A Quiet Crisis in America 

A Report to Congress by the

Commission on Affordable Housin

Health Facility Needs for Seniors i

21st Century
 

A QUIET CRISIS IN AMERICA 

A Report to Congress by the 

Commission on Affordable Housing and Health 

Facility Needs for Seniors in the 21st Century 

Submitted to the 

Committee on Financial Services 

Committee on Appropriations 

United States House of Representatives 

And the 

Committee on Banking, Housing and Urban Affairs 

Committee on Appropriations 

United States Senate 

Pursuant to Section 525(f) of Public Law 106-74, as Amended 

Washington: June 30, 2002

For Sale by the Superintendent of Documents

Commission on Affordable Housing and Health Facility 

 Needs for Seniors in the 21st Century 

470 L’Enfant Plaza, SW 

Suite 7110 

Washington, DC 20024 

Tel: 202-708-4287 

Fax: 202-708-4165 

Website: www.seniorscommision.gov
Dedication 

January 29, 1943 – April 9, 2002 

The Commission hereby dedicates this Report to the memory of The Reverend 

Monsignor Henry Gugino. Since his untimely passing on April 9, 2002, all of us have 

greatly missed him. His presence on the Commission was irreplaceable. Our dear 

colleague, Henry, led a life of distinguished service to his home community, his State, 

and our Nation. We join Monsignor Gugino’s neighbors in Buffalo, New York, and all 

who were touched by his life’s work, in mourning the loss of this inspiring leader, tireless 

advocate, and good friend. 
Commissioners 

Ellen Feingold, Co-Chair Nancy Hooks, Co-Chair 

President, Jewish Community Housing Regional Vice President 

 for the Elderly American Association of Homes and 

Boston, MA Services for the Aging 

 Albany, NY 

Jane O’Dell Baumgarten Reverend Emanuel Cleaver, II 

Member, Board of Directors Senior Pastor 

AARP St. James United Methodist Church 

Washington, DC Kansas City, MO 

John Erickson M’Liss Solove Houston 

Chairman & CEO President and CEO 

Senior Campus Living MSH Consulting, Inc. 

Baltimore, MD Springfield, VA 

James E. Introne Diana McIver 

President President 

Loretto Diana McIver and Associates, Inc. 

Syracuse, NY Austin, TX 

Rita Poundstone Steve Protulis 

Manager Executive Director 

Colorado Housing and Finance Authority Elderly Housing Development 

Denver, CO & Operations Corporation 

Washington, DC 

James H. Swanson James T. Sykes 

Senior Vice President Senior Advisor for Aging Policy 

Paragon Mortgage Corporation University of Wisconsin 

Phoenix, AZ Madison, WI 

Harry Thomas 

Executive Director 

Seattle Housing Authority 

Seattle, WA 
Commission Staff 

Gerard L. Holder Kenneth R. Trepeta 

Executive Director Deputy Director

Dina E. Elani Margretta R. Kennedy 

Associate Director Director of Administration 

Judy Crawford 

Special Assistant to the 

Executive Director 
CONTENTS 

Preface 

Seniors Commission Report 

Executive Summary 

I. Setting the Context: The Elements of Change 

A. A Quiet Crisis Is Looming for America’s Seniors 

B. A Vision for America 

II. Convergence: A Call for Coordination of Seniors’ Housing and Health Care 

III. Key Demographic Findings and Projections 

IV. Program Information and Other Considerations 

V. Recommendations of the Commission 

VI. Conclusion: A Mandate for Change 

VII. Best Practices 

Additional Views of Commissioners 

Minority Report 

Appendices 

A. Endnotes 

B. Summary of Commission Recommendations 

C. Biographies of Commissioners 

D. Commission Hearings 

E. List of Acronyms 

F. Acknowledgements 

G. Commissioned Research Papers 

H. Congressional Mandate 
PREFACE 

The Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st

Century (hereafter, Seniors Commission) was established by Congress on October 20, 

1999, under the Mandates of Public Law 106-74.1

 Then Housing and Community 

Opportunity Subcommittee Chairman Rick Lazio and Ranking Member Barney Frank, of 

the House Housing and Financial Service Committees, announced creation of the 

Commission and the appointed Commissioners on January 2, 2001. The Commission 

held its first organizational meeting on April 29 and 30, 2001. 

The Seniors Commission was created to study and report back to the Congress on 

housing and health facility needs for this and the next generation of seniors in America. It 

was empowered to offer specific policy and legislative recommendations to increase 

affordable housing and improve health-related service options for seniors now and as the 

Baby Boomer generation reaches retirement age. Existing and commissioned research — 

along with expert and public testimony compiled at field hearings across the United 

States — have been used to compile this report. 

As detailed in the legislative Mandate, as amended, the Commission was required to 

submit to the Congress by June 30, 2002, a report that: 

• “compiles and interprets information regarding the expected increase in the 

population of persons 62 years of age or older, particularly information regarding 

distribution of income levels, homeownership and home equity rates, and degree 

or extent of health and independence of living; 

• provides an estimate of the future needs of seniors for affordable housing and 

assisted living and health care facilities; 

• provides a comparison of estimate of such future needs with an estimate of the 

housing and facilities expected to be provided under existing public programs, 

and identifies possible actions or initiatives that may assist in providing affordable 

housing and assisted living and health care facilities to meet such expected needs; 

• identifies and analyzes methods of encouraging increased private sector 

participation, investment, and capital formation in affordable housing and assisted 

living and health care facilities for seniors through partnerships between public 

and private entities and other creative strategies; 

• analyzes the costs and benefits of comprehensive aging-in-place strategies, taking 

into consideration physical and mental well-being and the importance of 

coordination between shelter and supportive services; 

• identifies and analyzes methods of promoting a more comprehensive approach to 

dealing with housing and supportive service issues involved in aging and the 

multiple governmental agencies involved in such issues, including the Department 

of Housing and Urban Development and the Department of Health and Human 

Services; and 

• examines how to establish intergenerational learning and care centers and living 

arrangements, in particular to facilitate appropriate environments for families that 

consist only of children and a grandparent or grandparents who are the head of the 

household.” 
In addressing these matters, Congress directed the Commission to define and frame 

issues more precisely and to provide potential solutions. The Commission sought to: 

• Assess the existing Federal role in senior housing, health, and supportive services; 

• Explore means for Federal, State, and local governments to coordinate resources 

through joint collaboration; 

• Encourage public-private partnerships (with proprietary and non-profit groups) to 

address capital formation issues for seniors’ housing with a health care 

infrastructure; 

• Educate the public and private sectors on seniors’ capital housing and health care 

needs; 

• Craft or develop new models and approaches to delivering seniors’ housing that 

link housing and services; 

• Develop strategies to make better use of single-family housing as a long-term care 

resource (most seniors reside in their own homes, and accessible features will 

influence their ability to age in place and affect the costs of caregiving); and 

• Explore the financing strategies that can be employed to promote supportive 

housing and aging in place through home and community-based services. 

To inform its work, the Commission held public hearings in: 

• Syracuse, New York, on July 30, 2001; 

• Columbus, Ohio, on September 24, 2001; 

• San Diego, California, on November 7, 2001; 

• Miami, Florida, on January 14, 2002; and 

• Baltimore, Maryland, on March 11, 2002. 

A number of Commissioners also participated in a Public Forum in Boston, 

Massachusetts, on March 1, 2002. 

The Seniors Commission established Task Forces on Financing Strategies, on Needs 

Assessment, and on Housing and Health Strategies to address specific elements of the 

Mandate. Each task force was given responsibility for Mandate requirements and 

individual hearings. The task forces worked with the staff to select witnesses who would 

provide useful testimony for the essential elements of the Commission Report. 

Commission Co-Chairs Ellen Feingold and Nancy Hooks served as ex officio members of 

each task force. The Commission contracted with several leading researchers and firms 

to conduct original research; the significant findings of their papers are included in the 

Appendix to this report. 

Contemporaneous with the Seniors Commission, Congress also established the Millennial 

Housing Commission. Congress directed that Commission to identify, analyze, and 

develop recommendations that highlight the importance of housing, improve the housing 

delivery system, and provide affordable housing for the American people, including 

recommending possible legislative and regulatory initiatives. The two Commissions 

maintained appropriate liaison and they shared information, while respecting their 

individual Mandates. 
The Seniors Commission findings, recommendations, and policy analyses are contained 

in this final report to the Congress. 

All appropriate records of the Commission and its work will be available to the public 

through the National Archives. Its report is available online at 

www.seniorscommission.gov. 

Ellen Feingold 

Nancy Hooks 

Co-Chairs 
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Seniors Commission Report 

SENIORS COMMISSION REPORT 

We, the Commission on Affordable Housing and Health Facility Needs for Seniors in the 

21st Century, are pleased to transmit our Report – A Quiet Crisis in America. This report 

is presented by the Majority of the Commissioners and contains recommendations for 

Federal policy that we believe will allow this Nation to appropriately plan for and meet 

the needs of seniors in the 21st Century. 

Our Congressional Mandate was broad and encompassing. The Congress asked not only 

that we identify existing and future needs, but that we recommend creative, yet realistic 

approaches to address these needs. As expected, the growth in the numbers of seniors is 

staggering – today, one in twelve persons is 65 years of age or older. In the year 2020, it 

will be one in six. Some of this growth – from 35 million seniors today to 53 million in 

2020 – is attributable to the aging of the Baby Boomers, but some of it is due to advances 

in medicine and improvements in our health care systems – resulting in longer life spans. 

Regardless, this “aging of America” will challenge our Nation’s resources. 

The Commission is a diverse group, encompassing providers, developers, researchers, 

advocates, clergy and lenders – each Commissioner brought a different perspective and a 

different experience base to our mission. As we worked through the past eighteen 

months to fulfill our Mandate, we experienced a common bond in our caring, 

compassion, and concern for the Nation’s seniors. Ideology and partisanship aside, we 

shared a common vision that government at all levels should promote policies that allow 

for choice. 

Our commonalities far exceeded our differences, but even though we had consensus on 

many of our ideas, we could not reach consensus in the interpretation of our Mandate. 

Thus, the Seniors Commission Report is submitted by seven of the thirteen 

Commissioners, bipartisan in our views, even though most of the recommendations were 

developed, with consensus, by the entire Commission. Some Commissioners have 

elected to sign a Minority Report, which follows the Seniors Commission Report in this 

document. 

As a Majority, we believe that: 

Congress sought our ideas for addressing future needs, not our counsel on funding 

sources – for broad-brushed, proactive ideas, not prescriptive solutions. 

Congress asked us to address the impending needs of all seniors, regardless of 

income. We believe that the needs of poor elderly are indeed the most urgent, but we 

also believe that difficulties associated with the process of aging itself affects all 

seniors, regardless of their income strata. We heard the pleas of the “forgotten 

elderly” – incomes too high to qualify for low-income housing and Medicaid, but too 

low to afford private housing and health care. 
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Seniors Commission Report 

Additional resources are needed to meet the pressing needs of seniors, both today and 

in the future. We stop short, however, of setting production goals or advising the 

Congress on the commitment of Federal resources to specific programs. We believe, 

demographic facts in hand, evolving market demand, and weighing national 

priorities, that Congress must decide the appropriate allocation of resources. 

Seeing the trend of high homeownership rates among seniors, our Nation must be 

creative in assisting seniors in preserving this valued asset and using their equity 

wisely. 

The Majority also struggled with the reliability of data available to us to develop our 

recommendations. Absent other resource data, we relied on data interpolated from the 

1999 Annual Housing Survey. Such data is self-reported and must be used with caution. 

Further, no data can accurately predict unknowns – the economy, homeownership equity, 

technological advances or consumer preference. To predict with accuracy the economic 

and demographic profiles of the next generation of seniors is simply not possible. 

Anticipating the diversity of needs and demands by 53 million individuals, the Majority 

sought approaches that would create options and maximize choices for seniors. 

Accordingly, we developed recommendations that create foundations and building blocks 

– with flexibility to change as the market changes, from today’s survivors of the Great 

Depression to tomorrow’s Baby Boomers. We sought to build upon what exists, and we 

do not propose major program restructuring or radical reform. We propose, insofar as is 

possible, solutions that support individual choice rather that government prescription. 

We propose flexibility and simplicity in regulations and avoid categorical programs with 

rigid guidelines. This challenge does not have a “one size fits all” solution. 

Our Recommendations are far-reaching and they are economically sound. We challenge 

the Government Sponsored Enterprises and HUD to step out of their “silos” and be part 

of broad-based solutions, not just in urban areas, but in the rural parts of our country as 

well. This will require changes in Federal policy; it will not require Federal funds. 

We challenge the institutional bias of Medicaid and propose its greater use in less costly 

alternative residential and community environments. We propose effective ways of 

linking existing housing and health care resources rather than creating new expensive, 

categorical programs. We call upon the Congress to preserve our existing senior 

communities – aging buildings as well as their aging residents need attention. All of 

these measures would conserve, rather than expend, resources. 

Addressing the needs of seniors in the 21st Century will be a monumental task. It is a 

challenge addressed to all Americans – it cannot be borne by the Federal government 

alone. We appeal to the Federal government to lead, to serve as a catalyst for change, to 

make it easier for local governments and the private sector to serve. Through sound 

policy, governments at all levels can provide incentives and tools. Through flexible 

policy, we can get these tools in the hands of the people most capable of making a 

difference. 
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Seniors Commission Report 

Our Commission is Federal in scope, but many of the measures we propose will need to 

be implemented in the Nation’s diverse neighborhoods and communities. We encourage 

partnerships among and between proprietary and non-profit providers, faith-based 

organizations, community lenders, private investors, and all the many parts of our local, 

state and Federal government. We ask Congress to create a policy framework for an 

aging America, and to provide the opportunities and means for change. 

It is with appreciation for the opportunity to contribute our services that we, the Majority 

of the Commission Members, submit this Report. 

Respectfully Submitted, 

Nancy C. Hooks, Co-Chair 

Jane O’Dell Baumgarten 

John Erickson 

M’Liss Solove Houston 

James E. Introne 

Diana McIver 

James H. Swanson
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Seniors Commission Report 

EXECUTIVE SUMMARY 

A QUIET CRISIS IS LOOMING FOR AMERICA’S 

SENIORS 

Eighteen short years from now, 53 million Americans (one in six United States residents) 

will be aged 65 or older. Today, 12.4 percent of the U.S. population is 65 or older; in 

2020, that figure will approach 20 percent. America needs to prepare for these changing 

demographics: this is the “Quiet Crisis.” 

Senior Americans, whether rich, poor, or somewhere in the middle, face many barriers to 

an old age in which very basic human desires for physical safety, appropriate health care, 

and maximal independence are met. For some, crucial family supports will disappear as 

they outlive spouses or children move to distant places. For others, limited resources will 

prevent them from identifying and purchasing needed services. Many will lose their 

homes — long a symbol of their independence — due to rising property taxes and 

maintenance costs. Living alone, isolated from services and perhaps coping with 

disabilities that prevent social interactions, a large and growing number of seniors will 

face triple jeopardy: inadequate income, declining health and mobility, and growing 

isolation. 

“There's a lack of affordable housing alternatives to meet the demand, and many...do not 

have options.” 

Rene Rodriguez, Executive Director, Miami-Dade Housing Agency, at hearings 

before the Commission, January 14, 2002, Miami, Florida. 

In the face of unprecedented growth in the proportion of the population who are 

seniors, we believe that this Nation has both a moral obligation and a financial imperative 

to establish a more rational long-term care system. A system that drives seniors to 

needless, premature institutionalization and expensive, preventable medical interventions 

will burden both seniors and those who must bear the costs for their care. Senior 

individuals who are able to remain in the community should receive the services they 

need to be as independent as possible. Those who must move from their preferred setting 

should have viable and affordable alternatives that ensure their well-being. Neither 

institutionalization nor neglect should be the only alternatives they must accept. 

“...A lot of older persons live in housing without supportive features. Over 5 million 

older households have one member with a functional limitation. Over 1 million of these 

households report needing modifications. These are primarily old, old persons.” 

Dr. Jon Pynoos, Associate Professor of Gerontology, Ethel Percy Andrus 

Gerontology Center, at hearings before the Commission, November 7, 2001, San Diego, 

California 

_______________________________________________________________________ 
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Seniors Commission Report 

In a Nation characterized by care and compassion for the least fortunate of its citizens, 

the stark reality is that many seniors, after years of contributing to their country’s defense 

and prosperity, find themselves seriously at risk of being ignored, forgotten, or destined 

for a room in a skilled care facility. The simple fact is that this country lacks a national 

policy that addresses humanely and cost-effectively the needs and preferences of seniors 

who have diminished abilities to care for themselves. All too often, seniors with chronic 

illnesses and declining mobility have limited care and financial alternatives, when what 

they want is to live in their homes with appropriate support. 

How the Quiet Crisis Has Developed 

The Commission found that the Quiet Crisis has been developing over time as a result of 

numerous trends and economic factors. Some of our key findings regarding this evolution 

are the following: 

• In 1900, seniors accounted for less than 5 percent of the total U.S. population; 

numbering 35 million, seniors now represent 12.4 percent. By 2030, the 

senior population will double to 70 million, or 20 percent of the U.S. 

population.2

• Nearly 20 percent of seniors have significant long-term care needs. In 1997, 

more than 5.8 million or 18 percent of non-institutionalized people age 65 and 

older required assistance with everyday activities, and about 1.2 million (3.7 

percent) were severely impaired, and required assistance with three or more 

activities of daily living (ADLs).3

• Many seniors across the income spectrum are at risk of institutionalization or 

neglect due to their declining health and the loss or absence of support and 

timely interventions. The risk is greatest for those with lower incomes.4

• There are nearly six times as many seniors with unmet housing needs as are 

currently served by rent-assisted housing.5 Waiting lists for many types of 

subsidized housing are long. For example, “in 1999, approximately nine 

elderly applicants were on waiting lists for each Section 202 unit that became 

vacant within a year” compared with eight applicants in 1988.6

 

• The Nation’s affordable housing stock is in danger of losing significant 

numbers of units. According to Commission research, 324,000 Section 8 

assisted units in senior properties are currently at risk of "opting out" of the 

HUD program.7

What the Quiet Crisis Will Bring 

The Commission found, based on the best research and forecasts available, that by the 

year 2020: 

• The number of senior households will have grown by nearly 53 percent; 

• More than 80 percent of senior householders will be homeowners;8

• Nearly three-fourths of senior households with unmet housing needs will likely be 

homeowners; 9

• Almost 44 percent of senior householders will be age 75 or older;10 
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Seniors Commission Report 

• Even if current rates of disability continue to decline, the number of seniors with 

disabilities will have increased from 6.2 million in 2000 to 7.9 million;11 and 

• The need for home- and community-based services (HCBS) will have increased 

due to the desire of seniors to age in place;12 

Current policies and programs for seniors are an accumulation of unrelated decisions and 

unintended consequences. Housing assistance programs are implemented with little 

reference to health care or supportive service needs. Medicare remains centered on acute 

care and episodic medical interventions, while the need to manage chronic care for the 

senior population has emerged as the most formidable challenge. Medicaid, which was 

designed to ensure access to health care for low-income persons, now provides an 

imperfect reimbursement mechanism for the Nation’s long-term care facilities and the 

skeleton of a payment system for much-needed home- and community-based care. 

“For any older American to suffer after working hard all of his or her life is a national 

disgrace.” 

Honorable Elijah E. Cummings, Member of Congress, Seventh Congressional 

District of Maryland, at hearings before the Commission, March 11, 2002, Baltimore, 

Maryland 

________________________________________________________________________ 

This Nation, despite competing demands for national resources, must respond to the 

critical need for affordable housing and home- and community-based supportive services, 

with a substantial financial commitment and effective policies. First, seniors most at risk 

of neglect or inappropriate institutionalization must receive the care they need. Second, 

all seniors, no matter what their individual circumstances and resources, should be able to 

continue to live where they prefer regardless of income, with the services they need to 

maintain personal dignity and quality of life. 

“We just had a tragedy in this country where ... immediately, all the money that was 

necessary to deal with that problem was provided.... We’ve got Baby Boomers coming. If 

they don’t want to deal with it now, what do you think they’re going to do then? ” 

Andrew Montgomery, senior and former Chairman of the Commission on Aging 

for the city of Oakland, California, at hearings before the Commission, November 7, 

2001, San Diego, California. 

A VISION FOR AMERICA 

The Seniors Commission believes that all older Americans should have an opportunity to 

live as independently as possible in safe and affordable housing and in their communities 

of choice. No older person should have to sacrifice his or her home or an opportunity for 

independence to secure necessary health care and supportive services. 
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Seniors Commission Report 

The Commission further believes that: 

• An individual's final years need not and should not be a time of fear, loneliness, 

and pain; 

• Today’s exceptions of excellence in seniors’ housing and health care services 

must become tomorrow’s norm; 

• Seniors should be entitled to a coordinated system of healthy, affordable, and 

ethical long-term care without needing to spend down to Medicaid standards of 

eligibility; and 

• This Nation has the capacity not only to protect its most vulnerable citizens from 

the challenges associated with long lives, but also from the loss of dignity and 

independence that millions of seniors face. 

CONVERGENCE: A CALL FOR COORDINATION OF 

SENIORS’ HOUSING AND HEALTH CARE 

The most striking characteristic of seniors’ housing and health care in this country is the 

disconnection between the two fields. With few exceptions, seniors obtain their housing 

from one source and their health care and supportive services from a completely different 

source. 

Witness after witness before the Commission testified to this problem and the 

consequences of its continuation. Through such exchanges, Commissioners came to 

appreciate that: 

• Some policy disconnects have long histories and may not be easily reconciled; 

• Poor communication, differing vocabulary, and few opportunities to share 

experiences separate professionals, policymakers, academics, and even the media 

in the two fields; 

• Lack of coordination and integration between housing and health care is 

characterized by different and distinct financing systems and regulatory 

structures; and 

• Most difficult of all, government is structured, at both legislative and 

administrative levels, in ways that inhibit coordination. 

...“Even for long-time professionals, the current ‘crazy-quilt’ tapestry of services and 

shelter options make it difficult to fully grasp their complexities, let alone try to access 

them. The result [is] confusion amongst consumers, duplication of service delivery, 

government agencies not knowing who supplies what service or that some services even 

exist, reduction in qualified service workers, regulations that impede dedicated service 

providers from providing the service they were hired and want to perform...” 

