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No New Homes for Poorest Older Adults

2012 budget will eliminate new construction

Funding for the government program that pays for new construction of low-income housing for older adults was eliminated Thursday as part of negotiations over the 2012 federal budget.

See also: More older Americans renting.

The defunding of future capital projects within the Department of Housing and Urban Development's (HUD) Section 202 program was approved by Congress this week as part of a HUD appropriations bill. President Obama signed the measure, which preserves funding for current Section 202 recipients but ends new construction. This means no new rental units will be built after 2012.

In addition to construction, the Section 202 Supportive Housing for the Elderly Program also provides housing subsidies for those over age 62 who need assistance with activities of daily living and meet state-specific income guidelines. With the bill's passage, subsidies will be available only for residents in units that already exist. The average Section 202 recipient has an income of $13,500 per year, according to HUD.

This week, HUD released $545 million from the 2010-11 budget to pay for construction of nearly 100 new facilities to serve about 4,000 older adults. But this first-ever defunding of the capital program means that those units could represent the last expansion of a program started in 1959 that went on to create nearly 400,000 units — as many as 20,000 a year — that help keep frail and impoverished older adults living safely in their communities.

Who qualified?

Demand for Section 202 funds far exceeds supply. More than 1.3 million people over age 62 meet HUD standards of unmet "worst case housing needs," (PDF) spending more than 50 percent of their income on rent and/or living in substandard housing. And for each Section 202 unit, there are 10 people on the waiting list, according to a 2006 study by the AARP Public Policy Institute (PDF), the most recent research on the topic.

"These are people staying in their homes longer than they should [for safety reasons]," says Nancy Libson, senior housing policy expert for LeadingAge, which represents aging services that administer the program. "There are people who are homeless. There are people living in their cars. There are people living with their children who would really like their own place to live. There are people living in apartments they can't afford. Or they're going to nursing homes."

Next: Where will less affluent, older citizens live? >>

Where will less affluent, older citizens live?

The defunding of the new construction program saves money by not funding an entitlement program at the expense of a discretionary program – Medicaid, says Libson. “People will be going to nursing homes even though they really don’t need a nursing home placement,” he says. “And Medicaid will fund the cost.” 

The average nursing home placement costs upward of $70,000 per year, according to the 2011 Genworth Cost of Care Study. The average cost to HUD for a 202 recipient is $7,500 per year, says Libson.

No other program is able to meet the needs of the poorest older adults, says Robin Keller, vice president of affordable housing for Volunteers of America, the largest private owner/operator of Section 202 housing.

"With Social Security not really increasing and even being threatened, with home equity down and considering what's happened with the 401(k) investments, there's a need more than ever for affordable housing for seniors," Keller says.

Also of interest: Waiting for Social Security disability. >>

Cynthia Ramnarace writes about health and families. She is based in Rockaway Beach, N.Y.