Housing Needs of Special Populations

Thank you Chairman Olver and Ranking Member Knollenberg for inviting me to appear before this subcommittee to discuss the Department of Housing and Urban Development's efforts to provide affordable, accessible, and integrated housing options for seniors and people with disabilities. Under FHA Commissioner Brian Montgomery's oversight, I direct two programs that focus solely on serving these special needs populations - the Section 202 Supportive Housing for the Elderly Program and the Section 811 Supportive Housing for the Disabled.

The FY 2009 Budget requests $540 million for the Section 202 program. This program expands the supply of affordable housing with supportive services for seniors 62 years of age and older. It provides very low-income elderly with options that allow them to live independently but in an environment that provides support activities including cleaning, cooking, transportation. The residents of Section 202 projects have a median age of approximately 76, a median income of approximately $9,500, and their primary source of income is Social Security Insurance.

Most residents live in Section 202 properties for many years, often requiring additional services over time. Studies show that with supportive services seniors can age in place with dignity, and at a much lower cost than moving prematurely to institutionalized settings such as nursing homes.

Section 202 funding is awarded on a competitive basis to non-profit organizations to develop apartments and provide rental assistance. Since the program's inception, more than 300,000 units have been funded.

The Section 811 program, for which HUD has requested $160 million in FY 2009, focuses on serving people with disabilities aged 18 and older. It is nearly identical to the Section 202 program in terms of how the two are administered.

To improve the rate of new unit production within difficult budget environments, the Department has sought input from our industry partners to find way to increase production of both the Section 202 and Section 811 programs. As a result, the Administration proposed in the FY 2008 and FY 2009 Budgets to create demonstration programs to leverage both the Section 202 and 811 programs with the Low Income Housing Tax Credit (LIHTC) program as well as other sources of funding.

These demonstration programs would increase the production of units serving these special needs population by removing the barriers that discourage LIHTC applicants from utilizing Section 202 and Section 811. As the subommittee is aware, the Low Income Housing Tax Credit Program is the lead program in the country for producing and rehabilitating affordable rental housing. According to the U.S. Department of the Treasury, over the past two decades the LIHTC has financed nearly two million affordable housing units.

While the Department has yet to be granted the authority to implement these demonstration programs, we have undertaken several initiatives that have produced positive results. Specifically, we are making programmatic and regulatory changes that will remove some of the barriers that discourage sponsors from utilizing Low Income Housing Tax Credits with Section 202 and Section 811. These changes include allowing common amenities such as dishwashers, washers and dryers to be considered as eligible costs, and allowing for a more objective approach in calculating development costs.

We believe that statutory changes, as outlined in the demonstration efforts, will increase the productivity of both programs, will further increase the productivity of both programs, thus allowing for greater safe, decent, affordable and accessible housing options for special needs populations.

In closing, I would like to thank you for the opportunity to present before you today.

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