Janice C. Monks, Executive Director, American Association of Service 

Coordinators (AASC), at hearings before the Commission, September 24, 2001, 

Columbus, Ohio.
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Seniors Commission Report 

A Call for Coordination 

The Nation can no longer afford the inefficiency of the current disconnect between 

housing and health service systems for seniors. The time has come for coordination 

among Federal, state and local agencies and administrators. Coordination should begin in 

the halls and committee chambers of Congress and should spread through all branches of 

government and society. 

The now distinct worlds of housing and health care must begin to acknowledge each 

other, listen to and speak to each other, and learn to integrate efforts for their mutual 

benefit and the benefit of their senior clients. Such understanding and coordination are 

essential underpinnings to the success of reforms proposed in this report and in many 

other forums. 

Realities for Seniors Formed the Basis of our Recommendations 

The Commission received its Mandate from Congress; however, its major messages 

come directly from seniors across America. 

The world of seniors in America today is insufficiently reported in the print media or 

pictured on television — aside from the occasional special report. Advocacy groups 

speak well for the needs of seniors, academics detail the results of their research, and 

Congress and State legislative bodies contain several experts (many of whom are 

seniors) in the field. But public attention to the coming crisis is minimal. 

Commission members resolved, therefore, to find out for themselves about the world of 

seniors in America today. We held public hearings in Baltimore, Maryland; Columbus, 

Ohio; Miami, Florida; San Diego, California; and Syracuse, New York; and we attended 

a community forum in Boston, Massachusetts. We heard formally and informally from 

many of the country’s leading authorities on housing and health care options for seniors 

— heads of advocacy groups, recognized experts in senior services and leaders of 

government at all levels. We talked with providers, consumers, financiers, and 

regulators. We commissioned some of the Nation’s leading researchers to conduct 

original studies and we listened to seniors themselves. 

From this work, stretching over 12 months, we began to form the conceptual framework 

for our recommendations to Congress. We developed concepts that flowed from the 

hearings’ testimony, Commission meetings, informal conversations, and research. Five 

guiding principles emerged, illustrated here by testimony from hearings and supported by 

research and other documentation received by the Commission. The Commission’s five 

guiding principles are as follows: 

1. Preserve the existing housing stock 

 ...“Currently, neither the Federal or State governments recognize the critical 

nature of preserving affordable senior housing. Estimates are that there have 

been 300,000 units lost between 1997 and 1999. It is easy to see that we are 
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Seniors Commission Report 

losing units faster than we are gaining them. Many of these projects could be 

preserved with ... the infusion of dollars far less than the cost of new 

construction. We estimate that new construction costs in our 202 portfolio are 

approximately $70,000 per unit. We are seeing renovation projects only in the 

range of $20-$30,000 per unit. The difficulty is that there is little energy for 

preservation at the Federal and State level; however, there is often a great deal of 

energy at the local level...” 

 Thomas W. Slemmer, president, National Church Residences, September 

24, 2001, testimony before the Commission in Columbus, Ohio. 

First and foremost, the Nation must save what it has. Affordable senior housing is, 

like its occupants, experiencing an aging process. The challenge lies in both 

preserving seniors’ homes and simultaneously meeting their changing needs. 

 Principle No. 1 is addressed by seven specific recommendations that encourage 

the preservation, renovation, and refinancing of existing affordable and public 

housing projects and their potential conversion to service-enriched housing. These 

recommendations seek to preserve the existing stock of Section 202 units, 

encourage the renovation and refinancing of Section 202 projects, and support 

programs for senior homeowners to maintain their homes, maximizing their 

ability to age in place for as long as possible. Manufactured housing is recognized 

as an affordable housing option, and reliable financial products are encouraged for 

this type of housing. In addition, they encourage utilization of HOPE VI 

modernization funds to build new independent and assisted living facilities for 

seniors and to retrofit existing housing stock to better serve seniors.

2. Expand successful housing production, rental assistance programs, homeand community-based services, and supportive housing models. 

“Monies have to be allocated for senior programs...there should be a whole 

senior division from U.S. HUD. We're getting older; this Nation is getting 

older...every year, we see less and less money allocated...we opened our fifteenth 

building. It's located in the heart of Little Havana on 22nd Avenue and Calle 

Ocho. 

 We thought that we were going to have a lot of people applying for the 

building, so we decided to do a lottery and announced through the papers and 

television that we were going to give applications for a period of two weeks. 

People usually camp out from a month before to fifteen days to get these 

applications. Through rain, through storms, people get robbed in the streets. 

 So we decided to try to do something because we thought there would be a lot 

of people... Six thousand eight hundred and ninety-seven people showed up for 

applications. We spent another two weeks qualifying these persons. 

 We finally drew up a lottery with the press present and a hundred fortunate 

people got apartments...” 

 Jose Fabregas, executive director, CODEC, January 14, 2002, testimony 

before the Commission in Miami, Florida. 
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Seniors Commission Report 

 A housing crisis is on the horizon, and more housing units must be created in 

response. The Commission recommends the production of a variety of housing 

types, serving persons of low, moderate, and middle incomes, ranging from 

single-family home communities to service-enriched senior apartments to 

Continuing Care Retirement Communities. 

 Principle No. 2 is addressed by ten specific recommendations that include funding 

and modifying the Section 202 Program to keep step with the forthcoming growth 

in seniors population, increasing annual production to meet the needs of future 

generations of seniors, assuring Medicaid funding to support quality care and 

adequate payments across all settings. Recommendations also include modifying 

rural housing programs to provide ample funding to more appropriately serve 

seniors and assuring that home- and community-based services and supportive 

senior housing are available in rural areas. 

3. Link shelter and services to promote and encourage aging in place. 

“How do we have this continuum of care and services and coordinate them? 

What this [Commission] will do for us...is help us to look at this holistically...you 

can’t just have housing...people have different needs, they have different 

resources, and...how important is this medical component as we wind up with 55 

or 60 million people in this country who are going to need both pretty 

substantially.” 

 Congressman James Walsh, Chair, House Appropriations Subcommittee 

for VA-HUD and Independent Agencies, July 30, 2001, statement before the 

Commission in Syracuse, New York. 

In the area of long-term care services, public programs must move away from 

institutionally based models of service delivery. Seniors want choices in the 

services they receive. Public programs must provide services that are based on the 

needs and preferences of the individual. 

 Principle No. 3 is addressed by seven specific recommendations that include 

urging Congress to appropriately fund service coordination in all federally 

subsidized housing with senior populations and supporting demonstrations in 

assistive living technologies. The recommendations urge Congress to direct the 

General Accounting Office to evaluate interdepartmental operations between 

HUD and HHS and provide recommendations on how to coordinate their 

programs for seniors more effectively. These recommendations also urge 

Congress to help facilitate safe environments for grandparents raising 

grandchildren and call for improving transportation options and accessibility for 

seniors with limited mobility. 

4. Reform existing Federal financing programs to maximize flexibility and 

increase housing production and health and service coverage. 

 “Although Freddie Mac and Fannie Mae have existing programs and have 

become very responsive to us, their target is a very narrow property type...their 
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Seniors Commission Report 

programs accommodate properties that are generally servicing the middle and 

upper middle-income population that is largely Brookdales’ clientele. An issue 

that we have grappled with at Brookdale over the years is how to create a more 

affordable product for the vast population of seniors that cannot afford an 

upscale retirement community, yet has too much income to qualify for Section 8 

or tax credit housing.” 

 Mark Schulte, Chairman/CEO, Brookdale Living Communities, September 

24, 2001, testimony before the Commission in Columbus, Ohio. 

 Government-Sponsored Enterprises are the backbone of a housing system that has 

led to 68 percent of all Americans’ owning their own homes. With HUD, they 

should be major players in expanding housing and care facilities, particularly for 

seniors with incomes between 30 percent and 80 percent of area median income 

— a market segment with far too few options. Joined with Medicaid and 

Medicare, they can help meet the housing and service needs of many of the most 

needy seniors, now and into the future. 

 Principle No. 4 is addressed by ten recommendations that include calling on GSEs 

to develop and actively promote appropriate credit products to help expand 

private sector participation in senior housing, modernizing and redesigning FHA 

programs to work together seamlessly, and establishing higher HUD fair market 

rent standards for units in assisted living facilities. 

 These recommendations call on Congress to increase the Medicaid matching rate 

for home and community based service (HCBS) waiver services and ask Congress 

to institute a Medicaid shelter allowance as a requirement in Medicaid HCBS 

waiver programs, with incentives for state implementation. In addition, the 

recommendations support worker training in long-term care and urge the 

modernization of Medicare to address the growing needs of seniors with chronic 

conditions. 

5. Create and explore new housing and service programs, models, and 

demonstrations. 

...“Council for Affordable and Rural Housing (CARH) ... members own or 

operate affordable housing across rural America.... If there is one thing we have 

learned it is that there is no more effective method of delivering affordable 

housing than a public-private partnership between government and its citizens. 

We have also learned that too often the special needs of seniors and the disabled 

are not properly addressed... 

 Robert P. Yoder, Sr., past president, Council for Affordable and Rural 

Housing (CARH), July 30, 2001, testimony before the Commission in Syracuse, 

New York. 

 Yesterday’s demonstration and pilot programs often become today’s most 

successful approaches to the delivery of service-enriched housing for seniors. 

Principle No. 5 is addressed by eleven specific recommendations that include 

creating a clearinghouse of information about state Medicaid programs that 
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Seniors Commission Report 

deliver home- and community-based services and a national database of senior 

housing, encouraging the broader implementation of the Programs of AllInclusive Care for the Elderly (PACE) model, developing enhanced private sector 

and rural housing programs, creating an incentive for the purchase of long-term 

care insurance and establishing a prescription drug benefit for seniors under the 

Medicare program. 

Challenges to Meeting Future Needs 

The Commission also learned that national efforts to meet the future needs of seniors will 

face numerous challenges. Principal among those challenges is the need for resources. 

Committed investment in affordable housing has declined over the past three decades13

and resources devoted to home- and community-based services pale in comparison to 

resources dedicated to facility-based, skilled nursing care. The Commission's key 

findings on the challenges to addressing the growing affordable housing and health 

services crisis are: 

• One-third of senior households are expected to have housing needs; 

• Almost one-fifth of seniors will likely have service needs, and existing programs 

are not well structured to meet those needs; 

• Current production of affordable housing does not begin to meet demand; 

• Subsidized rental units are being lost due to expiring Section 8 project-based 

rental assistance contracts and mortgage prepayments; and 

• Federal housing and health policies are not synchronized, often leading to 

premature institutionalization as a more costly, yet practical option. 

The Commission has developed more than 40 recommendations to address the health and 

housing challenges of a dramatically increasing senior population. A full Table of 

Commission Recommendations appears in the Appendix to this Report. 

Though the Commission’s recommendations seek to respond to its Congressional 

Mandate, the Commission believes that these recommendations address the entire Nation 

on issues that many government leaders, providers, developers, advocates and consumers 

face. It is essential that these challenges be addressed proactively. 
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Seniors Commission Report 

PART I. SETTING THE CONTEXT: THE 

ELEMENTS OF CHANGE 

A. A Quiet Crisis Is Looming for America’s Seniors 

As Baby Boomers Age, Millions of Seniors Will Lack Affordable 

Housing and Health Care Services 

A crisis is looming for America’s seniors. It is a quiet crisis and most people seem 

unaware of its dimensions. Those who will be affected are not talking about it. Little is 

being done to prepare for it. Time is running out. 

When the first of America’s Baby Boomers reach age 65 in a mere nine years, the 

number of older Americans will begin to increase dramatically. Numbering 35 million 

seniors today, by the year 2020, one in six Americans — 53 million men and women — 

will be age 65 or older.14 The Nation is not ready for this surge in the senior population. 

This is the same generation that overloaded schools, challenged the health care system, 

and overburdened the transportation network. Many of these seniors will need housing 

and health care services that may be neither available nor affordable unless the Nation 

acts now. 

Congress saw this crisis on the horizon and established this Commission with a Mandate 

as broad as the crisis itself. At the outset, the Commission recognized the size and scope 

of the challenge — to examine two of the largest fields in America, housing and health, 

in light of this dramatic increase in seniors. We hope that our report is a first step toward 

the development of a sound national policy for seniors, but we know that many more 

studies and explorations of options must follow. It is important that the task has been 

identified, that the problem has been defined, and that work on finding solutions has 

begun. 

Challenges to Meeting Future Needs 

The Commission also believes that a national effort to meet future needs of seniors will 

face numerous challenges. Principal among those challenges is the need for resources. 

Committed investment in affordable housing has declined over the past three decades15

and resources devoted to home- and community-based services pale in comparison to 

resources dedicated to facility-based, skilled nursing care. The Commission's key 

findings on the challenges to addressing the growing affordable housing and health 

services crisis are: 

• One-third of senior households are expected to have housing needs; 

• Almost one-fifth of seniors will likely have service needs, and existing programs 

are not well structured to meet those needs; 

• Current production of affordable housing does not begin to meet demand; 
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Seniors Commission Report 

• Subsidized rental units are being lost due to expiring Section 8 project-based 

rental assistance contracts and mortgage prepayments; and 

• Federal housing and health policies are not synchronized, often leading to 

premature institutionalization as a more costly, yet practical option. 

The Commission has developed more than 40 recommendations to address the health and 

housing challenges of a dramatically increasing senior population. A full Table of 

Commission Recommendations appears in the Appendix to this Report. 

Though the Commission’s recommendations seek to respond to its Congressional 

Mandate, the Commission believes that these recommendations address the entire Nation 

on issues that many government leaders, providers, developers, and consumers face. It is 

essential that these challenges be addressed before the Nation is overwhelmed with the 

needs of the retiring Baby Boomer generation. 

The Causes of the Crisis Are Clear 

In America today, most people are living longer and many are enjoying their later years 

more, contributing as seniors to their families, communities, and country in countless 

ways. The reasons are simple: advances in medicine and health care, broader public 

understanding of good nutrition and healthy lifestyles, and a major reduction in 

environmental pollutants have contributed to a steady rise in life expectancy. 

Commission research based upon U.S. Census and American Housing Survey data 

shows, however, that almost half of seniors today are likely to have a low-income (under 

50 percent of area median income) and one-third of those seniors pay more than 50 

percent of their income for housing. Witnesses repeatedly told this Commission of long 

waiting lists for affordable housing, especially in growing urban areas. Families of 

seniors told of needing to move into costly institutional settings because of the lack of 

affordable and appropriate housing in the community. They told of the shortage of health 

care facilities or supportive services associated with their housing. The level of 

investment in this area has been inadequate for the past quarter century; neither market 

incentives nor political imperatives have generated sufficient private or public investment 

to meet even today’s need. If the situation is dire now, it will be desperate in the year 

2020. 

Barriers May Tarnish the Later Years 

Americans — poor or not — face many barriers to a secure aging process. In addition, a 

growing number of seniors are finding that they have to work in their “golden years” due 

to insufficient retirement plans, rising costs of health care/prescription drugs and lack of 

safe, affordable housing alternatives. For some, family supports disappear when they 

outlive spouses or when children move to a distant place. For others, old age is a time of 

discovering that, with a declining or fixed income, they are simply unable to purchase the 

goods and services they need. Rising property taxes and maintenance costs may make 

their home, long a symbol of independence and often their most valuable asset, too costly 

to retain. 
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Seniors Commission Report 

Seniors may face declining health, including the loss of ability to care for themselves and 

to live independently. They may live alone, lack family support, be unable to drive, be 

isolated from services they need, suffer disabilities that confine them to home, or be 

unable to enjoy friends and the social interactions so vital to their sense of dignity and 

well-being. While medical advances continue to increase life expectancy, the cost of 

medical insurance, long-term care, medications, and other needs for later life need to be 

within reach of seniors’ ability to pay. Many will spend what resources they have to 

meet their personal care and health needs until, impoverished, they meet Medicaid 

eligibility requirements. 

For those fortunate enough to have caring families nearby, their caregivers may face 

more stress than they can endure. When family, friends or caregivers search for help, 

they often encounter confusing requirements and eligibility standards as well as 

exorbitant costs. Those in rural areas face a dearth of available services, and the high 

cost of travel inhibits the use of what services are available. 

Seniors who live in private homes and require assistance could greatly benefit from the 

intervention of a professional who is able to facilitate service linkages, in the same way 

that resident service coordinators do in federally assisted housing. Furthermore, those 

seniors who are able to stay in their private homes may not be able to afford home 

modifications necessary for their safety and accessibility (for example, wheelchair ramps, 

wider halls and doorways, and grab bars). Even if they have the resources necessary to 

pay for nursing and personal care, labor shortages may make such assistance impossible 

to obtain. Premature and inappropriate institutionalization is also an inadvertent and very 

costly outcome of the current system. 

Sound public policy at all levels of government is essential to the development of 

solutions to these problems. 

This Nation Needs a Policy for the Elderly 

The Commission believes that a comprehensive national policy for affordable senior 

housing, coordinated with health and supportive services, is urgently needed. 

A specific concern of the Commission is to ensure that the government – at all levels – 

promotes policies that allow for choice. Seniors who need affordable housing, want to 

remain in their home and community, need assistance in caring for themselves, lack the 

resources to keep their homes and maintain their independence, or desire to live in senior 

communities should be supported in these options by sound government policy. 

Remaining at home is a cost-efficient housing choice, thereby allowing the most needy an 

increased opportunity to access the limited supply of subsidized housing. 

If there is inadequate housing, if what is available is not affordable, if health care or 

supportive services are too limited, seniors have little choice. If private and public 

resources are too few to provide for people who cannot provide for themselves, choice is 
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Seniors Commission Report 

an illusion. The Commission acknowledges that too many seniors find themselves at risk 

of being ignored, forgotten, or inappropriately housed in an institutional setting. 

“If we fail to meet these challenges,” Chairman, AARP Board of Directors, Keith 

Campbell testified to the Commission, “the likely result will be a crisis in both 

affordability and availability in housing, creating the possibility that we will see an 

America with a significant increase in underhoused, underserved older citizens. And a 

result of this could be a substantial increase in costly and premature institutionalization of 

older people.” 

Individual Americans are compassionate and care about the lives and welfare of seniors. 

National policy should be grounded on that caring and compassion, but, for this to be so, 

change must occur on many levels. Policies for seniors need to be coordinated and 

integrated, from the top levels of government to the service delivery level. Demand for 

existing facilities already outstrips supply, and the current pace of construction of new 

facilities will not meet future demand. Millions of seniors will face critical, yet bleak, 

choices unless the Nation acts soon. 

The Commission offers the following Vision as a conceptual guide for a national policy 

in the 21st century, a guide that finds its origins in the many voices that we heard. 

B. A Vision for America 

The Seniors Commission traveled across America to listen to men and women of all 

generations talk about the housing, health, and supportive service needs of seniors. From 

coast to coast, we visited with seniors and learned about their lives. We also heard from 

leading researchers, housing, health, and service providers, and government officials at 

all levels and from all points along the political spectrum. 

The picture of seniors in America that emerges is both inspiring and alarming. As 

individuals and as a Commission, we commend the vigor, imagination, and creativity that 

Americans are bringing to solve the problems of affordable housing and health care for 

the Nation’s seniors. 

We found, as we stated in the preceding section on problems, that current efforts are 

falling short of developing what will soon be needed — indeed, they fall short of 

providing what is needed today. 

Based on what we saw and heard the Commission developed this Vision for America. 

Ours is a land in which seniors should enjoy an array of opportunities for affordable 

housing, health care, and supportive services. By mobilizing its private and public 

sectors in a spirit of community, and drawing on its vast resources, the Nation has the 

capacity to enable seniors, regardless of economic status, to maximize their 

independence, promote their health and safety, and preserve their dignity. 
 -17- 

Seniors Commission Report 

Seniors should have access to quality care within a coordinated and comprehensive 

system that delivers healthy, affordable, and ethical long-term care. They should not 

have to impoverish themselves to be eligible for Medicaid. 

Seniors want and should have the opportunity to exercise informed choices about their 

care and their caregivers, and to grow older in their home, community, or other setting 

they select. Seniors should not have to face fear, uncertainty, or loneliness because of 

their limitations of income, illness, or disability. Nursing facilities should be places that 

care for the very ill and not the only alternative for people who cannot afford to live 

elsewhere. 

Special attention should be paid to those most vulnerable in society — the seniors who 

are poor, who live alone, who have lost their financial independence and perhaps even 

their homes, who may have debilitating health conditions, and who may have lost their 

very spirit. An adequate supply of community-based affordable housing and quality 

services can enable seniors to look forward to a safe, secure, and dignified old age. 

Today’s exceptions of excellence should become the norm, and flexible programs should 

be tailored to the needs of individuals. Greater Federal, State and local resources should 

be committed to affordable housing and quality care with a focus on wellness, not illness. 

Government at all levels should coordinate and consolidate funding and programs. A new 

flexibility in administration should be balanced by accountability to the taxpayers. 

Application and reporting requirements should be simplified and unified. 

The private and public sectors should work together to ensure appropriate care and 

services for seniors. Private business, faith-based and other non-profit organizations, 

government, and private foundations should form powerful and goal-driven 

collaborations and enter into creative partnerships for the effective and efficient use of 

private and public resources. 

Communities should develop a better understanding and appreciation for the seniors who 

live within them. State and municipal government should rewrite use and building 

regulations to encourage facilities and amenities for seniors resulting in, for example, 

walkable neighborhoods and town centers, expanded transit services, retrofitted homes, 

and essential services for seniors who live alone. In response, bold and exciting new 

design concepts for homes and other environments, focused on the special daily living 

needs of seniors, would emerge.

Americans have the foresight to support the initiatives and programs to implement this 

Vision. America has the means to achieve this Vision. We see an America that dedicates 

time, energy, and resources sufficient to address the housing and service needs of seniors 

in the 21st century. 
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Seniors Commission Report 

PART II. CONVERGENCE: A CALL FOR 

COORDINATION OF SENIORS’ HOUSING AND 

HEALTH CARE 

Housing and Health Care Operate as Separate Systems; Policies and 

Programs Are Disconnected and the Need for Coordination Is Clear 

The most striking characteristic of seniors’ housing and health care in this country is the 

disconnection of one field from the other. With few exceptions, seniors obtain their 

housing from one source and their health care and other services from a completely 

different source. 

Witness after witness before this Commission testified to this problem and the 

consequences of its continuation. “This lack of coordination and integration results in 

enormous inefficiency in the use of economic and social resources,” William L. Minnix, 

president of the American Association of Homes and Services for the Aging, told the 

Commission at its San Diego hearing. Commissioners themselves, experienced in both 

housing and health care, found that those with expertise in one field had inadequate 

understanding of the other. In that, they mirrored their counterparts across the country. 

