Senior Housing - Market / Subsidized / Section 8

[GailL1]

  Back in 1959, the Housing Act authorized the Section 202 Program for the joint construction of low cost housing for seniors - there was a resurgence of the program in 1975 and more units were built.  This continued until about 1990 - 

The program stalled in 2009 and funding stopped in 2012 because it just did not fit the conditions of the economy.  

The program was pretty simple - non-profits (private-non-profits - many were faith-based) applied for a loan with HUD to build apartment units for senior citizens.  Many of them are still around today because as these units have aged, they have been able to also finance / refinance remodeling & improvement cost with HUD keeping these complexes up and running and hopefully in pretty good shape.

I don’t know about the program when it 1st started but when I had dealings with one of these concepts back in the early 2000’s - it went pretty much like this:

Say there were 300 units - studio or 1-bedroom -

• 100 or so of them would have been designated to Section 8 seniors or disabled.  These bore little rent money from the beneficiary - mostly paid by the government - with the resident picking up about 30% of the rent.
• 100 or so of them would have been designated as SUBSIDIZED - meaning if the senior or disabled person had limited income at a certain level, they qualified for a government subsidy - the subsidy amounted to about 30% of the rent and the rest was born by the resident or about 70% by the resident.
• the remaining 100 units bore market rate - with NO government help for these seniors or disabled since they had ample funds to pay their own rent.

As time went on - the scope and nature of the complexes changed because of how the cost of living increased and other conditions that affected our national economy.  

It became very expensive to construct these type of complexes - the cost of the land where seniors and the disabled wanted/needed to live and the actual cost of construction.  

Then there were all the auxiliary staff needed to run the places - from maintenance of the building and grounds to security, from the cleaning crew to the office / social working staff.  Salaries increased.

Those that got an apartment in one of these complexes also changed in their financial makeup because they were staying longterm and their finances were being reduced by just living.

When the market rate rent increased on the units, all of the various types of payers were also affected - more units went to Section 8 -  but many of these Section 8 users were coming from the ranks in the building that use to pay a subsidized rent but now their finances were waning.  Those that were paying market rent might have been in the same condition and they passed from self-pay to subsidized.

They also all lived longer - thus any turnover due to death was negligible.  If they got too sick to do for themselves (this program is independent living) they were able to bring in some help on their dime or the government's dime (Medicaid) until this didn’t work any longer.  

Thus the constant increase in the waiting list especially for Section 8 and Subsidized.  Many senior always thought that this was a place they would go in their later years - now they find out that there is no room for them in this type of living abode.  They stay on the waiting list for years before there is any movement - and many are on the list with them.

This is just some highlights of what has happened to this once really good program that got caught up in everyday life situations and changes.

So now what are we gonna do - with rents escalating and people getting older without the proper financial plans.  

We aren’t building any more of these type complexes and now the non-profit owning the ones that currently exist may find that what they are getting to cover their cost isn’t getting it anymore - so they could just end up selling the complex to a for profit enterprise OR even more likely, they sell to a developer who will tear it down to build perhaps upscaled rentals in these sought after urban/suburban locations.

Anybody that has gotten to the end of this - GOT ANY COMMENTS - CAN IT BE FIXED?

HUD Section 202

a download document

HUD.gov - SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY PROGRAM