Federal Housing Programs For The Elderly And Disabled

Next, in our look at federal housing programs reviewed in former Congressman Paul Ryan’s critique of the War On Poverty, we’ll consider four smaller programs that I’ll call the “section” programs. I’ll cover these niched and focused programs in two posts. The programs contain a mix of incentives for housing built for particular populations, and offer both direct capital support and rental assistance.

Section 202 Supportive Housing for the Elderly

The first version of the Section 202 program was passed and became law in 1959. The program combines loans or grants for housing construction and rental support for people 62 years or older who earn less than 50% of Area Median Income (AMI). The intention is to create housing that caters to a population with different physical needs than a younger population, such as housing without stairs and that’s close and accessible to medical providers.

Section 202 housing also frequently covers construction costs with tax credits and other funding sources. Operating costs are covered from tenant rent combined with Project Rental Assistance Contracts (PRAC) or project-based Section 8 vouchers (PBRA). According to the National Low Income Housing Coalition (NLIHC), of “6,957 Section 202 communities, 4,074 receive their operating subsidy from PBRA and 2,993 receive their operating subsidy from PRAC”

Ryan’s review determined that while Section 202 was more expensive than Section 8’s project-based tenant support, the program was more cost-efficient in meeting the housing needs of seniors receiving institutionalized care.

This makes sense since the idea behind Section 202 is to provide supportive services in addition to housings. I pointed out in a previous post that something needs to be done to address the costs of housing older people who are face mounting challenges as they age. The Section 202 program, however, appears to be weighted down with too many sources of capital. For this population, I would support full funding for capital construction combined with Medicare reimbursement and voucher support. This would likely be more expensive than the current program, but cheaper and more humane than nursing homes; I’d pay for it with savings from reduced use of other big, inefficient programs like the LIHTC.

In fiscal year 2012, Section 202 outlays were $862 million and, according to NLIHC, “In FY21, Congress appropriated $855 million for Section 202, providing $52 million for new construction.”

Section 811 Supportive Housing for Persons with Disabilities

The Section 811 program resembles the Section 202 program, providing support for the development and building of supportive housing for people with disabilities and rental assistance to those residents. The program was reformed in 2010 and according to the Department of Housing and Urban Development (HUD) in two ways.

First, the program relies on typical methods of the combination of a variety of capital sources to support construction of new housing, and, like the Section 202 program, provides project-based assistance for residents of those properties. The capital support usually comes in the form of interest-free forgivable loans.

The second role the Section 811 program serves is providing support to disabled people who are living in “traditional” projects – i.e., ones funded with Low Income Housing Tax Credits (LIHTC), and other sources of capital – with rental assistance. According to the Section 811 webpage, state housing agencies that have entered into partnerships with state health and human services and Medicaid agencies “can apply for Section 811 Project Rental Assistance for new or existing affordable housing developments funded by LIHTC, HOME, or other sources of funds.” State housing agencies are awarded funds and in turn grant those to qualifying projects that support disabled residents. To live in a unit or get support under the Section 811 program, at least one resident of a household must be between 18 and 62 and household income must be at or below 50 percent of Area Median Income (AMI).

Ryan’s review of the program determined that, like Section 202 units, it is more expensive to house someone under the Section 811 program than just vouchers alone. In the case of Section 811 costs run 8% higher than other programs using Section 8 in metropolitan areas. As with Section 202, this finding isn’t surprising since the program serves a population in need of more than just housing. Also, like the Section 202 program, we ought to simply fund housing for this population without creative financing or layers of bureaucracy. I’ve written many times that we should aim most of our capital housing subsidies, services, and operating costs, at populations that have limited incomes or no incomes due to their inability to work.

In fiscal year 2012, Section 811 outlays were $226 million and according to the National Low Income Housing Coalition, in 2022 the capital portion of the program served 28,000 households at 2,390 sites, and the rental assistance portion supported over 9,000 units at a total outlay of $325 million.

Tomorrow’s post will cover Section 521 which provides housing support for rural housing and Section 236 that incentivized development of new subsidized housing with mortgage insurance and a reduced interest rate for financing.