Through exchanges in their own meetings, Commissioners have come to appreciate that: 

• Some policy disconnects have long histories and may not be easily resolved; 

• Poor communication, differing vocabulary, and few opportunities to share 

experiences separate professionals, policymakers, academics, and even the media 

in the two fields; 

• Lack of coordination and integration between housing and health care is 

characterized by different and distinct financing systems and regulatory 

structures; and 

• Most difficult of all, government is structured at both legislative and 

administrative levels in ways that inhibit coordination. 

The historical disconnect between housing and health care demands attention before the 

Baby Boomers reach retirement age. Coordinating these systems will take considerable 

time, effort, and commitment. 

Two Views Divide Housing and Services 

How does a housing provider deal with the concept of “aging in place”? How does a 

health services provider deal with a senior’s desire to “live in the community”? Even 

casual conversations with these providers begin to show the first signs of separation — 

language. 

Housing professionals speak of dwelling units, turnover rates, replacement schedules, and 

subsidies. They want to know seniors’ income as a percentage of area median income 
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Seniors Commission Report 

(AMI). Health services professionals speak of beds, length of stay, and insurance. They 

want to know seniors’ activities of daily living (ADL), their maintenance needs 

allowance (MNA), and their ability to access and pay for community service options. 

One witness, Arthur Y. Webb, president and chief executive officer of Village Care of 

New York, told the Commission about the confusion that surrounds models for care that 

exist, citing uncertainty about the meaning of “assisted living, continuing care retirement 

communities, life care communities, supportive housing, adult care facilities....” 

History, finances, and even legislative structures play a role in extending housing and 

health service disconnects. Federal housing and health issues are, for example, assigned 

to different committees in Congress, and State authority in these fields falls within the 

jurisdiction of different committees in State legislatures. The programs are administered 

in different departments — housing principally in the U.S. Department of Housing and 

Urban Development and health principally in the U.S. Department of Health and Human 

Services. Their headquarters, only a few blocks apart in Washington, are miles apart in 

understanding each other or working collaboratively. As one seasoned former HUD 

executive told the Commission, “There’s no coordination because it’s nobody’s job to 

coordinate.” 

The U.S. Supreme Court decision in Olmstead v. L.C. (1999), affirming the right of 

persons with disabilities to live and receive services in the least restrictive setting they 

desire if at all possible, gives even greater urgency to the issues of government 

coordination. 

Private and non-profit housing and health service providers face a bewildering array of 

funding sources: the private markets for a mortgage or equity loan, perhaps a municipal 

bond issue, or the credit sale, and — often most important of all — government funding 

from half a dozen different programs. Government programs are most often Federal in 

origin, but some are administered through State agencies. Each program has its own 

eligibility requirements, application deadlines, funding schedule, and recipient reporting 

requirements, to name only a few. One program’s maximums might be another program’s 

minimums. Witnesses before the Commission spoke of many consultants who make 

their living by advising sponsors on how to apply for these programs, how to write 

applications and reports, how to “cobble” together a layered funding package, and how to 

keep up with the relentless demand for more and more reports. Needless costs are 

associated with this complexity. 

The ultimate consumer — the senior citizen — faces the daunting task of obtaining 

shelter and care from these two disconnected sources. Confronted with complex entry 

requirements, insurance coverage limitations, and high costs, many seniors become 

overwhelmed just when they need help the most. The shelter and care one needs should 

not require understanding complex systems. Shelter with services should not demand 

that providers work with multiple programs and funding sources. A senior with financial 

resources may navigate these passages more easily than one without, but in many 

instances, particularly in rural areas, the shelter and care options may simply not exist at 

any price. 
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Seniors Commission Report 

A Call for Coordination 

The crisis in housing and services for seniors demands a new approach. The Nation can 

no longer afford the inefficiency of the current disconnect between housing and health 

service systems for seniors. The time has come for coordination among Federal and State 

agencies and administrators. Coordination should begin in the halls and committee 

chambers of Congress and should spread through all branches of government and society. 

In the private sector, housing and health services providers are aware of the disconnect, 

but they need help in making the critical connections. 

A first step in coordinating programs is to develop a common vocabulary, common age 

for eligibility, common definition of poverty, and common standards for programs. 

The now distinct worlds of housing and health care must begin to acknowledge each 

other, listen to and speak to each other, and learn to integrate efforts for their mutual 

benefit and the benefit of their senior clients. Such understanding and coordination are 

essential underpinnings to the success of reforms proposed in this report and in many 

other forums. 
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Seniors Commission Report 

PART III: KEY DEMOGRAPHIC FINDINGS AND 

PROJECTIONS 

The next three decades will see a tremendous increase in the size of the senior population 

as the Baby Boom generation ages and the lifespan of Americans increases. In meeting 

elements of its Mandate, the Commission conducted independent research, including 

original analysis of the American Housing Survey and other data sources,16 hearings, and 

reviews of scholarly work. The Commission's research included groundbreaking work 

using U.S. Census Bureau data from the American Housing Survey, analysis of the 

Current Population Survey (CPS), and the Survey on Income and Program Participation 

(SIPP). The Commission noted several important trends regarding current and future 

seniors and their housing and health services needs. (Note: In general, seniors means 

persons 65 and older unless otherwise noted. Data describing today's housing are based 

on 1999 information.) 

The Present 

• In 1900, the senior population was less than 5% of the total U.S. population. 

Numbering 35 million seniors, it is now 12.4%. By 2030, the senior population 

will double to 70 million, or 20% of the U.S. population.17

• Nearly 20% of seniors have significant long-term care needs. In 1997, more than 

5.8 million or 18% of non-institutionalized persons age 65 and older required 

assistance with their everyday activities, and about 1.2 million (3.7%) were 

severely impaired and required assistance with three or more activities of daily 

living (ADLs).18

• Many seniors across the income spectrum are at risk of institutionalization or 

neglect due to declining health and the loss or absence of support and timely 

interventions. The risk is greatest for those with lower incomes.19

• There are nearly six times as many seniors with unmet housing needs as are 

currently served by rent-assisted housing.20 Waiting lists for many types of 

subsidized housing are long. For example, in 1999, nine applicants were waiting 

for each Section 202 unit that became vacant within a year21 compared with eight 

applicants in 1988.22

• The affordable housing stock is in danger losing significant numbers of units. 

There are 324,000 Section 8 assisted units in senior properties that are at risk of 

"opting out," according to Commission research. 23

The Future 

The Commission developed projections of the future needs for housing and services 

between now and 2020 based on existing and contracted research. The Commission's 

research led to the following key findings about the future senior population. 

By 2020: 

• The number of senior households is expected to grow by nearly 53%. 
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Seniors Commission Report 

• More than 80% of senior householders will be homeowners.24

• Nearly three-fourths of households with housing needs will likely be owners of 

their housing. 25

• Almost 44% of senior householders will be age 75 and older.26

• Even if current rates of disability continue to decline, the number of seniors with 

disabilities is expected to increase from 6.2 million in 2000 to 7.9 million.27

• The need for Home- and Community-Based Services (HCBS) will grow 

substantially owing to the desire for seniors to age in place.28

The number of seniors in need of affordable housing will also increase at a steady pace. 

In 2020, 730,000 additional rent-assisted units1 will be needed to accommodate the senior 

households age 65 and older who are likely to have housing problems at the same 5.8 to 1 

ratio at which they are accommodated today.29 

The data shows that current and future populations of seniors require creative and diverse 

use of significant resources to meet their needs. The following demographic data shed 

light on the breadth of current and future needs. 

Housing and Health Characteristics of the Senior Population30

Housing

Seniors currently occupy a diverse array of housing types. Their housing reflects both 

economic decisions and life circumstances such as the purchase of a house in middle age, 

new retirement lifestyles, the disability or death of a spouse, and/or changes in financial 

well being, personal health, and mobility. 

Just over 21.4 million or almost 82% of older (age 65 and older) American householders 

live in conventional homes that they own or rent. Although homeownership is the norm, 

more than 16% of senior householders rent their accommodations, with most (70%) 

living in private market-rate housing, rather than government-subsidized or rent-assisted 

housing (Exhibit 1). 

In 1999, the AHS database enumerated a total of 6.2 million rent-assisted units in the 

United States — 1.2 million (or 20%) of which, were occupied by age 65 and older 

households and another 200,000 or 2% of which were occupied by age 62 to 65 

households.31 

 

1

 Rent-assisted is a term used in the American Housing Survey to reflect not just governmental rental 

subsidies, but also government subsidies that are provided in the form of grants or loans with favorable 

interest rates, resulting in a more affordable rent structure. 
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Seniors Commission Report 

Exhibit 1: Major Types of Housing Occupied by Senior Householders and 

Persons (Age 65 and Older) in the United States, 1999 

Type of Housing Number of 

Unitsa

Percentage 

Distribution

Number of 

Persons 

Percentage 

Distribution

CONVENTIONAL HOUSING UNITS: SENIOR 

HOUSEHOLDERS b,c 21,423,000 81.5 29,138,000 84.5 

Total Owner-Occupied Units 17,196,000 65.4 24,216,000 70.2 

I-unit attached or detached 14,846,000 56.5 

2-49 units 836,000 3.2 

50+ units 259,000 1.0 

Manufactured homes 1,255,000 4.8 

 

Unsubsidized Rental Units 3,011,000 11.5 3,584,000 10.4 

 

Government-Subsidized Rental Units 1,216,000 4.6 1,338,000 3.9 

 

CONVENTIONAL HOUSING UNITS: YOUNGER 

HOUSEHOLDERS (Under Age 65) OCCUPIED BY 

AT LEAST ONE OLDER ( Age 65 and older) 

PERSONc 2,166,000 8.2 2,336,000 6.8 

Owner-occupied dwellings 1,789,000 6.8 1,931,000 5.6 

Renter-occupied dwellings 377,000 1.4 405,000 1.2 

 

SUPPORTIVE SENIORS HOUSING UNITS 2,691,266 10.2 3,002,377 8.7 

Congregate Care and CCRCd independent 

living 644,852 2.5 818,962 2.4 

Assisted Livinge 507,414 1.9 644,415 1.9 

Skilled Nursingf 1,539,000 5.9 1,539,000 4.5 

 

TOTAL UNITS/PERSONS OCCUPIED BY 

SENIORSg 26,280,266 100.0 34,476,377 100.0 

All older householders 24,114,266 32,140,377 

All younger householders with senior 

occupants 2,166,000 2,336,000 

aNumbers all refer to units except for skilled nursing which are reported in terms of beds and treated as one-person households.

bThe householder is the first household member listed on the questionnaire who is an owner or renter of the housing unit. 

c

An unknown, but probably small, percentage of the units in this category are probably counted twice, because the U.S. Census 

erroneously treats them as households rather than "group housing" and they are also being counted in the "Supportive Seniors 

Housing Units" category. As this percentage increases in size, it artificially increases the relative share of dwelling units 

considered as "conventional housing units." 

dCCRC: Continuing Care Retirement Communities 

eIncludes Board and Care facilities.

f

Includes hospital-based facilities, private-pay facilities, and facilities managed by Department of Veterans Affairs 

gIncluding both "Conventional Housing Units" and "Supportive Seniors Housing Units" 

Notes for computing households: For the Congregate Care and Independent living units in CCRCs, an occupancy rate of 

94.1% was computed. For assisted living facility units, an occupancy rate of 89.4% was computed. Occupancy rates obtained 

from financial indicators reported in unpublished data from National Investment Conference. A nursing home occupancy rate of 

88.35% was computed and the share of beds occupied by age 65 and seniors in nursing facilities was computed as 90.29% 

See: Gabrel, C. and A. Jones. 2000. The National Nursing Home Survey: 1997 Summary, National Center for Health Statistics. 

Vital Health Statistics 13(147). Washington: U.S. Government Printing Office. To count only senior occupants, the number of 

assisted living units was reduced by 3.1% and the number of independent living units was reduced by 2.9%. 

Notes for computing number of persons: The following assumptions were made. First, of the 2,166,000 nonsenior 

households occupied by seniors, 170,000 households were occupied by two or more persons. For computation purposes, only 

two seniors per households were computed. This will understate the number of seniors to the extent that some households will 

contain 3 or more seniors. To estimate the number of persons occupying supportive senior housing units other than nursing 

facilities, it was assumed that there were l.27 persons per unit. 
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Seniors Commission Report 

Source: Supportive Seniors Housing Units data is modified from original tabulations found in Promatura Group, LLC. 2000. NIC 

National Supply Estimate of Seniors Housing & Care Properties. Annapolis, Maryland: National Investment Center for the Seniors 

Housing & Care Industries. 

Conventional housing unit data from U.S. Census Bureau. Current Housing Reports, Series H150/99, American Housing Survey for the 

United States: 1999. Washington, DC: U.S. Government Printing Office. 

Senior Income 

Income distribution is an important factor in determining need and eligibility for 

assistance for both housing and health programs. In some instances, those with incomes 

of less than 80% of area median income (AMI) are eligible for housing assistance. 

Those with incomes below 50% of AMI are, however, more likely to apply for and 

receive such assistance.32 Given that most seniors have fixed incomes due to retirement 

or decreased participation in the workforce, it is not surprising that nearly 40% of senior 

households reported incomes below 50% AMI, i.e. the lowest income quartile, according 

to Current Population Survey data (Exhibit 2). 

Exhibit 2: Income Distribution of 65+ Population, 2000 by Area Median Income 

Greater than 

50% AMI 

(61%)

Less than 30% 

AMI (17.5%)

30- 50% AMI 

(21.5%)

Source: The Lewin Group tabulation of the Current 

Population Survey (CPS) 2001 March Supplement (which 

reports income data for 2000) for the Commission on 

Affordable Housing and Health Facility Needs for Seniors 

in the 21st Century, 2002. 

The Medicaid program uses variations of Supplemental Security Income (SSI) eligibility 

levels or the Federal Poverty Level (FPL) to determine eligibility. About 10% of seniors 

live at or below the FPL and another 14% live below 150% of that level (Exhibit 3). 

One of the principle challenges to public policy is to reconcile the multiple standards. 

AMI is a local standard used by HUD to determine eligibility for many of its subsidized 

rental programs, while the SSI level is largely a national standard with 100% SSI equal to 

about 74% FPL.33 The maximum income eligibility for HCBS under Medicaid is 

generally 300% SSI, although variations exist among States.34 

Although some States have higher and lower levels for eligibility for Medicaid or other 

services, and HUD and other agencies have higher and lower standards for subsidized 

housing eligibility, 300% SSI and 50% AMI are the most useful eligibility standards for 

broad comparisons.35 Therefore, for evaluation purposes, seniors with incomes below 

300% SSI are compared with seniors at 50% of AMI to demonstrate potential eligibility 

discrepancies (Exhibit 4). Even this comparison is fraught with inadequacies because 
 -25- 

Seniors Commission Report 

any national compilation of AMI leads to averaging that does not reflect vast differences 

in AMI at the local level. 

Exhibit 3: Income Distribution of the Age 65 and Older Population, 2000 by Federal 

Poverty Level 

125-149% 

FPL

7%

100-124% 

FPL

7%

<100% FPL

10%

150%+ FPL

76%

Source: The Lewin Group tabulation of the Current Population Survey (CPS) 

2001 March Supplement (which reports income data for 2000) for the 

Commission on Affordable Housing and Health Facility Needs for Seniors in the 

21st Century, 2002.

Exhibit 4: Estimates of the Number of Households Headed by an Individual Age 

65+ Meeting Alternative Housing and Service Income Eligibility Criteria, 1999 

(in thousands)36

Typical Income Eligibility Criteria for Subsidized 

Housing 

Typical Income 

Eligibility Criteria 

for Medicaid 

Home and 

CommunityBased Waiver 

Services:

<50% 

National AMI 

 Row % 

 Column %

>50%Nation

al AMI 

 Row % 

 Column %

Total 

 Row % 

 Column %

 <300% SSI 

 Row % 

 Column % 7,923 

76% 

95%

2,467 

24% 

19%

10,390 

100% 

48%

 >300% SSI 

 Row % 

 Column % 460 

4% 

5%

10,653 

96% 

81%

11,113 

100% 

52%

Total 

 Row % 

 Column %

8,383 

39% 

100%

13,120 

61% 

100%

21,503 

100% 

100%

Note: AMI levels are assessed against household income, while poverty and SSI levels are assessed against family 

income. 

Source: The Lewin Group tabulations of the March 2000 Current Population Survey matched to HUD Section 8 income 

limits from http://www.huduser.org/datasets/il/fmr99rev/index.html for the Commission on Affordable Housing and 

Health Facility Needs for Seniors in the 21st Century (March 2002).
 -26- 

Seniors Commission Report 

Many seniors who are eligible for one type of assistance may not be eligible for the other, 

based largely on where they live in the Nation or even in a particular region of a State. 

In high-cost areas, many seniors qualify for housing assistance but not for Medicaid 

because the median incomes in those areas are quite high and do not compare well with 

the 300% SSI standard.37 Likewise, although many seniors qualify for housing 

assistance, the shortage of affordable rental housing units or home repair and 

maintenance assistance compels them to "go without."38 Finally, in some areas, because 

of very-low median income levels, seniors may qualify for services but not for housing 

assistance even if it is available. 

Just as noteworthy as the discrepancies regarding income is the percentage of seniors 

who have incomes above these limits (Exhibits 2 &. 3). These seniors represent a large 

group, many of whom have moderate incomes but do not qualify for housing assistance 

or appropriate health and services assistance.39

Health- and Service-Related Data 

In 1999, more than 1.5 million seniors lived in skilled nursing facilities.40 In addition, 

recent data show that more than 5.8 million or 18% of persons aged 65 and older, who 

did not reside in institutions such as nursing facilities, had difficulty performing either 

their everyday activities of daily living (ADLs) — or their instrumental activities of daily 

living (IADLs) — without assistance. This included about 3.18 million or 10% of seniors 

with at least one IADL limitation involving the following activities: preparing meals, 

doing light housework, taking a prescribed amount of medicine, keeping track of money 

or bills, and going outside the home. It also included about 2.61 million or 8% of seniors 

with at least one ADL limitation involving the following activities: getting in and out of 

bed or a chair, taking a bath or shower, dressing, walking, eating, and using or getting to 

a restroom. A smaller share of these seniors, 1.19 million or 3.7%, were especially 

impaired with limitations in three or more ADLs (Exhibit 5). 

Exhibit 5: Age 65 and Older Persons 

By Poverty Status in Percentages (1996) 

Poverty Level 

Threshold 

No ADL or 

IADL 

Disabilities 

1 to 2 

IADLs 

3 to 6 

IADLs

1 to 2 

ADLs 

3 to 6 

ADLs Total 

At least one 

IADL 

Disability 

At least 

one ADL 

Disability

Below 100% 71.2 13.6 3.2 7.0 4.9 99.9 16.8 11.9 

100% to 149% 73.7 12.0 3.0 6.0 5.4 100.1 15.0 11.4 

150% and above 85.2 6.2 1.7 3.7 3.2 100.0 7.9 6.9 

All Income Levels 81.9 7.9 2.0 4.4 3.7 99.9 9.9 8.1 

Source: The Lewin Group Projections from the 1996 Survey of Income and Program Participation, Wave 5, prepared for the 

Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century, 2002. 

A little more than 2.6 million or 8% of seniors have a mental disability that seriously 

interferes with their everyday activities.41 Older seniors are more likely to suffer from 

these limitations. A little more than 15% of those age 75 and older have IADL 
 -27- 

Seniors Commission Report 

impairments, almost 13% have ADL impairments, and just under 12% have a mental or 

cognitive disability that interferes with everyday activities.42

Proportionally, subsidized renters are the most likely to have impairments and 

homeowners are the least likely (Exhibit 6). As an aggregate, however, because of the 

large number of senior homeowners, there are four times as many with impairments as 

unsubsidized renters and nearly ten times as many as subsidized renters. Therefore, the 

Nation faces a challenge in serving seniors in diverse settings, including their own singlefamily homes, rental housing, retirement communities, and homes of family members. 

Exhibit 6: Disability Among Seniors by Housing Tenure, 2000 

All % Owners % 

Unsubsidized 

Renters % Rent-Assisted % 

Total 65+ 33,328,000 100.0 27,158,000 100.0 4,858,000 100.0 1,397,000 100.0

No ADL or IADL 27,130,000 81.4 22,581,000 83.1 3,670,000 75.5 929,000 66.5

Any ADL or IADL 6,198,000 18.6 4,577,000 16.9 1,188,000 24.5 468,000 33.5

 At least one IADL 3,372,000 10.1 2,469,000 9.1 629,000 12.9 290,000 20.8

 At least one ADL 2,826,000 8.5 2,109,000 7.8 549,000 11.3 177,000 12.7

With a mental 

disability 2,742,000 8.2 2,055,000 7.6 528,000 10.9

 

163,000 11.7

Source: The Lewin Group Projections from the 1996 Survey of Income and Program Participation, Wave 5, prepared for the 

Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century, 2002.

Because nearly one-fifth of all seniors have impairments, the availability and 

affordability of health and services is vitally important to their well being and quality of 

life. 

Future Housing Needs of Seniors 

According to Harvard Joint Center for Housing Studies projections, from 2000 to 2020 

the number of senior households is expected to grow by nearly 53%. Owner households 

are expected to grow by more than 60% and renter households by 22% (Exhibit 7).43 The 

growth in both groups will impact an already overburdened housing and health care 

system extensively, requiring flexible responses to meet the needs of renters and 

homeowners. 

Research into the unmet needs of seniors was conducted by the Commission using 

American Housing Survey data and Harvard Joint Center projections. AHS and HUD 

use specific formulas to gauge and describe needs, found in the box below. 
 -28- 

Seniors Commission Report 

Exhibit 7: Household Growth Projections 2000-2020 

Owner 

Households

Renter 

Households

Total 

Households

Ownership 

Rate 

Age Groups 

and Year 

2000 

Age 65-75 9,470,000 1,972,000 11,442,000 82.80% 

 

Age 75 and Older 8,784,000 2,637,000 11,421,000 76.90% 

 

2000 Totals 18,254,000 4,609,000 22,863,000 79.80% 

 

2020 

Age 65-75 16,880,000 2,790,000 19,670,000 85.80% 

 

Age 75 and Older 12,424,000 2,838,000 15,262,000 81.40% 

 

2020 Totals 29,304,000 5,628,000 34,932,000 83.80% 

Source: "State of the Nation's Housing 2001," Joint Center for Housing Studies, Harvard University (2002).

