Although the program's mission and financing have been modified several times by different Congresses and Administrations, the Section 202 Elderly Housing program remains the primary federal program focused on constructing subsidized housing for older adults. Over 3,500 Section 202 facilities housed more than 300,000 older persons in 1999.
The 1999 National Survey of Section 202 Elderly Housing1 is the third national survey of elderly housing sponsors and facility managers (previous surveys were done in 1983 and 1988). The purpose of this study was to document changes in project characteristics, resident characteristics, consumer demand, services offered, management styles, and capital needs. In particular, the survey asked about financing changes and staffing changes authorized by the housing acts of 1990 and 1992 to document the effects of those pieces of legislation over time. A total of 509 managers (response rate 47 percent) and 480 sponsors (response rate 44 percent) participated in the survey. The analyses compared project, resident, staffing, services, and financial characteristics as they have changed through five phases of the Section 202 program:
- Moderate-Income Phase (1959-74) — Projects built in this phase have higher income eligibility requirements and generally no rental assistance.
- Low-Income Phase (1974-84) — Projects built in this phase have Section 8 rental assistance and serve renters with less than 80 percent of median income.
- Cost-Containment, or Very Low-Income, Phase (1985-88) — Projects built in this phase must serve renters with less than 50 percent of median income, and many were built under rigid cost-containment rules.
- Transition Phase (1989-94) — Projects in this phase have the same income requirements as the low-income phase, but HUD waived many cost-containment measures. Some overlap exists between projects placed in this phase and those in the subsequent "PRAC Phase" because of the lag time in implementing financing changes between the two phases.
- PRAC Phase (1993-present) — The current phase uses "project rental assistance contracts" (PRAC) instead of Section 8 for rental assistance, though the income eligibility is the same as in the cost-containment and transition phases.
Summary of Key Findings
Five key points emerge from the wealth of data in this report.
- First, Section 202 units for older persons continue to be in high demand, as shown by low vacancy rates (1 percent for one-bedroom units) and long waiting lists (nine applicants waiting for each vacancy that occurs in a given year, up from eight in 1988).
- Second, legislative and regulatory changes have improved the Section 202 program. For example, in 1999, more than a third of all Section 202 facilities (37.4 percent) had service coordinators on staff, a service authorized by legislative changes in 1990 and 1992.
- Third, residents are older and frailer than in previous years. Average resident age increased from 72 years in 1983 to 73.6 years in 1988 and 75 years in 1999. In the oldest projects, the average age was 78.2 years in 1999, and 39 percent of residents were over the age of 80.
- Fourth, facilities built during the past decade are, on average, much smaller than those built in previous years. This change may limit managers' ability to adapt to the changing needs of aging residents.
- Five, capital reserves were generally viewed as inadequate for retrofitting projects to meet the changing needs of aging residents, especially among older projects, where the oldest residents are concentrated.
The following policy implications may be drawn from the data in this report:
- Production levels are not adequate to meet demand. The program is not able to meet the needs of many others who must wait years to get housing assistance. The trend toward lower funding levels limits Section 202 from serving most of the needy clients waiting for housing.
- Targeting funding to smaller rural projects is not addressing the greatest need, as evidenced by longer waiting lists and fewer vacancies in larger cities.
- The trend toward funding smaller projects creates difficulties achieving the economies of scale needed to provide community spaces, staffing, and services to support an increasingly very old and frail resident population.
- Projects built during the earliest period and the cost-containment years of the mid-1980s will have the heaviest need for capital to retrofit and modernize their projects. Unfortunately, these projects also report the least ability to meet capital needs from project reserves.
AARP Public Policy Institute report #2001-02, by Leonard F. Heumann, Ph.D., Karen Winter-Nelson, and James R. Anderson, Ph.D.
Written by Donald L. Redfoot, AARP Public Policy Institute
May be copied only for noncommercial purposes and with attribution; permission required for all other purposes.
Public Policy Institute, Public Affairs, AARP, 601 E Street, NW, Washington, DC 20049
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