 236 -- to provide a range of assisted living services. Attachment 2 provides a more complete summary of the forthcoming report, which was based on case studies of 17 projects in 11 states.

Service Coordinators and Congregate Services

AARP supports the continued authorization of appropriations in S 2733 for service coordinators and congregate services for the elderly - as well as the provision that allows service coordinators to assist low-income elderly or disabled families living in the vicinity. The Section 202 survey found that 11 percent of projects were currently extending services to older persons in the surrounding communities, an approach that would be promoted by this bill.

Preservation of Affordable Housing Stock

Title IV of S 2733 includes a matching grant preservation program for states, as well as other financing options, to assist in preserving affordable housing for all low-income families. AARP is encouraged by bipartisan Congressional concern with the potential for additional losses of Section 8 housing. According to the National Housing Trust, approximately 38,000 subsidized apartments were lost to the Section 8 program between 1996 and 1998 because the owners opted not to renew the assistance contracts. In 1999, the U.S. Department of Housing and Urban Development estimated that approximately one million subsidized units would be subject to contract expiration within the next 5 years. Older Americans are found throughout Section 8 housing, and reside in approximately 40 percent of at-risk units - both in elderly and mixed-age housing projects.

In a third soon-to-be released study sponsored by AARP, the National Housing Trust identifies 152,000 units located in properties occupied primarily by older Americans that are at risk of being lost to the Section 8 program (by the end of 2004) if the owners choose to seek higher rents in the private market. A summary of this analysis can be found in the third attachment to this statement. The loss of Section 8 projects that are predominately rented by the elderly - and that already have access to additional supportive services - would be particularly tragic.

Home Equity Conversion Mortgages

Finally, AARP supports the provision in S 2733 that streamlines the process by which older homeowners with FHA-insured Home Equity Conversion Mortgages (HECMs) can refinance their reverse mortgage loans. Easing this process will allow HECM homeowners to reduce interest costs on their loans when interest rates drop - and conserve the equity share they have in their homes. We are also encouraged by constructive steps being taken by Fannie Mae to help consumers better understand and compare reverse mortgage options available to older homeowners in this emerging market.


Today, too many older persons with modest means face a stark choice between living in their own homes with minimal access to support services or moving to expensive and restrictive institutional settings. S 2733 provides a variety of means for serving frail older persons in a range of supportive housing settings.

S 2733 would provide a comprehensive balance of new construction, retrofitting, housing assistance, and services needed to meet the challenges involved in serving older persons in housing settings. Such an approach would support the efforts of states and localities looking for housing-based supportive services for frail older persons who do not require the continuous skilled care of a nursing home.

The legislative proposal before the Subcommittee offers the opportunity to help shape the evolving mission of housing for older persons. By moving the legislation before you to enactment, you will be taking the next important step toward meeting housing needs and services for older persons.

Thank you for this opportunity to present AARP's views on S 2733. I would be happy to answer any questions that you may have.

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