PRIORITY PROBLEMS: Refers to households with a serious housing cost burden44

who pay 50% or more of their monthly income on their housing costs or that occupy 

dwellings with severe physical problems. 

LESS SERIOUS PROBLEMS:45 Refers to households with a moderate housing cost 

burden who pay 30% to 49% of their monthly incomes for their housing costs or that 

occupy dwellings with moderate physical problems.46

AHS data are self-reported and suffers from the shortcomings related to underreporting of 

income and assets.47 Nevertheless, it is the most comprehensive national data set 

available for analyzing of the scope of the housing challenges seniors face, now and in 

the future (Exhibit 8). Those who have "priority" and "less serious" problems are 

considered "at-risk" in terms of their housing costs and quality. 

Currently, 1.2 million rent-assisted units are occupied by age 65 and older households.48

There is an at-risk population of 7.1 million households (owners and renters) who are not 

receiving rental assistance identified as having priority or less serious housing 

problems.49 This translates into 5.82 unassisted senior households with problems for 

every one existing rent-subsidized unit now occupied by a senior household. 

To estimate the number of rent-assisted units that will be needed to accommodate at-risk 

low-income senior households by 2020, the analysis makes two general assumptions. 

First, projections are based on the number of rent-assisted units necessary to 

accommodate the growth of all current age 65 and older unassisted owners and renters 

with priority or less serious problems (of all urgencies) — a total of 7.1 million 

households. Second, the projections assume that these owner and renter groups of 

households will grow at the same rate for all senior owners and renters.50
 -29- 

Seniors Commission Report 

Exhibit 8: Current and Projected Number of Low- and Higher-Income Age 

65 and Older Households in Unaffordable or Poor Quality Dwellings (by 

Housing Tenure, 1999 to 2020) 

 1999 2020 

Income Group Total Owners Renters Total Owners Renters 

All Income Levels 

With priority problems 3,890,000 2,468,000 1,422,000 6,099,070 4,205,761 1,893,309 

With less serious problems 3,868,000 2,667,000 1,201,000 6,140,905 4,543,177 1,597,729 

With all problems 7,758,000 5,135,000 2,623,000 12,239,976 8,748,938 3,491,038 

 

Extremely Low-income 

<30% AMI with priority problems 2,699,000 1,630,000 1,070,000 4,202,353 2,777,711 1,424,642 

<30% AMI with less serious problems 1,406,000 995,000 411,000 2,242,819 1,695,597 547,222 

<30% AMI with all problems 4,105,000 2,625,000 1,481,000 6,445,171 4,473,308 1,971,864 

 

Very-Low-income 

<50% AMI with priority problems 3,375,000 2,064,000 1,311,000 5,262,817 3,517,298 1,745,519 

<50% AMI with less serious problems 2,662,000 1,795,000 867,000 4,213,250 3,058,890 1,154,359 

<50% AMI with all problems 6,037,000 3,859,000 2,178,000 9,476,066 6,576,188 2,899,878 

 

Low-income 

<80% AMI with priority problems 3,713,000 2,331,000 1,382,000 5,812,348 3,972,297 1,840,051 

<80% AMI with less serious problems 3,382,000 2,274,000 1,107,000 5,349,067 3,875,163 1,473,905 

<80% AMI with all problems 7,095,000 4,605,000 2,489,000 11,161,416 7,847,460 3,313,956 

 

Higher Income 

>81% AMI with priority problems 177,000 137,000 40,000 286,722 233,464 53,258 

>81% AMI with less serious problems 486,000 392,000 93,000 791,838 668,014 123,824 

>81% AMI with all problems 663,000 529,000 133,000 1,078,560 901,478 177,082 

Source: Stephen Golant, "Housing Problems of the Future Elderly, Table 8.

Based on these assumptions, the Commission developed three possible rent-assisted unit 

growth scenarios (Exhibit 9):51

Scenario One: For the number of rent-assisted units for senior households to expand at 

the same rate between 1999 and 2020 as that projected for senior renters, generally there 

would be a need for 1.6 million rent-assisted units in 2020. 

Scenario Two: For the number of rent-assisted units for senior households to expand at a 

rate that maintains the same 1999 ratio of unassisted senior households with problems to 

rent-assisted units, there would be a need for 1.95 million rent-assisted units in 2020.

Scenario Three: Given the current shortage of rent-assisted units for those eligible, 

reducing the ratio of unassisted senior households with a priority or less serious problem 

from 5.8 to 1 to 5 to 1, there would be a need for 2.3 million rent-assisted units. 
 -30- 

Seniors Commission Report 

Exhibit 9: Subsidized Housing Projections 

Current Status 

and Projection Assumptions 

Total 

Households 

Total Number 

of OwnerOccupied 

Households 

with Any 

Problems 

Total Number 

of Unassisted 

Rental 

Households 

with Any 

Problems 

Total Number 

of Owned and 

Unassisted 

Rental 

Households 

with Any 

Problems 

Number of 

Rent-Assisted 

Households 

Ratio of 

Unassisted 

Households 

with Problems 

to RentAssisted 

Households 

Number of Age 65 and Older Households, 1999 

 

Current Status, 1999 21,423,000 5,135,000 1,940,000 7,075,000 1,216,000 5.82 

 

Projected Number of Age 65 and Older Households and Rent-Assisted Units in 2020 

Rent-Assisted Unit Projection Scenarios 

1. U.S. Census/Harvard Projected 

Household Growth Trends (1999-

2020) 34,932,000 8,750,642 2,582,995 11,333,637 1,619,032 7.0 

2. Maintain 1999 Ratio of 

Households with Problems to 

Rent-Assisted Units 34,932,000 8,750,642 2,582,995 11,333,637 1,947,669 5.82 

3. Proposed New Ratio of 

Unassisted Households with 

Problems to Rent-Assisted 

Households 34,932,000 8,750,642 2,582,995 11,333,637 2,266,727 5.0 

Notes: Unlike previous household tabulations, these include senior households at all income levels. 

The growth of all household categories, regardless of rent-assisted unit projection assumption, is based on U.S. Census-/Harvardprojected household growth rates. 

Source: Stephen Golant, "Housing Problems of the Future Elderly," Table 17.

The demand for rent-assisted housing will increase substantially. Programs such as 

Section 202, Section 8, Low-Income Housing Tax Credits, Section 515, and other Federal 

programs as well as State and local programs must be used to erase shortfalls and meet 

expanding need. 

Given the large number of homeowners and the expressed desire of the vast majority of 

seniors to remain in their homes for as long as possible, meeting the needs of the nearly 9 

million 2020 senior homeowners with housing needs in 2020 will be a daunting challenge 

as well. Some will be able to use home equity to finance improvements, 

accommodations, or relocations.52 For those with little equity or overwhelming housing 

problems, flexible forms of assistance, like those funded by the HOME and CDBG 

programs, will need to be expanded and targeted to help senior homeowners adapt and 

maintain their homes and avoid the rolls of more costly long-term institutional settings.53 

Future Health and Services Needs of Seniors 

To predict the future number of seniors (age 65 and older) who will suffer from physical 

and cognitive limitations, the Commission assumes a declining annual disability rate 

based on recent studies and evidence.54 That rate also assumes that the senior population 

will grow at the U.S. Census Bureau's intermediate rate of population projections.55

Based on these assumptions, the Commission projects that by 2020 there will be 4.3 
 -31- 

Seniors Commission Report 

million seniors with IADL limitations, 3.6 million seniors with ADL limitations, and 3.6 

million seniors with mental and cognitive disabilities. (Exhibit 10). 

Exhibit 10: Number and Growth of Age 65 and Older Low-Income Persons Having 

Physical or Mental Disabilities, 1996 to 2020 (Incomes Below 150% of Poverty) 

Type of Disability 1996 2000 2010 2020 1996 to 

2000 

2000 to 

2010 

2010 to 

2020 

2000 to 

2020 

Total Below 150% of

poverty 8,249,452 8,603,591 9,636,990 12,952,292 4.3 12.0 34.4 50.5 

No ADL or IADL 

disabilities 5,993,167 6,189,880 7,090,412 9,861,142 3.3 14.5 39.1 59.3 

At Least one IADL 

disability 1,293,889 1,371,834 1,440,181 1,755,068 6.0 5.0 21.9 27.9 

At least one ADL 

disability 962,396 1,041,878 1,106,396 1,336,081 8.3 6.2 20.8 28.2 

With a mental 

disability 948,517 1,002,988 1,059,319 1,307,688 5.7 5.6 23.4 30.4 

Source: Projections were computed by Tne Lewin Group. Note: Several important assumptions underlie the above projections. First, it is assumed

that both the ADL and IADL disability rates will start to decline in the period 1997-2000 at an annual rate of 1.00%. This rate of annual decline is 

projected to decrease by 0.1% every five years through 2020. The annual rates of decline are as follows: 2000-2005, 0.90%; 2005-2010, 0.80%, 

2010-2015, 0.70%, 2015-2020, 0.60%. It assumes that the older population subgroups with incomes under the 150% poverty level will grow at the 

same rate as the older population overall. 

Further analysis of long-term care data developed by the Lewin Group indicates that 9.1 

million seniors now utilize some level of personal care, ranging from skilled nursing to 

personal care in the home. The Commission projects that the aggregate need for such 

care will rise dramatically to approximately 12.5 million, although the increase will occur 

at less than the rate of growth in the senior population. 

In addition to current service usage, Lewin provided the Commission with projections of 

future use based on their Long-Term Care Financing Model (LTCFM).56 The LTCFM 

simulates nursing facility and home care use and expenditures for seniors age 65 and 

older to the year 2030. It permits analyses of alternative assumptions about the nature of 

the senior population in the future (e.g., declining disability rates) and policy scenarios 

(e.g., tax incentives for long-term care insurance or changes in Medicaid eligibility). 

Exhibit 11 shows current and future service use and needs. 

The income level breakdown of those in need of services is critical, because in most 

instances, income level determines eligibility for government programs. Along with 

income level, knowledge of the range of services required is also important because it 

enables informed policy decisions regarding vital services that must be covered to ensure 

that the health and health-related needs of seniors are met. 
 -32- 

Seniors Commission Report 

Exhibit 11: Projected Number of Seniors Using Supportive Services, 2000 to 2020

Projected Number of Seniors Using Supportive Services

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2000 2010 2020

Years

Number of Users (in Millions)

Nursing Facility

Alternative

Residential Care

Skilled Home Care

Personal Care

Source: The Lewin Group analysis of Long-term Care Financing Model supplemented by the National Long-term 

Care Survey, prepared for the Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st

Century, March 2002.

In 2000, 4.1 million seniors with incomes below 150% of the poverty level required 

health and health-related services (Exhibit 12).57 That number is expected to decline to 

3.7 million in 2020 as a result of the decline in the number of seniors who fall within this 

population group. For those in the 150% to 249% of poverty range, 2.1 million required 

services in 2000. By 2020, that number is expected to nearly double to 4 million as a 

result of growth in this population. Under current policy, many in this group are not 

eligible for Medicaid.58 This is critical because of differences in eligible services under 

Medicaid and Medicare. Finally, of those with incomes that exceed 250% of poverty, 2.9 

million currently require services: that number is expected to increase to 5 million in 

2020. Although many in this group have sufficient income or insurance to provide for 

necessary services, a large number do not,59 and the Medicare program does not cover 

most of the services required to meet the long-term care needs of eligible seniors.60
 -33- 

Seniors Commission Report 

Exhibit 12: Service Needs by Income Level 2000-2020 

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

<150%

FPL

150-

250%FPL

>250%

FPL

<150%

FPL

150-

250%FPL

>250%

FPL

<150%

FPL

150-

250%FPL

>250%

FPL

2000 2010 2020

Years and % of Poverty

Millions of Seniors

Nursing Facility Alternative Residential Care Skilled Home Care Personal Care

Source: The Lewin Group analysis of the Long-Term Care Financing Model supplemented by the National 

Long-Term Care Survey, prepared for the Commission on Affordable Housing and Health Facility Needs for 

Seniors in the 21st Century, March 2002. 

A large percentage of those who live in rent-subsidized housing (27%) are likely to have 

service needs. The largest aggregate group of those in need of services is likely to be 

homeowners (Exhibit 13). This group faces two-fold challenges because their 

environment may not be conducive to service provision and they may face housing 

quality challenges that drain the income available to purchase services or necessary 

modifications. Finally, seniors who live in unsubsidized rental housing will likely face 

the challenge of both inadequate income and lack of access to services. Increased supply 

of service-rich subsidized housing would alter the distribution of those in need of services 

and those likely receiving such services. 

The data indicate potential vast disparities between the number of seniors in need of 

services and the subsidized services available, either because of income or choice of 

residence. Although the statistics are daunting with many issues to be addressed, if the 

right policies are adopted and obstacles overcome, the housing and health needs of future 

generations of seniors can be addressed effectively. 

Predicting Assisted Living Growth 

Providing housing options for the growing number of seniors with disabilities will require 

markedly increased efforts to provide housing options that include supportive services. 

Because of the integration of housing and services found in assisted living facilities, we 

present projections of the growth in assisted living facilities for 2020. 
 -34- 

Seniors Commission Report 

Exhibit 13 - Projected Number of Seniors with Disabilities by Housing Tenure, 

2000 to 2020 

 Number of Persons 

Dwelling Tenure and Type of Disability 1996 2000 2010 2020 

Total Owners 26,202,110 27,158,000 30,399,000 41,232,000 

No ADL or IADL 21,921,872 22,581,000 25,639,000 35,429,000 

Any ADL or IADL 4,280,238 4,578,000 4,760,000 5,802,000 

 IADLs only, no ADLs 2,329,497 2,469,000 2,562,000 3,140,000 

 At least one ADL 1,950,741 2,109,000 2,198,000 2,662,000 

With a mental disability 1,944,134 2,055,000 2,134,000 2,635,000 

Total Unsubsidized Renters 4,536,431 4,858,000 5,610,000 7,692,000 

No ADL or IADL 3,460,783 3,670,000 4,327,000 6,151,000 

Any ADL or IADL 1,075,648 1,178,000 1,282,000 1,541,000 

 IADLs only, no ADLs 577,902 629,000 671,000 804,000 

 At least one ADL 497,746 549,000 611,000 737,000 

With a mental disability 492,137 528,000 580,000 715,000 

Total Rent-Assisted 1,320,098 1,397,000 1,610,000 2,235,000 

No ADL or IADL 885,161 929,000 1,111,000 1,641,000 

Any ADL or IADL 434,937 467,000 499,000 595,000 

 IADLs only, no ADLs 273,011 290,000 307,000 370,000 

 At least one ADL 161,926 177,000 192,000 225,000 

With a mental disability 156,815 163,000 181,000 226,000 

All Age 65 and Older Persons 32,058,639 33,328,000 37,619,000 51,159,000 

No ADL or IADL 26,267,816 27,130,000 31,077,000 43,221,000 

Any ADL or IADL 5,790,823 6,198,000 6,541,000 7,938,000 

 IADLs only, no ADLs 3,180,410 3,372,000 3,540,000 4,314,000 

 At least one ADL 2,610,413 2,826,000 3,001,000 3,624,000 

With a mental disability 2,593,086 2,742,000 2,896,000 3,575,000 

Source: The Lewin Group Projections from the 1996 Survey of Income and Program Participation, Wave 5, prepared for the 

Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century, 2002.

Estimating the growth and number of assisted living facilities in the year 2020 is a 

difficult task. The clientele of assisted living facilities can conceivably be seniors who 

would otherwise deal with their impairments in their homes or those who would 

otherwise occupy nursing facilities. Thus, the future demand for the assisted living 

facility alternative depends on other projections—the future number and share of seniors 

who will enter nursing facilities and those who will cope with their needs in their own 

homes. Estimating both of these needs is a challenging task in its own right.

Accurate predictions of the number of seniors who will be income and asset-qualified to 

enter these facilities are also required because the bulk of these facilities are not 

subsidized significantly.61 This, in turn, requires predictions of the income distributions 

of future seniors and of the future cost of this alternative.62 In addition, corollary 

estimates of the number of seniors who will not qualify to enter these facilities on the 

basis of income, but will be able to pay for this alternative by way of intergenerational 

transfer payments from their children are also required. 
 -35- 

Seniors Commission Report 

The future supply of this alternative will also depend on State policies that regulate the 

supply of nursing facilities, the care requirements in assisted living facilities and the 

availability of affordable home and community based care. Many States have placed caps 

on their nursing home expansion, which suggests that institutional care alternatives will 

receive an increasingly smaller share of the long-term care dollar as States seek to 

accommodate their frail seniors less expensively through home- and community-based 

care alternatives and by subsidizing the cost of assisted living facilities. 

Providers of assisted living facilities themselves have not been accurate forecasters. The 

industry badly misjudged the demand for assisted living facilities. In many regions of the 

county, markets are now overbuilt and oversaturated and have relatively low-occupancy 

rates.63 Thus, most of the major corporations have postponed often ambitious expansion 

plans. There have been many bankruptcies, and several company consolidations. 

Increasingly, a smaller group of corporations is controlling a larger share of ALF units 

throughout the country. 

There are also three important senior consumer trends that suggest a dampening of 

demand for this alternative. The first is the aforementioned expected decline in the 

disability rate of the next generation of seniors with the obvious implications for future 

demand, although in absolute terms, the number of people with disabilities will increase. 

The second is the projected higher share of seniors who will be homeowners and the 

stronger attraction of the conventional dwelling as a place to accommodate their care 

needs. The third is the predicted slower growth of the age 75 and over group (and the 85 

and over group) in each of the next two decades (2000 to 2010 and 2010 to 2020) than 

was the case in the 1990s. 

Two projection scenarios are offered to predict the number of assisted living facilities in 

2020. A third set of projection scenarios are also reviewed from the National Investment 

Center (Exhibit 14). 

Scenario One 

This scenario is organized around the following four assumptions:64

1. The growth of the senior population (age groups 65-74, 75-84, and 85+) between 

2000 and 2020 will be consistent with U.S. Census middle-series projections.65

2. Between 1999 and 2010, the percentage of age 65 and older persons that occupy 

nursing facilities will remain unchanged. 

3. Between 2010 and 2020 (but not between 2000 and 2010), an expected decline in 

the disability rate of seniors will depress the growth of seniors occupying nursing 

facilities with the result that a smaller percentage of this group will occupy this 

institutional alternative in 2020. 

4. Between 1999 and 2020, the ratio of assisted living units to nursing home beds 

occupied by seniors will remain unchanged. 
 -36- 

Seniors Commission Report 

Exhibit 14: Assisted Living Facility Projection Scenarios of Number of Units 

Occupied by Age 65 and Older Persons in the United States, 1999 to 2020: 

Alternative Scenarios 

Number of Unitsa

Assisted Living Projection 

Scenarios 1999c 2020 % Growth 

Rate 

Assisted Living Facility Projection Scenario 1 507,414 712,707 40.5 

Assisted Living Facility Projection Scenario 2 507,414 755,302 48.9 

NICb Conservative 511,163 673,911 31.8 

NIC Base 511,163 720,299 40.9 

NIC Optimistic 511,163 874,585 71.1 

aNumbers all refer to units except for skilled nursing which is reported in beds and treated as one-person households. 

bNIC demand models are focused on "individuals" rather than "units" and thus will produce artificially higher estimates than the first two 

scenarios. They also only include private-pay residents. NIC numbers are for the year 2000. 

cNIC estimates are for the year 2000. 

Source: Scenario 1 and Scenario 2 are from Stephen Golant, Stephen, The Housing Problems of the Future Elderly Population: A Report 

Prepared for the Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century. January 2002. NIC projections 

are from National Investment Conference, 2001, The Case for Investing in Seniors Housing and Long-term Care Properties. Annapolis, 

Maryland: National Investment Conference for the Senior Housing & Care Industries. 

The 1.5 million nursing home beds occupied by seniors in 1999 are projected to grow to 

2.2 million beds by 2020, an almost 41% increase. In 1999, there were about 2.9 senioroccupied nursing home beds for every senior-occupied assisted living unit. Maintaining 

this ratio (and growth rate) would result in the number of senior-occupied66 assisted 

living units increasing from 507,414 units to 712,707 units between 1999 and 2020. 

Scenario Two 

This scenario is organized around the following three assumptions:67

1. The growth of the senior population (age groups 65-74, 75-84, and 85+) between 

2000 and 2020 will be consistent with U.S. Census middle-series projections.68

2. In 1999, the age distribution of the assisted living population was as follows: 3% 

under age 65; 8.7% age 65 to 74; and 88.3% age 75 and older. Based on U.S. 

Census middle-series and Harvard household projections, the number of persons 

in each of these age groups will grow in size to 2020 

3. Between 1999 and 2020, the disability rate of the older population will remain 

constant. 

Using this methodology, there is a projected need that 507,414 units of assisted living 

occupied by age 65 and older persons in 1999 will grow to 755,302 or by 49% in 2020. 

The National Investment Center (NIC) produced three alternative projections of the 

number of seniors likely to demand assisted living in 2020. These are referred to as 

conservative, base, and optimistic estimates.69 The lowest number of seniors70 occupying 

assisted living is predicted by the “conservative” projection and the highest by the 
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Seniors Commission Report 

“optimistic” projection.” All residents are estimated to be private pay. The optimistic 

estimate differs from the conservative demand model in that it assumes constant 

homeownership rates through 2010 and then somewhat declining homeownership rates; 

and it assumes fairly constant ADL deficiency rates between 2000 and 2010 and then a 

slow decline in these ADL deficiencies through 2020. An important new assumption of 

all three alternative projections is that income-eligible seniors may have annual incomes 

as low as $15,000 — and even lower — if they have assets greater than $50,000 

(because they are capable of spending down these assets). The optimistic model assumes 

that between 2000 and 2020, the percentage of seniors with incomes greater than $15,000 

or net worths of more than $50,000 will gradually increase. Based on these assumptions, 

the NIC estimates that from 674,000 to 875,000 seniors will want assisted living facilities 

in 2020, resulting in growth rates that range from 32% to 71%. 

The allocation of resources by government and the private sector, as well as the incomes 

of seniors and the choices they make will greatly affect both the growth of assisted living 

and how the industry's product is shaped over the next 2 decades. 

Challenges to Meeting Future Needs 

The principal challenge to meeting future demand is the need for resources to address 

growing and changing housing and health requirements of seniors. Committed 

investment in affordable housing has declined over the past 3 decades71 and resources 

devoted to Home- and Community-Based Services pale in comparison with resources 

dedicated to facility-based skilled nursing care. Below are the Commission's key 

findings on the challenges to addressing the growing affordable housing and health 

services crisis. 

• One-third of senior households are expected to have housing needs; 

• Almost one-fifth of seniors will likely have service needs, and current programs 

are not well structured to meet those needs; 

• Current production of affordable housing does not meet demand; 

• Subsidized rental units are being lost due to expiring Section 8 project-based 

rental assistance contracts and mortgage prepayments; and 

• Federal housing and health policies are not synchronized, often leading to 

premature institutionalization as a more costly, yet practical option. 

The Commission has developed numerous recommendations to address the health and 

housing challenges of a growing senior population. It is essential that these challenges be 

addressed before the Nation is overwhelmed with the needs of retiring Baby Boomer 

generation. 
 -38- 

Seniors Commission Report 

PART IV. PROGRAM INFORMATION AND OTHER 

CONSIDERATIONS

The need for appropriate and affordable housing and the need for accessible, high-quality 

services are equal partners in creating a workable equation for successful aging. A 

person’s ability to function can be enhanced or impeded by his or her physical and social 

environment.72 As people age, independence and quality of life can depend on their 

ability to access and pay for the housing and services they need in the environment that 

best supports an appropriate balance between autonomy and safety. 

Since the 1930s, the Federal Government has created an array of programs to encourage 

the development of affordable housing, ranging from grants to direct loans to mortgage 

insurance to rental assistance and other types of incentives. Similarly, it has created 

entitlement, grant, loan, and discretionary programs to meet the health and supportive 

service needs of seniors, including Medicare, Medicaid, and the Older Americans Act 

programs. 

The Commission presents here brief descriptions of existing Federal programs of 

particular importance to seniors. 

FEDERAL HOUSING PROGRAM DESCRIPTIONS 

Section 202 Supportive Housing for the Elderly 

Created by the Housing Act of 1959,73 today’s Section 202 program provides capital 

advances (grants) and project-based rental assistance — to non-profit sponsors for the 

development and construction of supportive housing for very-low-income seniors, age 62 

and older. Through 2001, the Section 202 program provided housing for approximately 

381,000 senior or disabled households in more than 9,000 facilities 

Initially, the Section 202 program provided a below-market interest rate loan. In 1968, 

however, that program was phased out and replaced by the Section 236 program. The 

initial program was, however, reinstated by Congress in 1974, at which time it was 

targeted to households with incomes of less than 80 percent of AMI. Project-based 

Section 8 rental assistance was made available for up to 100 percent of the units, in most 

cases, for 20 years. The presence of Section 8 units in such projects permitted owners to 

serve very-low-income seniors. (The majority of pre-1975 projects relied on tenant 

income to pay the debt service and served moderate-income residents.) 

In 1990, Section 202 funding was changed from direct loan to capital advance (grant) for 

the development and construction of supportive housing for seniors, but continued to 

include project-based rental assistance that ensures that no resident pays in excess of 30 

percent of income for rent and utilities. Eligible residents must be 62 or older and have 

incomes at or below 50 percent of AMI. Eligible sponsors are private non-profits. HUD 

opens competition for funding once each year. Because of its rental assistance 

component, this program has an exceptional ability to reach extremely low-income 
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Seniors Commission Report 

seniors — individuals with incomes at or below 30 percent of AMI. Funding is, 

however, limited. In the Notice of Funding Availability (NOFA) issued on March 26, 

2002, HUD estimated that funding was available for the production of 5,816 units, 

nationwide. 

Section 202 is the only affordable housing program dedicated exclusively to seniors and, 

as such, can serve as the linchpin between housing and service delivery. It also has the 

advantage that it can serve a range of housing and service needs while promoting 

maximum independence among residents. Although originally designed as an 

independent living program, the modifications resulting from the 1990 Housing Act 

encourage service to a frail population. According to a recent AARP study,74 the average 

age of the residents is 75, a large proportion of whom are frail. 

Section 202 projects can also be designed or retrofitted to provide a continuum of care 

services as residents age, thereby allowing older residents to age in place without fear of 

displacement due to frailty. This is an often-cited problem with existing assisted living 

facilities. 

Although a highly popular and successful program, as indicated by the chart below, 

funding for the Section 202 program has dropped from an annual production level of 

20,000 units in 1977, to today’s production level of approximately 6,000 per annum. 

Exhibit 15: Units Funded by Year (Elderly) -- Section 202*

0

5,000

10,000

15,000

20,000

25,000

30,000

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

*Chart prepared using HUD data
 -40- 

Seniors Commission Report 

Public Housing 

Created by the 1937 Housing Act, our system of public housing is administered at the 

local level by local housing authorities. Utilizing a system of construction grants and 

operating subsidies, hundreds of thousands of units of rental housing were developed 

across the country and made available to the poorest Americans. It is estimated that 

between 600,000 and 700,000 persons age 62 and older live in public housing, but only 

about one-half of those live in “seniors only” public housing.75 Much of this housing 

stock needs modernization. Because no new incremental public housing units have been 

created for more than a decade, however, at present this program is not a resource for 

meeting the growing need for new senior housing. 

Since 1993, HOPE VI has provided financial incentives to Public Housing Authorities 

(PHAs) to modernize, renovate, demolish, and replace dense public housing communities 

with mixed-use, mixed-income units. HOPE VI grant funds can also be used to pay for 

supportive services and service coordinators for seniors and=many PHAs have 

incorporated senior housing into their HOPE VI revitalization projects. The Commission 

views this as a good source for intergenerational living for seniors. Still, a net loss of 

units available to low-income seniors often results from a HOPE VI development, 

because the program does not require “one for one” unit replacement. 

Housing Choice Vouchers 

Administered by local housing authorities, Housing Choice Vouchers (a tenant-based 

rental assistance program which was formerly the Section 8 certificate and voucher 

program), is available to help with rent affordability for very-low-income and extremelylow-income persons in existing private rental housing. Although this program does not 

produce new units, it is a valuable resource where a supply of appropriate units for very 

low-income seniors already exists. According to the 1999 American Housing Survey, the 

most important consideration in the choice of neighborhood for seniors who moved 

recently was convenience to friends or relatives. A voucher program may permit an older 

person to relocate closer to family and community support. HUD estimates that 

approximately 1.5 million vouchers are currently in use and that 17 percent of voucher 

holders are elderly households. 

Seniors may encounter significant difficulty in locating acceptable units. Housing Choice 

Vouchers are limited in their utility for older seniors with physical impairments or 

transportation problems. These difficulties are compounded in areas of the country with 

low vacancy rates or where fair-market rents lag behind market rents. In a recently 

released HUD-commissioned study, 7 percent of respondents were elderly households. 

Of those respondents, persons age 62 and older had only a 54 percent success rate in 

finding appropriate housing using the voucher program. By contrast, households headed 

by persons under age 25 had a 73 percent success rate and households headed by persons 

aged 25 to 62 had a 68 percent success rate.76 

The following table shows the amount of new, incremental vouchers funded by Congress 

from 2000 through the President’s FY 2003 budget proposal. HUD does not collect 
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Seniors Commission Report 

demographic information on the types of households that receive these new vouchers. 

For purposes of illustration, however, the HUD estimate of 17 percent senior voucher 

holders was assumed. 

Exhibit 16: Incremental Vouchers 

Fiscal Year Number of New, 

Incremental Vouchers 

Number Used by 

Elderly Households* 

2000 60,000 10,200 

2001 79,000 13,430 

2002 26,000 4,420 

2003 

(proposed) 

34,000 5,780 

*Chart prepared from HUD data 

Recently, HUD has allowed PHAs to use up to 20 percent of their vouchers in housing 

developments, as project-based subsidies. This decision will assist both the seniors who 

are searching for subsidized housing and senior housing providers who are attempting to 

increase the stock of affordable housing. 

HOME Investment Partnership Program 

HOME, a federally funded program for housing, was enacted in 1990 as part of the 

National Affordable Housing Act (NAHA). The program is intended to foster 

partnerships among Federal, State, and local governments, and the private sector. Funds 

are allocated annually to States and local governments on a needs-based formula. This 

formula includes the number of low- and very-low-income families, the number of 

homeless, local housing conditions, and local economic conditions. Typically, 40 percent 

of HOME funds are allocated to the State unit of government and 60 percent to local 

Participating Jurisdictions , generally, the larger cities. To receive funds, States and 

localities must generate a Consolidated Plan — a planning tool that documents housing 

statistics and sets housing goals, as part of a comprehensive strategy. HOME could be an 

important resource for seniors in that it is locally administered and could potentially 

combine services with housing. For example, in FY2000, State agencies were awarded 

almost $72 million in funds for a range of housing activities targeted to seniors.77 HOME 

is not, however, a program that is dedicated exclusively to seniors and it is typically used 

as “gap” financing to create affordability in projects that rely on mixed-financing. 
 -42- 

Seniors Commission Report 

Community Development Block Grant Program (CDBG) 

Enacted by the Housing and Community Development Act of 1974, the Community 

Development Block Grant (CDBG) program provides a flexible source of annual formula 

grant funding for local governments to address their particular development priorities. 

HUD provides grant funds to States and local governments based on relative needs. To 

receive both CDBG and HOME funds, States and localities must generate a Consolidated 

Plan, as described above. 

CDBG funds support a wide range of activities intended to further community and 

economic development directed toward neighborhood revitalization, economic 

development, and the provision of improved community facilities and services. CDBG 

activities are initiated and developed at the local level based on a community’s 

perceptions of its needs and priorities and potential benefits to the community. CDBG 

projects must benefit low- and moderate-income families, prevent or eliminate slums and 

blight, or meet other urgent community development needs. 

Approximately 70 percent of CDBG funds go directly to local governments with 50,000 

or more residents. Remaining funds go to the States, which then allocate the funds among 

less populated localities. CDBG funds can be used to benefit seniors through the: 

• Reconstruction or rehabilitation of affordable senior housing; 

• Construction of public facilities and improvements, such as senior centers; and/or 

• Provision of public services, such as congregate meals and transportation. 

States and local governments often use CDBG funds to match Older Americans Act 

(OAA) formula funding to help provide OAA Title III services. 

Low-Income Housing Tax Credit Program 

Currently, more affordable housing is produced through the Low-Income Housing Tax 

Credit Program (LIHTC) than any other Federal housing program. Created by Congress 

in 1986 — under Section 42 of the Internal Revenue Code — the program provides a tax 

credit to those who invest in affordable housing. To be eligible for the credit, 20 percent 

of the applicable housing units must be affordable to persons with incomes at or below 50 

percent of AMI, or 40 percent of the units must be affordable to persons at or below 60 

percent of AMI. Although LIHTC program rents must be “affordable,” the rents are not 

subsidized i.e., the individual resident’s rent is not capped at 30 percent of income. 

Because of this, the “band of affordability” in tax credit housing is considered to be 

persons with incomes between 40 percent and 60 percent of AMI. 

Although the enabling legislation for Section 42 establishes basic ground rules, the 

housing tax credit program is administered by each State through the State’s Qualified 

Allocation Plan (QAP), which reflects the goals and principles of that State. The 

Commission finds that this model of Federal/State partnership works well, with State and 

local governments better able to determine local needs and adjust for changes in 

demographics. Many states have established “set-asides” or have provided additional 

points in their scoring systems to provide incentives for developers who produce senior 
 -43- 

Seniors Commission Report 

housing under the tax credit program. Some States require services in senior housing 

developments as well, or provide additional points for housing owners who are willing to 

commit to offering services on a long-term basis. The Commission believes that States 

that include senior housing as a priority should be commended and that other States 

should be encouraged to move in that direction. 

Although not a program targeted exclusively to senior housing, each year about 13,20078

units of senior housing are being created through the LIHTC. A recent 40 percent per 

capita increase in tax credit authority to the States should [result in an increase in senior 

housing production levels under this program. 

Mortgage Revenue Bonds and 501(c)(3) Tax Exempt Bonds 

Senior facilities, including independent living and health care facilities are also financed 

with multifamily bonds. These are tax-exempt bonds developers use to obtain more 

favorable interest rates. As a result of reduced interest expense, they are able to set lower 

rents. Generally, multifamily bonds take two forms: 501(c)(3) bonds that are exclusively 

available to non-profits and have no upper limits on how much can be issued; and private 

activity bonds, which can be used by private developers and are generally combined with 

a 4 percent tax credit that is subject to a State’s bond cap. 

Multifamily bonds are issued on a project-specific basis. Regardless of the 

sponsor/developer, a public entity such as a State or local housing finance agency or PHA 

must be involved in the issuance of these bonds. Taxable bonds may also be issued to 

provide additional funds for the production of affordable rental housing. 

The Internal Revenue Code requires that at least 80 percent of the units financed with 

housing bonds be rented to persons with incomes at or below 80 percent of AMI, and that 

non-501(c)(3) bonds meet one of the following more stringent tenant income 

requirements: 

• At least 20 percent of the units in a bond-financed project must be rented to 

tenants with incomes at or below 50 percent of AMI; or 

• At least 40 percent of the units must be rented to tenants with incomes at or below 

60 percent of AMI. 

Health facility bonds are also used to finance assisted living and long-term care facilities, 

but do not carry the same affordability test, as do multifamily bonds. 

Government Sponsored Enterprises 

Because Government Sponsored Enterprises (GSEs) — Fannie Mae, Freddie Mac, and 

the Federal Home Loan Banks — are chartered as a private enterprise by Congress they 

are able to access the capital market at lower costs. GSEs are a critical part of the 

Nation’s financial delivery system and their actions have direct bearing on the availability 

and cost of housing finance, including housing for seniors. Again, although they are not 

designed to help fill needs for senior housing exclusively, they are useful sources of 
 -44- 

Seniors Commission Report 

financing for moderately priced senior housing. Both Fannie Mae and Freddie Mac offer 

forward commitments for projects utilizing LIHTC, and Fannie Mae is one of the largest 

purchasers of housing tax credits. The Affordable Housing Program of the Federal Home 

Loan Bank is a good example of GSE participation in affordable housing as a frequent 

supplement to mixed-financed projects, including those projects that are making use of 

housing tax credits. 

HUD Mortgage Insurance

Pursuant to the Housing Acts of 1954 and 1959, HUD offers Federal Housing 

Administration (FHA) mortgage insurance for housing and health care facilities under a 

variety of programs. Sections 221(d)(3) and 221(d)(4) of the Housing Act provide 

insurance for the construction or rehabilitation of housing for low- and moderate-income 

families. Section 232 provides insurance for nursing facilities, board and care homes, 

assisted living facilities, and projects that combine two or more of those types of housing 

units. The regulations that govern all three of programs are quite similar. HUD mortgage 

insurance offers a number of advantages to the potential housing provider. With HUD 

insuring the loan, the risk to financing institution(s) is reduced, which means lower 

interest rates for the housing provider. FHA programs, although not direct subsidy 

programs, are an important potential resource in the delivery of housing and health care 

services for seniors. 

Home Equity Conversion Mortgages (HECM) 

Also known as “reverse mortgages,” Home Equity Conversion Mortgage (HECM) loans 

enable older homeowners to convert the equity in their homes into monthly income 

streams or lines of credit. 

Homeowners aged 62 and older can receive reverse mortgage loans for single-family 

homes, one-to-four unit owner-occupied dwellings, condominiums, planned unit 

developments, and manufactured homes. The borrower must, however, participate in 

counseling from a HUD-approved counseling agency prior before filing an application 

for this type of mortgage. Approved Direct Endorsement Lenders process all aspects of 

the loan application and submit it to HUD for insurance endorsement. HUD insures 

lenders against loss on these loans. 

Section 515 Rural Rental Housing Program 

Section 515 is a multifamily direct-loan program administered by the Rural Housing 

Service (RHS) of the U.S. Department of Agriculture. Although Section 515 served as a 

major funding source for rural housing for a number of years, in recent years, Congress 

severely limited funding. Currently, the program receives allocations of only 

approximately 1,000 units per annum. Traditionally, projects intended for very-low and 

extremely low-income seniors receive about half of this allocation. Under the program, 

housing developers receive loans at 1- percent interest for a 50- year term for the purpose 

of developing affordable rental housing in rural communities. Rents are set at Basic 

(based on 1 percent debt) and Market rate (assuming a market rate loan). In new Section 
 -45- 

Seniors Commission Report 

515 projects, 95 percent of tenants must have very-low-incomes. In existing projects, 75 

percent of new tenants must have very-low-incomes. Project-based rental assistance can 

be made available, because of scarcity, however, newer facilities are less likely to receive 

such assistance. Developers may restrict their housing to occupancy by persons age 62 

and older.79 It should be noted that: 

• Approximately 40 percent of Section 515 developments are built and operated as 

senior housing properties that may contain community rooms that accommodate 

service delivery; 

• 57.8 percent of all Section 515 units (in both elderly and family properties) are 

currently occupied by elderly or disabled households; and 

• 55 percent of Section 515 households receive Section 521 Rental Assistance and 7 

percent receive project-based Section 8 assistance administered by HUD. 

Section 504 Home Repair Loan and Grant Program 

The Section 504 Home Repair Loan and Grant Program is an RHS program offered to 

elderly persons and very-low-income families who own homes that need repairs. Seniors 

may use grant funds to repair, improve, or modernize their dwellings, or to remove health 

and safety hazards. Such activities include: repairing or replacing a leaking roof; adding 

insulation; installing electric lines; replacing a wood stove with central heating; installing 

running water, a bathroom, or a waste-water disposal system; or making a home 

accessible to family members with disabilities. 

Homeowners who are at least 62 can receive home improvement grants of up to $7,500 if 

they cannot afford a loan at the 1- percent interest rate. 

Community Facility Loan and Grant Program 

RHS provides grants, direct loans, and guaranteed/insured loans to construct, enlarge, 

extend, or otherwise improve community facilities that offer essential services to rural 

residents through the Community Facility Loan and Grant program. . Eligible facilities 

include hospitals, clinics, assisted living facilities, nursing facilities, medical 

rehabilitation centers, group homes, community centers, and public buildings. 

Exhibit 17: Summary of Income Eligibility for Programs of Housing Assistance 

Income Level Extremely Low 

30% of Median and 

Below 

Very-Low 

31% – 50% of Median 

Low 

51% – 80% 

Median 

Moderate 

81%+ 

Programs 

currently 

financing new 

construction or 

rental assistance 

vouchers 

• Section 202 

• Housing Choice 

Vouchers 

• HOME 

• Section 515 

• Public Housing / 

HOPE VI

• Section 202 

Housing Choice 

Vouchers 

• LIHTC 

• HOME 

• Section 515 

• Public Housing/ 

HOPE VI 

• 501(c)(3) Bonds 

 (partial) 

• LIHTC (up 

to 60%) 

• HOME (up 

to 65%) 

• 501(c)(3) 

• Bonds 

• GSEs 

• HUD 

Mortgage 

Insurance 

• GSEs 

• 501(c)(3) 

• Bonds 

(partial) 
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Seniors Commission Report 

FEDERAL HOUSING AND SERVICE INTEGRATION 

PROGRAMS AND GUIDELINES 

Service Coordinators in Multifamily Housing 

Service Coordinator positions in multifamily assisted housing were authorized in the 

1990 Cranston-Gonzalez National Affordable Housing Act. HUD currently provides 

funding for service coordinators through three mechanisms: a national competition with 

other properties for a limited amount of grant funding; the use of the development's 

residual receipts or excess income; and budget-based rent increases or special rent 

adjustments. 

Owners of Section 202, Section 8, Section 221(d)(3) below-market interest rate, and 

Section 236 developments may apply for grant funding. Eligibility for funding is limited 

to those developments designed for the elderly and persons with disabilities, including 

any such building within a mixed-use project originally designed for them or where the 

owner — with HUD approval — gives preference to the elderly or persons with 

disabilities in tenant selection. 

Service Coordinator program funding covers service coordinator salaries and benefits as 

well as administrative and training expenses. Service coordinators routinely assess 

resident needs, identify and link residents to appropriate services, and monitor the 

delivery of services. Services involve activities of residents' daily living, such as eating, 

dressing, bathing, grooming, transferring, and home management. A service coordinator 

may also educate residents about what services are available and how to use them or help 

residents build informal support networks with other residents, family, and friends. The 

service coordinator may not require any elderly or disabled family to accept supportive 

services.80

Resident service coordinators provide an essential role for seniors by: 

• Enabling individuals to remain in the least restrictive environment; 

• Affording those who suffer from early- to mid-stage dementia and chronic 

disabilities an alternative to relinquishing their independence; 

• Coordinating the most basic of health care needs with community service 

providers, preventing the pre-emptive movement of seniors to a higher than 

necessary level of care; 

• Navigating the complex array of existing supportive services and eligibility 

guidelines; and 

• Preventing the potential occurrence of acute medical episodes and costly 

treatments through early detection of apparent changes in health status. 

In December 2000, Congress expanded the role of service coordinators through 

legislation that allows them to also assist low-income elderly or disabled families living 

in the geographic vicinity of eligible federally assisted housing properties.81
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Seniors Commission Report 

Resident Opportunities and Self-Sufficiency Program (ROSS) 

The Resident Opportunities and Self-Sufficiency (ROSS) program links public housing 

residents with resident empowerment activities, supportive services, and assistance in 

becoming economically self-sufficient. The program is consistent with HUD's goal to 

focus resources more effectively on welfare-to-work and independent living for the 

elderly and persons with disabilities. 

ROSS incorporates three basic funding categories: technical assistance/training support 

for resident organizations; resident service delivery models; and service coordinators. 

The last two categories specifically serve seniors as follows: 

(1) Resident Service Delivery Models for the Elderly and Persons with Disabilities. 

Eligible activities include, but are not limited to: 

• Providing personal assistance with daily activities; 

• Transporting residents to medical appointments, shopping, and other locations; 

• Helping residents maintain their health through nutritional meals, wellness 

programs, health education, and referrals to community resources; 

• Providing congregate services, and 

• Making physical improvements to the housing development in order to provide 

space for supportive services. 

(2) Service Coordinator Grants. 

These grants enable PHAs to employ Service Coordinators to assist elderly and 

disabled residents in maintaining independent living. Grant funds may be used to 

pay salaries, fringe benefits, and related administrative costs (i.e., training, office 

equipment, and utilities). Since FY 1999, HUD has provided Service Coordinator 

extension funding under ROSS for grants originally awarded in FY1995. ROSS 

does not fund new Service Coordinator programs. 

Each year, HUD awards grants to PHAs through a competitive grant process set forth in 

annual NOFAs. 

Assisted Living Conversion Program (ALCP) 

The FY2000 VA- HUD and Independent Agencies Appropriations (Public Law 106-74) 

authorized the Assisted Living Conversion Program (ALCP), as a program of grants to 

non-profit providers of Section 202 facilities to cover the physical conversion of common 

spaces and some or all residential units within existing projects to operate as assisted 

living facilities. In 2001, Congress expanded this program to include HUD Section 

221(d)(3) BMIR, Section 236 and senior developments with project-based Section 8, 

including RHS Section 515 projects. Although funds may be used to renovate and 

reconstruct units and common spaces, no grant funds may be used to pay for or deliver 

services. The funding level for FY2000 and FY2001 was $50,000,000 per year, with 
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Seniors Commission Report 

FY2000 authority carried over to 2001. Due to difficulty in qualifying for and 

implementing the program, funds have not been fully utilized in either funding cycle. 

Congregate Housing Services Program (CHSP) 

Congress created the Congregate Housing Services Demonstration (CHSP) program in 

1978, and made it a permanent, discretionary grant program in 1990. Each year, 

Congress provides extension funding for existing CHSP grantees, but has not 

appropriated funding for new grants since 1994. 

CHSP grants subsidize the cost of service coordination and onsite supportive services 

(i.e., home and community based services) for frail elderly and disabled residents of 

HUD and RHS subsidized senior housing. The goal of CHSP is to enable aging in place 

and to prevent premature or unnecessary institutionalization. It was among the first 

initiatives developed by the Federal Government to provide a comprehensive housing and 

supportive services package within a subsidized housing environment. 

CHSP grant funds are matched through contributions from grantees and private and 

public funding sources, and through participant fees. This coordinated effort to provide 

housing and supportive services has given to frail elderly persons whose incomes, and 

therefore housing and service options, are limited, a higher-quality of life than they 

would have had without it. CHSP can serve as an alternative to nursing facility 

placement for many participants. 

FEDERAL HEALTH CARE SERVICE PROGRAM 

DESCRIPTIONS 

Medicaid Waivers and Demonstrations 

The Federal Government may waive certain Medicaid State plan requirements to allow 

States to operate specific programs. These programs are referred to as Medicaid waivers. 

In general, Federal law allows States to enact two types of Medicaid waivers: 

• Program Waivers [1915(b), 1915(c), 1915(b)/1915(c) concurrent waivers]; and 

• Research and Demonstration Waivers[1115 waivers]. 

Program waivers, the most common waivers used to support seniors living in the 

community with services, include the following: 

• 1915 (c): Home and Community Based Service Waivers. Since 1981, Medicaid 

home and community based services (HCBS) waivers afford States the flexibility 

to develop and implement creative alternatives to placing Medicaid-eligible 

individuals in hospitals, nursing facilities or intermediate care facilities for 

persons with mental retardation. 
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The HCBS waiver program recognizes that many seniors at risk of being placed 

in these facilities can be cared for in their homes and communities, preserving 

their independence and ties to family and friends at a cost no higher than that of 

institutional care. 

Under section 1915(c) of the Social Security Act (the Act), States may request 

waivers of certain Federal requirements if they wish to develop Medicaidfinanced alternatives to home- and community-based care. The three requirements 

that may be waived are statewide applicability, service comparability, and 

community income and resource rules for the medically needy. As a result, 

Medicaid HCBS waivers may allow States to deliver services to persons with 

incomes that are greater than those allowed under general Medicaid eligibility 

rules. 

To illustrate, in most States, seniors are eligible for Medicaid benefits if their 

incomes are no higher than the SSI limit. The basic Medicaid benefit provides 

coverage for services such as primary health and acute care. But Federal 

Medicaid law allows States to apply special income rules for nursing facility care 

and the most often applied rule to determine Medicaid nursing facility eligibility 

permits coverage for seniors with incomes of up to 300 percent of SSI — the “300 

percent rule.” In 2002, 300 percent of SSI equated to $1,635 per month or 

$19,620 per year. Under HCBS waiver programs, States may, as with nursing 

facilities, allow seniors to have incomes up to 300 percent of SSI to qualify for 

Medicaid HCBS. Medicaid eligibility limits for all covered services are, however, 

set at the discretion of each State. Consequentially, disparities within and among 

States exist in Medicaid nursing facility eligibility income limits when compared 

with HCBS eligibility limits. 

Section 1915(c) of the Social Security Act specifically lists the following seven 

services that can be provided in HCBS waiver programs: case management, 

homemaker/home health aide services, personal care services, adult day health 

programs, habilitation, and respite care. A broad range of other services, may also 

be provided on requested of the State — subject to CMS approval — if they are 

needed by waiver participants to avoid placement in a medical facility. . 

States have the flexibility to design each waiver program and select the mix of 

waiver services that best meets the needs of the population they wish to serve.82

HCBS waiver services may be provided statewide or may be limited to specific 

geographic areas. To be eligible for home- and community-based waiver services, 

individuals must require the level of care provided in skilled-nursing, 

intermediate-care, or intermediate-care facilities for the mentally retarded. To 

obtain approval to implement HCBS waiver programs, State Medicaid agencies 

must assure CMS that the cost of providing home-and community-based waiver 

services to persons eligible for waiver services will not exceed the cost of care for 

the identical population in an institutional setting. The Medicaid agency must also 

document that safeguards are in place to protect the health and welfare of 

beneficiaries. 
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• 1915(b) Freedom of Choice Waivers. States are permitted to waive statewide 

applicability and service comparability, and to restrict beneficiaries’ choice of 

provider. These types of waivers are limited in that they apply to existing 

Medicaid eligible beneficiaries. In addition, authority under the waivers cannot 

be used for eligibility expansions. There are four types of 1915(b) Freedom of 

Choice Waivers: 

(b)(1) mandates Medicaid Enrollment into managed care;

(b)(2) utilizes a "central broker;" 

(b)(3) uses cost savings to provide additional services; and 

(b)(4) limits the number of providers for additional services. 

No State can use these waivers to serve beneficiaries beyond Medicaid State Plan 

Eligibility. 

Concurrent Waivers (Combining HCBS with Freedom of 

Choice Waivers) 

Some States are interested in providing long-term care services in a managed care 

environment or using a limited pool of providers. In addition to providing traditional 

long-term care State plan services (e.g., home health, personal care, institutional 

services), some States propose to include nontraditional home and community-based 

"1915(c)-like" services (e.g., homemaker services, adult day health programs, and respite 

care) in their managed care programs. No authority is provided under 1915(b) to cover 

individuals in a special eligibility category (the 42 CFR 435.217 group) who are only 

Medicaid eligible through a link to a 1915(c) waiver. For these reasons, several States 

have opted to utilize authorities of the 1915(b) and 1915(c) programs simultaneously to 

provide a continuum of services to disabled and/or elderly populations. In essence, States 

use the 1915(b) authority to limit freedom of choice, and the 1915(c) authority to provide 

home- and community-based services and to expand Medicaid to cover individuals in the 

special eligibility category listed above. 

Nursing Home Transition Grants Program 

Beginning in 1998, the Health Care Financing Administration (HCFA – now CMS) 

solicited proposals from States for the development of programs to assist then current 

nursing facility residents with the transition to home- and community-based settings. 

Although many States have developed procedures for diverting prospective nursing 

facility residents from institutions, far fewer have attempted to design programs that 

assist nursing facility residents in returning to their communities. The Nursing Home 

Transition Grant program’s purpose is twofold: to provide administrative and service 

resources to help States develop transition programs; and to set aside technical assistance 

grant funds for at least one State that is willing to collaborate with one or more 

Independent Living Centers (ILCs).83

Two primary goals of this grant initiative are to establish community support systems and 

a comprehensive set of choices that will enable current beneficiaries who are residing in 
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nursing facilities to live safely, maintain and improve their health status, and participate 

in community life to the fullest extent possible. States need to consider the range of 

services and supports that will enable people with all levels of disability, including 

significant disability, to meet those goals and to eliminate barriers that may impede 

success. 

Appropriate housing options are of particular importance. Barriers to effective transition 

are sometimes found in the regulations, policies, or the organization of the provider 

network. For example, no provision for nighttime services may exist, assistive technology 

may be difficult to obtain, or there may be no training available in how to use it. 

Alternatively, there may be gaps in the supply of quality providers (i.e., attendants or 

transportation services) or a lack of opportunities for persons with disabilities to direct 

their own services. As part of the solicitation, States are encouraged to explore ways to 

develop consumer controlled and other community-based providers, fostering voluntary 

supports, and create housing opportunities for nursing facility residents who will 

participate in the transition program. 

Medicare Home Health Benefit 

Medicare is the largest single payer of home care services. In 1999, Medicare paid for 

about 26 percent of total estimated home care expenditures. There are very specific 

eligibility criteria for Medicare home health. Medicare home health provides skilled 

nursing and related personal care services provided by a certified home health aide to 

those who meet the need for skilled and intermittent care, and are homebound. 

Beneficiaries who meet these criteria may also receive needed personal care services. 

Services must be provided by a certified home health agency. 

During the early 1990s, the home health benefit grew rapidly, in part because of changing 

demographics. This unanticipated growth led Congress to reduce home health 

expenditures under Medicare by $16 billion over the past five years by limiting annual 

per-person benefits to home health care agencies, and reducing payments for services. 

Overall, CMS estimates that almost 900,000 fewer Medicare beneficiaries received 

services in 1999 than in 1997. 

Social Services Block Grant (SSBG) 

Administered by the Administration for Children and Families of HHS, Social Service 

Block Grant (SSBG) funds enable each State to furnish those social services that best suit 

the needs of individuals who reside in their State. 

SSBG funds may be used to provide services directed toward one of five goals: 

• To prevent, reduce, or eliminate dependency; 

• To achieve or maintain self-sufficiency; 

• To prevent neglect, abuse, or exploitation of children and adults; 

 • To prevent or reduce inappropriate institutional care; and 

• To secure admission or referral for institutional care when other forms of care are 

not appropriate. 
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Seniors Commission Report 

HHS allocates SSBG funds to the 50 States, the District of Columbia, and the U.S. 

Territories, by formula. Section 2003 of Title XX of the Social Security Act specifies 

how the allotments for each State and jurisdiction are determined. Each State is entitled 

to payments in an amount equal to its allotment for that fiscal year. 

Exhibit 18 shows expenditures for Long-Term Care Services from public and private 

sources in 1998. 

Exhibit 18: Expenditures for Long-Term Care Services 

 Nursing Facilities 

(1998 $billions) 

Home Care 

(1998 $billions) 

Medicaid $40.6 $14.8 

Medicare $10.4 $10.4 

Other Public $2.1 $0.1 

Private Insurance $4.7 $4.0 

Out-of-Pocket $28.5 $6.0 

Other Private $1.6 $3.7 

Total $87.9 $39.0 

Source: Citizens for Long-Term Care 2001.

STATE HEALTH CARE SERVICE PROGRAMS 

Medicaid Personal Care Services: State Plan Option 

Under the Medicaid State plan, personal care services are an optional benefit. . Although 

individuals who are not undergoing treatment in a hospital on an inpatient basis, or 

residing in a hospital, nursing facility, intermediate-care facility for the mentally retarded, 

or institution for mental disease may receive services, such services must be: 

• Authorized for the individual by a physician or other health professional in 

accordance with a plan of treatment or service delivery must be approved by the 

State; 

• Provided by a qualified individual who is not a member of the individual's family; 

and 

• Furnished in a home or other location. 

Personal care services may include a range of human assistance provided to persons with 

disabilities and/or chronic conditions of all ages, enabling them to accomplish tasks that 

they would be able to complete in the absence of a disability. Assistance may be in the 

form of hands-on assistance or cueing so that the person is able to perform the task. Such 

assistance most often relates to performance of Activities of Daily Living (ADLs) and 

Instrumental Activities of Daily Living (IADLs), such as eating, bathing, dressing, 

toileting, transferring, personal hygiene, light housework, medication management, etc. 

Personal care services can be provided on an episodic or continuing basis. . Skilled 
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Seniors Commission Report 

services that may be performed only by a health professional are not considered personal 

care services. 

Unlike Medicaid HCBS waiver services, personal care services are available only to 

individuals who meet Medicaid’s basic income eligibility criteria (generally SSI- level 

income for the elderly). To receive personal care services, however, an individual is not 

required to demonstrate need for nursing facility level of care. In 2000, 27 states 

provided personal care coverage under their State plans.84

Title III—State And Community Programs

The Older Americans Act of 1965, as amended (OAA) authorizes a range of programs 

that offer services and opportunities for older Americans, especially those at risk of 

losing their independence. Under Title III - State and Community Programs, the 

Administration on Aging (AoA) oversees a nationwide network of agencies that focus on 

aging, including Regional offices, State Units on Aging (SUAs) and Area Agencies on 

Aging (AAAs). These agencies plan, coordinate, and develop community-level systems 

of services that meet the unique needs of older persons and their caregivers. 

Title III supports services designed both to assist older persons at risk of losing their 

independence and to enhance the lives of active older persons. Through Title III, AoA 

advocates for the needs of the elderly in program planning and policy development by, 

providing technical assistance and by issuing best practices guidelines. 

AoA awards funds for Title III to the 57 SUAs, which are located in every State and 

territory. Program funding is allocated based on the number of older persons in the State. 

Most states are divided into Planning and Service Areas (PSAs) so that programs can be 

effectively developed and targeted to meet the unique needs of the elderly residing in 

those areas. Nationwide, some 670 AAAs receive funds to plan, develop, coordinate, and 

arrange for services in each PSA from their respective SUAs. 

AAA's contract with public or private groups to provide services. More than 27,000 

service provider agencies operate nationwide, and in some cases, they AAA may act as 

the service provider, if no local contractor is available. 

Although the Act directs that priority be given to serving those with the greatest 

economic and social need —with particular attention to low-income minority older 

persons — all individuals age 60 and older are eligible for services. Limits in program 

funding often result in waiting lists for OAA services. 

Until recently, no mandatory fees existed for services. Recent legislative changes, 

however, now allow States to implement participant cost sharing for services received. 

Older persons also are encouraged to make voluntary contributions to help defray the 

costs of services. Under current law, these contributions are used to expand services. 

Volunteer support is also an integral component of the service system. 
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Title III- B Supportive Services 

In FY 2002, Congress appropriated $357 million for supportive services and senior 

centers. Most supportive services fall under three broad categories: 

• Access services, such as transportation, outreach, information and assistance, and 

case management; 

• In-home services, including homemaker and home health aides, chore 

maintenance, and supportive services for families of older individuals who have 

Alzheimer's disease; and 

• Community services, such as adult day programs, legal assistance, and recreation. 

Supportive services are designed to maximize the informal support provided by 

caregivers and to enhance the capacity of older persons to remain self-sufficient. During 

FY 1999, information and assistance services were provided to more than 12 million 

older persons and their caregivers. More than 8 million outreach contacts were also made 

to identify older persons in need of access to services. Transportation continued to be one 

of the most heavily used services. The OAA funded nearly 46 million trips by older 

persons to their doctor, clinic, senior center, or other location. Of Title III participants, 19 

percent were minorities and 51 percent were low-income.85 

Title III-C Congregate and Home-Delivered Meals 

Nutrition services are provided under Title III-C of the Older Americans Act. The title 

contains two Parts, Congregate Meals (C-1) and Home-Delivered Meals (C-2). The 

services provided under these two parts are similar, however, Congregate Meals are 

targeted to active seniors, while Home-Delivered Meals are delivered to the homebound. 

There is substantial private sector, State, and local financial and volunteer support for 

meal programs. Although older participants are not charged a fee, they are encouraged to 

make voluntary contributions to help defray the cost of services. Under current law, these 

contributions are used by local programs to expand services. In FY 2002, Congress 

appropriated $390 million for Congregate Meals and $176.5 million for Home-Delivered 

Meals. In FY 1999, nearly 884,000 seniors received Home-Delivered Meals and nearly 

1.8 million received Congregate Meals.86 

National Family Caregiver Support Program 

The Older Americans Act Amendments of 2000 enacted the National Family Caregiver 

Support Program. This program calls for all States to provide five basic services for 

family caregivers, including: 

• Information about available services; 

• Assistance in gaining access to supportive services; 

• Individual counseling, organization of support groups, and caregiver training to 

assist caregivers in making decisions and solving problems relating to their 

caregiving roles; 
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Seniors Commission Report 

• Respite services to give caregivers temporary relief from their responsibilities; 

and 

• Supplemental services, on a limited basis, to complement the care provided by 

caregivers. 

In FY 2002, Congress appropriated $141.5 million for this program. 

OTHER CONSIDERATIONS 

Market Rate Housing 

Market rate (i.e., moderately priced) housing fills an important niche for our Nation's 

seniors. Many properties offer amenities tailored to senior households, such as security, 

community rooms, wellness centers, dining, and other supportive services. Most are not 

subsidized in any significant way, and for the most part use private financing; however, 

some non-profits rely on tax-exempt financing to develop market rate apartments. 

Many types of market rate products fill the two major categories of market rate housing 

— apartments that provide housing only in a secure environment; and apartment 

communities that offer services in addition to housing. These community alternatives 

generally address the housing needs of seniors whose incomes are too high to qualify for 

subsidized senior housing admission, yet not high enough to afford either assisted living 

facilities or continuing care retirement communities. A recent analysis by the America 

Senior Housing Association estimated that approximately 1.1 million apartments of this 

type now exist nationally, providing a valuable resource in reaching the moderate-income 

senior market.87

Continuing Care Retirement Communities88

Continuing Care Retirement Communities (CCRCs) describe a diverse group of campus 

type retirement communities that provide a continuum of housing, health care, supportive 

services, amenities and activities. CCRCs can be made up of apartments, cottages, or a 

variety of other independent living spaces located in a single community. They may be 

urban, suburban or rural, and may range from garden style to high-rise structures. CCRCs 

are not homogenous; each has an array of differences, while preserving the core elements 

that allow them to be described as a “CCRC.” 

A key way in which CCRCs differ is in the degree of health care coverage included for 

the resident. Extensive or “full life care” agreements generally include housing, 

residential services, amenities and unlimited, yet specific health-related services for the 

life of the resident. Such agreements may feature little or no substantial increases in 

monthly payments for enhancements such as additional meals or incidentals; however, 

there may be periodic increases for normal operating costs or adjustments for inflation. 

 

Modified agreements generally include housing, residential services, amenities and a 

limited, specified amount of skilled nursing care. A number of variations may be found 

in these contracts; however, substantial increases in monthly payments are not common. 
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Seniors Commission Report 

Fee-for-service agreements, which are often termed “a la carte,” generally include 

housing, residential services and amenities as specified in the individual agreement. 

Health-related services are commonly paid for as they are needed and utilized. 

Access to and availability of health care services either within or in close proximity to a 

CCRC are at the heart of the CCRC care concept. Health-related services may include 

the following: 

Emergency response systems; 

Resident health clinic; 

Wellness and health education programs; 

Hospice services; 

Nursing consultation; 

Primary and specialty physician services; 

Podiatric and dental care; 

Pharmacy or pharmacy services; 

Physical, occupational and/or speech therapies; 

Assisted living; and 

Skilled nursing care. 

Although significant variations in service delivery may occur, typical services that may 

be available at a CCRC include the following: 

Meals, including prescribed diets; 

Grounds and unit maintenance; 

Routine and/or heavy housekeeping; 

Social, physical, religious, recreational, cultural and activity programs; 

Scheduled transportation; 

Bed and bath linens; 

Security systems; and 

Social services and counseling. 

Amenities may include banking, exercise rooms or postal services - to name a few. 

CCRCs ownership is equally diverse. Non-profits, for-profits, partnerships, syndicates 

(i.e., a number of investors), residents or an individual may be involved in the ownership 

of a CCRC. Many are accredited by the Continuing Care Accreditation Commission 

(CCAC), an independent entity sponsored by the American Association of Homes and 

Services for the Aging (AAHSA) that evaluates quality and a variety of other factors 

before issuing its seal of approval to communities. 

CCRC's are affordable to moderate-income seniors, especially those who own their own 

homes and can convert that asset to accommodate entry fees. Fee structures for CCRCs 

are as diverse as the CCRCs themselves. Many have different structures depending on 

the level of services required. Entry fees are usually tied to the size of the living unit. 

Hundreds of thousands of seniors have availed themselves of the CCRC option and their 

popularity is growing. Creative structuring of agreements and other cost-saving 
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Seniors Commission Report 

mechanisms will likely make this option more widely available to future generations of 

seniors. 

Comparing Costs in Promoting Aging in Place 

In accordance with our Mandate, the Commission reviewed the comparative costs of 

housing production and housing vouchers in promoting aging in place. 

In January 2002, the General Accounting Office (GAO) released a report that compared 

the costs of various Federal housing programs. 89 The study covered all active Federal 

housing programs, estimated the 30-year lifecycle costs of each,90 and found that the 

Housing Choice Voucher program is less costly than production programs. 

In metropolitan statistical areas (MSAs), GAO found the average total 30-year cost of a 

one-bedroom unit to be $140,000 for vouchers, $151,000 for Section 811, $157,000 for 

Section 202, and $167,000 for tax credit projects. According to the Report, “for all of 

the programs except tax credits, the Federal Government pays the largest percentage of 

the average total per-unit costs (from 65 percent for vouchers to 71 percent for HOPE VI 

over 30 years). Under the tax credit program, the tenants pay the largest share of the total 

cost (54 percent over 30 years); however, they have higher incomes, on average, and pay 

a larger percentage of their income for rent than other assisted households.” 

The Commission recognizes the importance of cost comparisons among Federal housing 

programs, but believes that both rental assistance and the production of new housing units 

are needed. In a response to the GAO study, David Smith states,91 “The biggest message 

of the study is not that the costs are different, but that they are roughly the same. Hence 

the focus should be less on choosing one form over the other, and more on providing a 

better mix of programs within markets and making each one work as efficiently as it can 

given its mission and parameters...The bottom line is that housing very poor households 

is expensive for the Federal Government under all programs.” 

In addition, the GAO comparison, by focusing on housing costs only, does not take longterm health care costs into consideration. In assessing the benefits of the Section 202 

program and other affordable housing programs relative to their costs, it is important to 

factor into the equation the longer-term financial consequences of inadequate health 

maintenance on other government programs serving the elderly such as Medicare and 

Medicaid. All too often, cost-benefit analyses in housing do not adequately evaluate the 

benefits of services. 

Thus, a service-enriched project such as one sponsored under Section 202 can result in a 

cost saving to the government that is not immediately evident in an analysis of housing 

costs alone. Similarly, other production programs such as LIHTC, HOME, and CDBG 

programs, and RHS Section 515 programs can result in cost-savings if they can be 

redesigned to provide services and health maintenance programs to achieve these 

benefits. These programs are not exclusively dedicated to serving seniors, although the 

housing facilities produced through them can be “seniors only” facilities. 
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Olmstead Decision 

The Olmstead decision provides a legal basis to advocate for community-based 

alternatives to institutional placement — including an expansion of housing- and 

community-based service options. 

In July 1999, the Supreme Court issued the Olmstead v L.C. decision — a decision that 

upheld Title II of the Americans with Disabilities Act (ADA), which required that States 

administer their services, programs, and activities "in the most integrated setting 

appropriate to the needs of qualified individuals with disabilities." This decision creates a 

challenge to Federal, State, and local governments to increase opportunities for qualified 

individuals with disabilities to return to, or stay in, the community and to receive 

appropriate community-based services. 

Medicaid is an important resource for helping States meet these goals because it is such 

an important source of funding for long-term care services. But, the decision's scope is 

not limited to Medicaid beneficiaries. ADA and the Olmstead decision cover services, 

programs, and activities provided or made available by public entities — government 

agencies at all levels — to all qualified individuals with disabilities, regardless of age or 

income. 

Long-term Care Insurance 

Private long-term care insurance (LTCI) was introduced during the past 2 decades and is, 

thus, a relatively new product. Sales of LTCI policies have grown substantially over the 

past 5 years, encouraged, in part, by the enactment of the Health Insurance Portability 

and Accountability Act (HIPAA). HIPAA established favorable tax treatment for 

“federally qualified” policies that meet certain consumer protection standards and 

developed minimum disability criteria needed for the beneficiary to trigger benefits. As 

of 1999, more than 6.8 million LTCI policies were sold in the United States. Private 

insurance pays for less than 7 percent of all long-term care costs. Thus, it plays only a 

small role in financing long-term care. 

The cost of LTCI is substantial, especially for persons who wait until they are in their 70s 

to make a purchase. Policies are generally sold with a “level premium” — meaning that 

the insurer may not raise premiums based on individual circumstances, such as increasing 

age or the onset of disability. In practice, however, insurers can, and often do, raise 

premiums for “classes” of individuals; when this happens, the policy may become 

unaffordable. In addition, policyholders who let their insurance lapse generally lose their 

entire investment, and are left without coverage when they are most likely to need it. 

Policies are most affordable if purchased during the policyholder’s 50s or 60s. These 

younger purchasers should expect to pay premiums for 20 or more years, because the risk 

of disability is greatest at age 80 and older. This fact makes the purchase of inflation 

protection critical; however, it also contributes to a more costly product. In 1999, 

average annual premiums for a policy that included inflation protection were $1,800 for 

purchase at age 65 and $5,900 for purchase at age 79.92 The cost of private LTCI is 
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Seniors Commission Report 

unaffordable for many, if not most, seniors. Many applicants are disqualified because 

they are unable to meet medical underwriting standards. 

Despite its limited role, LTCI has a number of advantages. Persons who can afford 

coverage can insure themselves against the high cost of long-term care, preventing 

depletion of their assets and preserving an inheritance for their children. In addition, they 

preserve choices as to the type, setting, and provider of care — should they become 

disabled. LTCI enables individuals to act responsibly in planning for their future needs, 

thereby preserving limited Medicaid funds for the most needy. 

Congressional legislation has been introduced to allow full deductibility of LTCI 

insurance premiums for individuals who have maintained continuous coverage over 

several years. Encouraging people who can afford to plan for their future by purchasing 

insurance and developing more affordable products can be part of an overall long-term 

care financing strategy that addresses the needs of persons with moderate incomes. 
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Seniors Commission Report 

PART V: RECOMMENDATIONS 

Between now and the year 2020, this Nation must begin to meet one of the most 

profound domestic challenges it has faced in a century. America must provide — through 

public and private means — housing, health care, and supportive services for tens of 

millions of men and women who will reach their senior years as the Baby Boomer 

generation ages. 

Fortunately, the United States has the capacity to meet the needs of an aging population. 

It takes time, however, to plan for a societal shift of this magnitude. Planning must begin 

now. In Part V, the Commission presents guiding principles and recommendations that 

respond to the Mandates in the authorizing legislation. 

Understanding the Needs of Seniors 

In seeking to understand the needs of seniors, the Commission drew on testimony of 

witnesses, research reports, informal conversations with the country’s leading authorities 

on housing and health care facilities for seniors, leaders of advocacy and faith-based 

groups, and many others. Accessibility, affordability, and availability became key words 

in describing not only seniors’ housing needs, but their service needs as well. 

Accessibility is a physical environment free of barriers and open to supportive services, 

through transportation, service coordination, and local service networks. Affordability is 

low-cost housing accommodations and the inexpensive purchase of services and health 

care that contribute to independent living. In many communities — urban and rural alike 

— availability of housing, services, and health care is a major problem; services are 

simply not there and no amount of money can buy them. 

Commission members repeatedly heard a key message through the words of our 

witnesses: the importance of their homes to seniors’ dignity and well being cannot be 

overstated. A senior cannot be healthy or maintain quality of life without a decent home. 

The home — an apartment, an assisted living residence, a single-family dwelling, or a 

manufactured home — is central to a senior’s life. 

The Commission heard the merits of living in one’s own single-family dwelling in the 

community as well as the benefits of living in a “seniors only” community. Witnesses 

shared the positive experiences of intergenerational communities and told of the 

challenges associated with homeless seniors. Witnesses asked for more flexibility in 

Federal programs, and told of the current confusing and often conflicting array of 

program rules. We heard that there are simply not enough resources committed to 

meeting the housing, health, and supportive services needs of seniors. Seniors who had 

elected to move to a specialized senior living community told of their reasons for that 

move — death or illness of a spouse, companionship and socialization, the need to be in 

an environment that is safe and secure, transportation services, affordability, and access 

to services. 
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Seniors Commission Report 

Developing Policy Responses to Seniors’ Needs 

Maximizing independence, staying in control of one’s life decisions, aging with dignity – 

these are qualities that Americans value as they age. Surveys reveal that, even as people 

age and begin to need assistance with daily tasks, they want to stay in their own homes 

for as long as possible. Fear of entering a nursing facility is a serious concern of many 

seniors, not only because of the high cost of institutional care, but also because of the 

perceived loss of autonomy and control. Seniors also fear becoming dependent on others, 

and want to avoid being a burden to their families. This strong desire of Americans — 

for a healthy and dignified old age is at the heart of this Nation’s long-term care debate. 

The Commission's recommendations recognize that appropriate and affordable housing 

and accessible, high-quality services are equal partners in creating a workable equation 

for quality of life during the aging process. A person’s ability to function can be 

enhanced or impeded by his or her physical and social environment. As people age and 

begin to need help with daily tasks, independence and quality of life can depend on their 

ability to access and pay for the services they need, in the environment that best supports 

an appropriate balance between autonomy and safety. 

The Commission came to understand the necessity of flexibility in responding to seniors’ 

needs. For example, diverse paths can lead to a senior’s need for long-term care and 

supportive services. These paths usually lead the senior, first, to increasing contact with 

the health care system and the medical professions. Eventually, this path may also lead 

the senior to a reconsideration of “home” — and a heart-wrenching decision about 

whether or when to leave for institutional care. 

Numerous factors influence an aging senior’s life including chronic and progressive 

health conditions, such as multiple sclerosis, diabetes, or Parkinson’s disease, any of 

which can lead to loss of function and mobility. A sudden event, such as a fall or a 

stroke, can result in long-term functional disabilities. Cognitive impairments, such as 

Alzheimer’s disease, can make it unsafe for an individual to live in an unsupervised 

setting. Health conditions such as arthritis, heart disease, and severe vision or hearing 

loss — alone or in combination — can make it progressively more difficult for seniors to 

engage in self-care, mobility, and housekeeping tasks. 

In addition to physical conditions, economic realities may begin to close in on the senior. 

Loss of a spouse can diminish or end family income. Taxes and maintenance on the 

home may rise above ability to pay. Supportive family members may move away. The 

home itself, lacking appropriate accommodations for senior occupants, may become 

unsafe or unsuitable for a senior. Failing eyesight or other limitations may prevent the 

senior from driving — a dramatic change in mobility for anybody, and even more 

consequential for many seniors. The aging process brings to seniors changing realities 

both in personal health and in home accommodations. 

The Commission found that the first step in developing guiding principles and 

recommendations is to understand what seniors want, what seniors themselves are ready 

to do on their own behalf, and where the seeds of solutions can be found. Therefore, the 
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Commission’s approach centers on choice. The Commission believes that seniors 

should have opportunities to choose the services they use, where and how they receive 

services, and where they live. 

The Commission recommends financing tools and linkage systems that promote choice. 

Its recommendations take into consideration the projected need for choice in housing and 

the importance of supportive services to maximize independence. 

Based on these considerations, the Commission developed five guiding principles for its 

recommendations: 

Preserve the existing housing stock; 

Expand successful housing production, rental assistance programs, home- and 

community-based services, and supportive housing models; 

Link shelter and services to promote and encourage aging in place; 

Reform existing Federal financing programs to maximize flexibility and increase 

housing production and health and service coverage; and 

Create and Explore new housing and service programs, models, and 

demonstrations. 

The Commission follows this formula, recommending policies that preserve existing 

stock, recommending expansion to policies that work, recommending linkages to remove 

barriers, recommending reforms to improve policies, and recommending new policies to 

meet changing needs. 
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RECOMMENDATION NO. 1 

PRESERVE THE EXISTING HOUSING STOCK

First and foremost, we must save what we have. Just as the production of new units is 

critical and necessary to meet the future needs of seniors, so also is the simultaneous need 

to focus on preserving and improving existing affordable senior housing. While the goal 

of preservation may be obvious, it is not always clear how this stock can be held in the 

affordable inventory and be recapitalized and renovated. Affordable senior housing, like 

its occupants, is undergoing an “aging process.” Much of it was developed through 

private/public partnerships more than three decades ago and much of the stock is itself in 

need of updating and repair. In many cases, use restrictions requiring low-income 

occupancy are expiring. Not surprisingly, as the average age of the population in this 

housing has climbed, so have the needs of seniors. The dilemma that confronts us is 

how to both preserve their homes and, simultaneously, meet their changing needs. 

This country is losing affordable senior housing in alarming numbers. A report prepared 

for this Commission by the National Housing Trust noted that 250 properties serving 

primarily seniors have either prepaid their HUD mortgages or opted out of their Section 8 

contracts since 1996, resulting in a loss of 20,000 units of senior housing.93 Moreover, 

the Trust determined that at least 4,400 older properties, consisting of more than 324,000 

Section 8-assisted apartments, are “at risk” of being converted to market rate rentals.94 

Exhibit 19: Analysis of Primarily Senior Housing and Units Currently At Risk95

Primarily Senior 

Properties 

Units Lost through 

FY2001 

Units at Risk of Loss 

(Rents <=110% of 

FMR) Ability to Refinance96

Ability to Refinance 

AND at Risk of Loss Financing Type 

Prop. Units Prop. Units Prop. Units Prop. Units Prop. Units 

202s97 4,468 285,356 2,000 125,692 1,674 99,271 358 23,616 

236 & 221(d)(3) 

BMIR 657 91,956 99 11,024 545 52,820 532 51,934 532 51,934 

Other Section 898 5,344 425,790 155 9,040 1,864 145,489 375 31,205 80 7,347 

TOTAL 10,469 803,102 254 20,064 4,409 324,001 2,581 182,410 970 82,897 

The States with the greatest potential losses are California with 37,356 units, New York 

with 25,330 units, Massachusetts with 21,648, Michigan with 19,492 units, and Ohio 

with 18,448 units. In addition to being at risk of being lost from the affordable housing 

inventory because of government policy that allowed the prepayment of the mortgages 

after a certain compliance period, in many cases, these affordable housing units are in 

need of repair and renovation. Much of the previously constructed senior housing stock 

did not include space for supportive services and virtually all of the early design was not 

barrier-free, making it difficult for these developments to serve the frail seniors. 

A great many States are already devoting considerable resources, including the creation 

of “set-asides” under the Low-Income Housing Tax Credit (LIHTC) program, for the 

preservation of the subsidized housing stock; however, much more can be done. The data 

reveal that this problem will grow in the coming decades. The Federal Government has 
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an important role to play, including encouraging State and local governments to direct 

resources to maintaining this unique housing stock. 

Congress needs to take immediate steps to ensure that this Nation does not continue to 

lose its existing stock of senior units as we prepare to meet the coming need for new units 

in the next two decades. 

RECOMMENDATION 1.1: ENCOURAGE THE PRESERVATION, 

RENOVATION, AND REFINANCING OF AFFORDABLE HOUSING 

PROJECTS 

The Commission is greatly concerned about the potential loss of hundreds of thousands 

of affordable senior units and has developed the following recommendations to ensure 

the preservation of existing housing stock. 

1. Congress should enact legislation to support preservation, renovation, and 

refinancing of federally assisted housing for low- and moderate-income seniors, 

including providing specific appropriations. 

2. HUD should establish an ongoing database with project-specific information on 

primarily seniors, subsidized properties that have a) Section 8 contract rents at or 

below market, b) loans with significantly high current interest rates, c) low REAC 

scores, and/or d) high vacancy rates. These properties are potentially at high risk 

of mortgage prepayment and should be placed on an “early warning” list to be 

shared with HUD regional offices, State housing finance agencies, the Rural 

Housing Service (RHS), and the general public. 

3. HUD should preserve the Section 236 senior housing stock, through (a) providing 

information to owners of existing HUD-insured, Section 236 properties primarily 

serving seniors, including a simple explanation of how the owner can refinance 

using the value of the Section 236 Interest Reduction Payments (IRP) to leverage 

additional debt for the purpose of rehabilitating the property and keeping it 

affordable, and (b) creating a program for use of the recaptured IRPs that are now 

in a pool at HUD, and using at least a third of these funds for the preservation and 

improvement of existing HUD-insured, Section 236 properties serving primarily 

seniors. 

RECOMMENDATION 1.2: PRESERVE THE EXISTING STOCK OF SECTION 

202 UNITS AS AFFORDABLE SERVICE-ENRICHED HOUSING AND 

ENCOURAGE THE RENOVATION AND REFINANCING OF SECTION 202 

PROJECTS. 

The Section 202 program is 43 years old and has financed more than 300,000 units for 

low-income seniors over the years. The Commission received significant testimony 

regarding not only the need to preserve the older Section 202 stock because of its 

physical condition, but also the need to preserve its affordability. The majority of Section 

202 mortgages have clauses that require HUD’s permission to prepay, but nearly 100,000 
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units built from 1977 through 1981 had mortgages allowing prepayment without HUD’s 

permission. 

In an effort to provide incentives to Section 202 sponsors to retain affordability and to 

finance needed repairs and renovations, HUD has issued guidelines for refinancing those 

projects that have the right to prepay their mortgages. For those projects requiring 

HUD’s permission to prepay, HUD guidelines for prepayment approval and refinancing 

require (a) continuing the project’s non-profit status, (b) executing a Use Agreement 

assuring long-term affordability, (c) honoring the Section 8 rental assistance contract, (d) 

maintaining a certain level of reserves, and, more recently, (e) making at least half of the 

resulting Section 8 savings available to the owner to cover the costs of retrofitting 

buildings (1) to provide supportive services , (2) to build new service facilities in or 

adjacent to the building, and/or (3) to build affordable assisted living facilities that could 

be accessed by the Section 202 residents. 

Congress also authorized ownership of a 202 development by a limited partnership, 

provided a private non-profit organization is the sole general partner of the partnership. 

This change was intended to allow Section 202 non-profit sponsors to take advantage of 

the equity that can be raised through the sale of Low-Income Housing Tax Credits 

(LIHTC). However, HUD has so far implemented this important provision of the 

legislation only for new Section 202 developments. 

In order to preserve this important segment of the senior housing market and to take full 

advantage of private sector equity and loan resources, the Commission requests the 

Congress to: 

1. Direct HUD to encourage retrofitting of buildings to include necessary space for 

services and programs, to accommodate an aging, frail population. This is 

particularly important to projects funded between 1982 and 1989, when HUD 

introduced a series of cost-containment measures, including a requirement that onefourth of the units be efficiency units. Projects built during this period have few 

design features and limited common space for supportive service provision. 

2. Direct HUD to streamline and expedite mortgage prepayments and refinancing 

opportunities that may result in improved quality of life for the senior residents. 

3. Direct HUD to utilize its authority to allow limited partnership ownership 

structures in accordance with legislative authority. This will allow Section 202 

projects access to the LIHTC program. 

4. Direct HUD to promulgate regulations that allow the Section 202 debt to be 

subordinated to new debt brought in with tax credits. This would allow some of the 

earlier Section 202s with interest rates ranging from 3 percent to 8 percent to keep 

current mortgages in place yet avail themselves of new equity. 

5. Encourage HUD to prepare and distribute information to Section 202 owners 

regarding the comparative costs and benefits of prepaying loans with 501(c)(3) 

bonds or refinancing with new debt and LIHTCs. 
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6. Revisit whether to waive all or part of the existing debt on Section 202 properties 

supported by Section 8, similar to the current 202 PRAC program. 

RECOMMENDATION 1.3: CONTINUE TO ENCOURAGE THE RENOVATION 

OF OUR AGING PUBLIC HOUSING STOCK AND ALLOCATE RESOURCES 

TO HOUSING AUTHORITIES TO PROVIDE SERVICE-ENRICHED HOUSING 

It is estimated that between 600,000 and 700,000 persons over 62 years of age live in 

public housing.99 This number will increase in the coming years due to the aging of those 

currently living in public housing. In addition, the number of seniors eligible for public 

housing will dramatically increase. 

Public housing for seniors was designed as independent housing. The characteristics of 

the stock do not make it easy for residents to age in place. Moreover, two-thirds of senior 

public housing residents live in buildings that are over 30 years old. According to a HUD 

study, funding the backlog of modernization applications for senior public housing 

developments will cost $4.8 billion. Some public housing agencies are beginning to 

make inroads by creatively combining other resources with agency funds to develop 

service-enriched housing and assisted living facilities. Some interesting examples 

identified by the Housing Research Foundation include: 

• The Miami-Dade Housing Agency in Florida has linked Medicaid waiver funding 

with low-income housing subsidies to provide basic assisted living and health 

services to low-income seniors living in an assisted living facility. The MiamiDade Housing Agency reports that the yearly cost to support one resident is 

$12,000 versus $38,000 in a nursing facility. 

• The Housing Authority of the City of Milwaukee, Wisconsin, transformed an 

independent living development into a continuing care facility by partnering with 

local service providers, which provide onsite health care and supportive services. 

• The Littleton Housing Authority of Colorado used tax credits, bonds, and its own 

funds to develop assisted living apartments100. 

Other examples from testimony before the Commission include: 

• The Syracuse Housing Authority has converted numerous units to make them 

more accessible and has partnered with a local continuum of care provider to 

ensure access to supportive services for its senior residents. 

• The Cambridge, Massachusetts, Housing Authority took over an obsolete city old 

age home and converted it into an assisted living development using low-income 

housing tax credits, HUD 232 mortgage insurance, historic tax credits, CDBG and 

HOME funds, and other funding sources including State, city and Federal Home 

Loan Bank funds. It is also building a small new nursing facility nearby to 

replace capacity still needed. 
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These are noteworthy examples, and Congress and HUD should allocate resources to 

allow other PHAs to emulate these successful models. One such vehicle could be the 

Elderly Housing Plus Health Support Demonstration Act, which is legislation pending in 

Congress. 

RECOMMENDATION 1.4: ENCOURAGE UTILIZATION OF HOPE VI 

MODERNIZATION FUNDS TO BUILD NEW INDEPENDENT AND ASSISTED 

LIVING FACILITIES FOR SENIORS AND TO RETROFIT HOUSING STOCK 

TO MAKE THE NECESSARY UNIT AND PHYSICAL PLANT 

IMPROVEMENTS TO BETTER SERVE SENIOR AMERICANS. REQUIRE 

THE DEVELOPMENT OF A RELOCATION PLAN FOR SENIORS THAT 

ASSURES EACH DISPLACED SENIOR AN AFFORDABLE, ACCESSIBLE 

LIVING UNIT WITH APPROPRIATE SERVICES. 

The HOPE VI program, which is used to demolish and revitalize distressed public 

housing, is the only public housing program that has received significant funding in the 

Past few years. Between 1996 and 2001, $293 million was appropriated to demolish the 

housing, and $4.8 billion was dedicated to its reconstruction or revitalization. 

Because HOPE VI requires significant displacement, however, it has frequently had a 

negative impact on senior residents. A comprehensive relocation program for senior 

residents should be an essential component for approval of any HOPE VI development 

plan. Because it is the main source of new funding for housing authorities, HOPE VI 

funds should accommodate the needs of future elderly residents - which includes an 

affordable, accessible living unit - providing an exemplary model of intergenerational 

communities. 

RECOMMENDATION 1.5: CONGRESS SHOULD FUND THE 

MODERNIZATION AND REPLACEMENT OF OUT-OF-DATE CAPITAL 

ITEMS AS WELL AS ADDITIONAL SPACE FOR SUPPORTIVE SERVICES 

AND PROGRAMMING. 

Many senior housing facilities have "aged" and need modernization and/or retrofitting. 

Congress should provide authority and funding for grants to HUD and RHS multifamily 

assisted senior housing developments to fund the modernization and retrofit of out-ofdate capital items (such as elevators, heating and cooling systems, roofs, plumbing, and 

sprinkler and security systems) in order to accommodate supportive services to aging 

residents and assure quality of life, accessibility, and marketability.101 These 

developments are often facing critical repair and modernization needs. Neither HUD nor 

RHS is now able to provide direct funding to ameliorate these problems. Although 

CDBG and HOME funds do pay for such activities, these funds are administered by State 

and local governments and are available to any low-income housing needing 

rehabilitation. As a result, HUD and RHS developments do not generally benefit from 

these block grant funds. 

In many cases, such rehabilitation is also necessary to meet new, more stringent 

architectural accessibility requirements and to provide space for the provision of 
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supportive services. This assistance will maintain a high-quality living environment for 

the senior residents and will preserve much-needed senior housing stock. 

RECOMMENDATION 1.6: CONGRESS SHOULD CONTINUE TO SUPPORT 

PROGRAMS FOR SENIOR HOMEOWNERS TO MAINTAIN THEIR HOMES 

AND MAXIMIZE THEIR ABILITY TO LIVE THERE AS LONG AS POSSIBLE. 

For most seniors, their housing choice is to remain in their own homes as long as 

possible. An AARP study finds that more than 80 percent of seniors would prefer to stay 

in their current dwellings and never move. Approximately 68 percent of Americans now 

live in homes they own, primarily single-family dwellings, and fewer than 20 percent of 

seniors live in apartments. 102 

Many seniors may not have supportive service needs, but their ability to remain in their 

homes is threatened by health and safety issues resulting from poor maintenance or 

disrepair. The 1999 American Housing Survey indicates that about 5 percent of senior 

owners (809,000) and 11 percent of senior renters (447,000) occupied dwellings with 

either severe or moderate physical problems. Not surprisingly, housing disrepair 

correlates directly with housing age, the poverty of its occupants, and their age.103 Often, 

a small infusion of financial assistance can enable senior homeowners to make essential 

repairs or modifications, thus giving them the option to safely remain in their homes 

much longer. 

Currently, the Federal Government funds a number of programs that provide home repair, 

modification, rehabilitation, and weatherization assistance to senior homeowners and 

renters and to rental housing owners. These programs include HUD’s CDBG and HOME 

Investment Partnership programs; the Rural Housing Service’s Section 533 Housing 

Preservation Grants, Section 504 Rural Housing Repair and Rehabilitation Loans and 

Grants; the Department of Health and Human Services’ Older Americans Act Title III 

programs and Medicaid; and the Department of Energy’s Weatherization Assistance for 

Low-Income Persons. 

At the State level, for example, the New York State Division of Housing and Community 

Renewal (DHCR) has developed a competitively funded home repair grant program 

called the Emergency Home Repair Program for the Elderly (RESTORE). Thus far, over 

150 groups covering 57 counties have received RESTORE awards to repair over 1,500 

homes.104

The most significant issues seniors face that can be helped by home modification and 

assistive technology are: getting in and out of the house, walking up and down stairs, and 

safely using the bathroom. The most frequently needed modifications are faucet and 

cabinet adaptations, stair lifts or elevators, bathroom access, ramps, and curbless or rollin showers.105 A well-insulated home or a structure free of physical deterioration allows 

seniors to focus on other more important aspects of their lives and gives them the 

freedom to remain safely in their homes. 

Moreover, some seniors can be helped by innovations in assistive technology (AT) that 

can actually be used to substitute for long-term care services in the home and prevent the 
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need for institutionalization. In testimony to the Commission, Johns Hopkins University 

Professor Sandra Newman noted that, “...housing modifications and assistive devices 

promote independent living (but)...it is difficult for the consumer to find the right source 

of help, and (there are) inconsistent standards of need and little coordination among 

funders.” 

Investments in new assistive technologies hold promise for cost savings and better 

delivery of services. The range of AT is becoming extensive and innovative. Basic 

assistive devices can include a bath seat or a shower grab bar. The latter may allow the 

senior to bathe without the help of a caregiver and will decrease the probability of a fall 

in the shower. Technological devices include in-home personal computers that can be 

used for telemedicine and teletherapy purposes. Evidence is building that AT can 

substitute for or lessen the frequency of caregiver visits, both formal and informal. 

Homes that have been modified to meet the changing needs of seniors can help them 

safely maximize the years spent in their preferred setting. 

RECOMMENDATION 1.7: RECOGNIZE MANUFACTURED HOUSING AS AN 

AFFORDABLE HOUSING OPTION AND ENCOURAGE REASONABLE 

FINANCING PRODUCTS. 

More than 2.5 million senior households live in manufactured housing.106 That 

represents significantly more seniors than all of those served by all of HUD’s assisted 

housing programs, including public housing, Section 202, Section 236, and Section 8. 

While manufactured housing is not subsidized by the government and does not have 

income limits for residents, it serves many lower income households because it costs less 

than most other homeownership options. 

As is evident by findings in a report prepared for the Commission in Appendix G, 

policymakers at the Federal and local levels need to recognize manufactured housing as 

an affordable housing option, particularly for low- and moderate-income seniors. As is 

the case of seniors living in other types of housing, residents of all types of manufactured 

homes must be protected to ensure that their homes meet basic housing quality and safety 

standards both in manufacture and installation. In order to keep housing costs stable and 

affordable, the Commission recommends that financial institutions provide long-term 

financing of manufactured housing with long-term amortizations and without balloon 

payments. 
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RECOMMENDATION NO. 2 

EXPAND HOUSING PRODUCTION AND SERVICES 

A housing crisis is on the horizon. The dramatic, unparalleled increase in the sheer 

numbers of persons over age 65 will do more than challenge our housing resources – it 

will exhaust them, unless we are ready. A major effort at increasing the public and 

private production of housing designed for seniors must begin immediately if the Nation 

is to meet the needs of increasing numbers of seniors, especially for those seniors 

requiring services. 

While the Commission first recognizes and urges preservation of existing housing stock, 

we believe that more housing units must be created. We recommend the production of a 

variety of housing types, serving persons of low, moderate, and middle incomes, ranging 

from single-family home communities to service-enriched senior apartments to 

Continuing Care Retirement Communities (CCRCs). 

Financing this broad and far-reaching level of production will be a challenge. At the 

Federal level, the Commission looks to the Section 202 program and Housing Choice 

Vouchers to serve extremely low-income seniors. Through recent increases in the per 

capita allocations on housing tax credits and housing bonds, and emerging State priorities 

for senior housing, the Commission is encouraged that seniors with low and very lowincomes will benefit from increased housing production. Through Commission 

recommendations for reform of the HUD mortgage insurance programs, and for greater 

participation by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, we expect 

increased production that will help meet the housing needs of low- and moderate-income 

seniors. 

As the number of older age seniors increases, so does their need for health care and 

supportive services. In 1997, 18 percent of seniors age 65 and over living in the 

community required assistance with everyday activities--that is, Activities of Daily 

Living (ADL) or Instrumental Activities of Daily Living (IADL). As seniors age, their 

need for assistance increases significantly. For seniors 65-74 years old, 1.8 percent 

needed assistance with three or more ADLs, compared with 5 percent of the 75-84 year 

old seniors and 11 percent of the 85+ year old seniors in 1997.107 Buildings need to be 

designed to accommodate the delivery of services to this vulnerable group. 

Reliable data about the number of new units being produced each year for seniors is 

difficult to obtain and, in some instances, nonexistent. Today’s production programs that 

serve predominantly seniors with incomes below 80 percent include HUD’s Section 202 

program, the LIHTC, HOME, and projects funded with tax-exempt housing bonds. The 

Section 202 program is currently producing 5,800 units per year. The LIHTC program is 

currently producing an estimated 13,200 rental units for seniors108 each year, and a recent 

40 percent increase in the tax credit program could increase this production level to 

18,000 units beginning in 2002.

Although not a production program, Housing Choice Vouchers can provide unit 

affordability for seniors, thus addressing an important need where a suitable housing unit 

is available, but not affordable. Only 17 percent of Housing Choice Vouchers now in use 

are held by senior households, and a recent HUD-commissioned study indicates that 
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senior households have only a 54 percent success rate in locating suitable housing under 

this program. 

Through the two major Federal production programs – Section 202 and LIHTC – the 

Nation has the current capacity to address the needs of an estimated 22,800 new senior 

households each year. No statistics are available on the number of seniors assisted 

through home repair programs, HOME, and tax-exempt bond programs. Even more 

importantly, no statistics are available on the number of seniors served through State and 

local resources, although the Commission heard of several highly successful programs. 

The seniors of America are not going to simply fade away. Their numbers are growing, 

and with that growth, the challenges presented by senior individuals without the 

resources to afford appropriate housing and necessary services are going to present 

themselves. One way or another, unless Americans are willing to abandon their Nation’s 

fundamental values, they will respond to those challenges, and our society, both privately 

and publicly, will bear the cost of that response. 

RECOMMENDATION 2.1: THE COMMISSION RECOMMENDS AN 

INCREASE IN THE ANNUAL PRODUCTION OF ALL TYPES OF ASSISTED 

HOUSING IN ORDER TO MEET THE NEEDS OF FUTURE GENERATIONS 

OF SENIORS. 

As indicated in Section III of this Report, data drawn from the American Housing Survey 

suggest that the projected rise in senior population will require approximately 730,000 

additional affordable rental units by 2020 to serve seniors with unmet housing needs (i.e., 

those who are living in substandard housing or who pay in excess of 30 percent of 

income for housing expenses either in homes they own or rent). Obviously, due to the 

issues associated with the interpretation of any complex data set and the difficulties of 

drawing global conclusions for circumstances that vary widely in their local 

manifestations, any such projections should be used cautiously. 

For instance, this estimate of need is based on a subset of individual housing and 

affordability needs and does not reflect that some seniors will move to a senior 

community for reasons other than substandard housing and affordability; for example, the 

need for services such as transportation, meals, home chores; the need for socialization, 

possibly due to the death of a loved one; the need for health-related services; or the 

inability to maintain one’s home. 

Moreover, this estimate cannot factor in uncertainties related to economic conditions and 

their impact on future income, homeownership rates, and most importantly seniors’ 

choices, nor can it address the geographical distribution of production programs, 

geographical shifts in demand, or potentially uneven levels of demand over the next two 

decades. 

Although some of this need can be met through home repair programs, Housing Choice 

Vouchers, senior developments financed with tax exempt bonds, and state and local 

programs, the balance will need to be met through increased production under the Federal 

Section 202, HOME and housing tax credit programs. 
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The Commission believes that if the Federal government encourages an array of 

financing tools, with sufficient flexibility capable of serving low- and moderate-income 

seniors in settings that encourage a continuum of services, then actual market and 

economic conditions can dictate the levels of need and how resources are distributed. 

RECOMMENDATION 2.2: THE SECTION 202 PROGRAM IS THE PRIMARY 

PRODUCTION PROGRAM SERVING EXTREMELY LOW-INCOME SENIORS, 

AND FUNDING FOR THIS PROGRAM SHOULD BE INCREASED TO KEEP 

PACE WITH THE DEMAND. 

The most urgent need is that of providing housing and services to seniors with extremely 

low-incomes, that is, those with incomes at or below 30 percent of area median. The 

Commission calls on Congress to increase funding for the Section 202 program, the 

principal production program designed with resources capable of reaching those seniors 

of greatest need. 

HUD’s Section 202 Program is the flagship housing program for seniors and one that has 

withstood the test of time. Despite an escalating demand, the production of Section 202 

units is at one of the lowest points in its history, and falls far below even today’s need. 

In the spring of 2002, HUD issued a Notice of Funding Availability totaling only 

5,800 units of 202 nationally, an average of fewer than 120 apartments per state. 

Only year 1990 had a lower production level. The peak production period was 

1976-1990, when 197,000 units of Section 202 housing came on line, an average 

of 13,134 units each year. Since 1990, annual production levels under the Section 

202 program have averaged 7,120 units. 

The demand for Section 202 has always exceeded supply. Clearly, the very low number 

of units now funded each year cannot meet either current or future need. According to a 

survey of Section 202 facilities by AARP,109 “...in 1999, approximately nine senior 

applicants were on waiting lists for each Section 202 unit that became vacant within a 

year.” Based on this strong demand, the Commission calls on Congress to increase 

funding for this valuable production program. 

RECOMMENDATION 2.3: HUD SHOULD INCREASE THE SECTION 202 PER 

UNIT FUNDING ALLOCATION TO COVER THE REALISTIC COST OF 

DEVELOPMENT, INCLUDING THE COST OF PUBLIC AND 

ADMINISTRATIVE SPACES. HUD SHOULD ESTABLISH REASONABLE 

OPERATING COST STANDARDS TO COVER SERVICE COORDINATION 

AND OTHER RELATED EXPENSES. 

To improve program efficiency, the Commission recommends that Congress direct HUD 

to make the following program modifications: 

1. Establish reasonable cost limits. The Section 202 program was designed to be a 

simple, one-stop financing program that covered 100 percent of acquisition, 

rehabilitation, or development costs associated with creating a new 202 property. In 

recent years, however, due to stringent budget ceilings and accelerating development 

costs in many parts of the country, the current Section 202 capital advance amounts 
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often fall far short of meeting up-front development costs. In addition, Section 202 

developments require substantial common space to provide for supportive 

programming and staff for residents aging in place. 

Although HUD issued increased base cost limits in 2001, concurrently, HUD reduced 

the multipliers used to reflect geographic differences resulting in lower overall limits 

in most parts of the country. 

Inadequate per unit funding has led to the need for highly complex, layered financing 

that greatly increases “soft costs” for these projects and also increases processing 

times. Providing adequate per unit financing will reduce the overall cost of the 

housing and make possible supportive environments that enable seniors to continue 

living in their homes and avoid moving to higher care facilities. 

If other sources of funding are not available, housing sponsors are left to create “bare 

bones” housing structures. However, in an environment when most developers 

understand that housing must be built to accommodate onsite supportive services, the 

inclusion of common space in new seniors housing is absolutely essential. 

2. Establish reasonable operating cost standards. Operating cost standards in PRAC 

programs need to reflect the costs of operating a building with integrated supportive 

services. This should include the funding of a service coordinator, as well as a 

reasonable amount for services such as transportation. Additionally, the PRAC 

funding should not be limited to 75 percent of the anticipated operating budget. 

Several independently conducted program studies110 conclude that service 

coordinators provide an important service and are strong determinants of the extended 

well being of residents. Service coordinators should be fully funded in Section 202 

operating budgets. Moreover, existing HUD guidelines for service coordinators 

should be fully integrated into the training component of the operating budget. 

RECOMMENDATION 2.4: CONGRESS SHOULD PROVIDE GREATER 

CLARIFICATON ON THE RECENT CHANGES THAT PERMIT COMBINING 

SECTION 202 AND THE LOW-INCOME HOUSING TAX CREDIT.

In 1999, Congress modified the Section 202 program to encourage and foster the creation 

of mixed-income, mixed-financed senior communities by enabling sponsors to combine 

their Section 202 allocations with the Low-Income Housing Tax Credit (LIHTC) 

program. These significant changes make it possible for the development of mixedincome communities for seniors, particularly beneficial in urban areas where larger 

projects can now be developed and in rural communities where a mix of incomes create 

enough qualified occupants for a single, feasible project. 

Although HUD permitted applicants in the 2001 funding round to combine the two 

programs, only eight of the funded applicants indicated a desire to do so. To date, none 

of these has actually combined the programs. The uncoordinated timing of the tax credit 

applications in conjunction with the Section 202 awards appears to pose an obstacle, 

along with some technical issues. 
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At the Commission’s hearing in Ohio, testimony111 was received about the need for 

technical changes to ensure that the Section 202 Project Rental Assistance Contract is not 

treated as a Federal grant and subtracted from eligible basis (making it ineligible for tax 

credits) and also that the PRAC rent subsidy is given the same status as a Section 8 

subsidy in considering rental income. 

Therefore, the Commission recommends the following:

1. Federal Grants. Add the following at the end of section 42(d)(5)(A): “For the 

purpose of this section, Federal grants shall not include payments made 

pursuant to a Project Rental Assistance Contract under section 202 of the 

Housing Act of 1959.” 

2. Computation of Permitted Rents. Add a new subsection (v) at the end of 

section 42(g)(2)(B): “(v) does not include any payments made pursuant to a 

Project Rental Assistance Contract under section 202 of the Housing Act of 

1959.” 

RECOMMENDATION 2.5: AMEND THE LOW-INCOME HOUSING TAX 

CREDIT PROGRAM TO PROVIDE A CREDIT BOOST OF 15 PERCENT FOR 

SERVICE-ENRICHED SENIOR HOUSING. 

The Low-Income Housing Tax Credit program provides a “credit boost” of 30 percent for 

housing developments that are located in Qualified Census Tracts (QCTs) – very lowincome census tracts – and Difficult to Develop Areas (DDAs), in recognition of the 

higher costs associated with development in these jurisdictions. As a result, affordable 

housing developments in these qualifying areas are given 30 percent more tax credits 

than a similar project located outside a QCT or DDA, thus increasing the amount of 

equity available to the project. 

The Commission recommends that Congress develop a credit boost for senior housing 

that takes into consideration the significantly higher costs associated with serviceenriched senior housing. Some of these higher costs are based on accessibility issues; 

(e.g., the developer must to either construct single story housing, with significantly higher 

foundation, roofing, and land costs, or multistory structures with elevators). Units are 

predominantly one- and two-bedroom units, resulting in higher square footage costs than 

multifamily complexes with mostly two- and three-bedroom units. These facilities 

include safety features such as grab bars, emergency call systems, accessible showers and 

bathtubs, special cabinetry, and accessible and adaptable appliances, all of which add to 

costs. In addition, common spaces are needed in order to provide services allowing 

seniors to age in place, so it is fairly typical for senior housing developments to cost 15 

percent to 20 percent more than their multifamily counterparts. 

To qualify for the credit, the housing would have to meet accessibility standards, offer a 

program of services for residents, and limit its occupancy to persons at or above 55 years 

of age. 
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RECOMMENDATION 2.6: HUD SHOULD REVISE ITS SECTION 202 

ALLOCATION SYSTEM TO MORE APPROPRIATELY TARGET 

GEOGRAPHIC AREAS OF GREATEST NEED. 

The current allocation system for Section 202 takes into account the number of seniors, 

substandard housing, and poverty rate, but not waiting lists and vacancy rates. As a 

result, there are a few communities in which Section 202 properties suffer from 

vacancies, yet, there are many other places where the existing supply of housing for 

seniors cannot begin to meet the demand. For example, a senior housing provider 

testifying in Commission hearings in Miami reported that 6,800 persons lined up to apply 

for one nearly completed Section 202 building.112 HUD’s distribution formula should be 

modified to more appropriately target areas of greatest need. 

To better allocate these limited resources, HUD should develop a formula for fund 

allocation that factors in: 

• Waiting lists and turnover ratios of other existing senior housing 

developments in the area; 

• Occupancy and vacancy rates in existing comparable housing; 

• Percentages of seniors with incomes at or below 50 percent of Area Median 

Income (AMI), with higher weights assigned to the numbers of seniors with 

incomes at or below 30 percent of AMI; 

• Demographic trends; 

• States with high poverty rates among their senior residents; and 

• Substandard housing. 

RECOMMENDATION 2.7: MEDICAID FUNDING SHOULD BE ADEQUATE 

TO SUPPORT QUALITY CARE. PAYMENTS SHOULD BE CONSISTENT 

WITH FEDERAL QUALITY STANDARDS AND SHOULD BE ADEQUATE 

ACROSS ALL SETTINGS. 

If the Medicaid program is to deliver high-quality care, its reimbursement rates must 

adequately compensate providers in all delivery settings. Currently, when agencies 

provide services under Medicaid contract, they must accept Medicaid’s rate of 

reimbursement, regardless of their actual costs. States determine the level of 

reimbursement for providers, and currently there is wide variation in the adequacy of 

Medicaid payments. Inadequate reimbursement rates make it difficult to attract and 

retain quality providers. When payment rates are inadequate, the quality of services 

delivered often suffers. 

When quality providers choose not to participate in Medicaid, there is the risk of a twotiered system of health care delivery in which low-income people may receive inadequate 

care. Poor quality care can lead to deterioration in health conditions, ultimately resulting 

in higher overall costs to the system. Taking steps to ensure that adequate reimbursement 

rates exist in all settings will help to minimize both geographical variations in service 

quality and variations by type of setting. 
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RECOMMENDATION 2.8: CONGRESS SHOULD MODIFY RURAL HOUSING 

PROGRAMS TO MORE APPROPRIATELY SERVE SENIORS AND FUND 

THEM REALISTICALLY. 

The Commission has found that senior residents in rural areas, especially those located in 

remote, lightly populated communities have unique circumstances that set them apart 

from seniors living in metropolitan or suburban areas. Although seniors in rural areas are 

more likely to be homeowners, their homes are often in poor condition and the value of 

their homes is relatively low. Many rural seniors live below the poverty level, their 

homes are widely dispersed and isolated, and the distance to services, supplies, and 

medical care is a serious problem.113

Many rural communities lack adequate independent or assisted living facilities, as well as 

health and supportive services for seniors. As rural communities begin to confront the 

reality of a growing number of seniors, financing of housing and community facilities 

will be required, as will programs to assist single-family homeowners and renters who 

live in rural communities. However, with added private sector investment and supportive 

government programs, seniors in rural areas will be able to choose housing and services 

that address their needs. 

In the multifamily housing developments funded under the Section 515 program of the 

RHS, 56 percent of the residents are over 62 years of age,114 and the Commission expects 

that number that will increase in coming years. The Commission supports full funding 

for RHS rental housing programs as a general principle; however, given the challenges 

that lie ahead, the RHS programs will require significant resources and policy changes so 

that the funds are used optimally. Below are some areas in which changes are needed to 

meet the current and future needs of seniors: 

1. The Section 515 program project budgets need to parallel actual development 

costs, including the provision of common and administrative spaces for 

supportive services and health-related programs. If the RHS program does not 

offer full funding of development costs, program standards should be flexible 

enough to reflect the reality of leveraged financing and accommodate the 

programmatic requirements of other subsidy sources such as the Low-Income 

Housing Tax Credit, HOME programs, and private sources of financing. For 

example, if Section 515 does not cover 100 percent of actual costs, RHS should 

allow subordination115 of Section 515 project debt commensurate with the 

percentage of RHS funds in the project. 

2. Service coordinator grant legislation should be amended to permit Section 515 

facilities, and other rural developments serving senior residents at 60 percent area 

median income and lower, to apply for HUD service coordinator grants. To 

facilitate partnerships among senior housing providers, HUD and RHS should 

encourage federally assisted facilities, including Section 515, Section 202 and 

other facilities whose residents are at 60 percent area median income and below, 

to jointly apply for service coordinator grants. 
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3. The RHS Section 538 mortgage insurance program has been designed as if it were 

a competitive subsidy program. Although Section 538 was intended to fill in 

financing gaps in rural areas and attract private sector financing, the program has 

failed to meet its objective. A key obstacle making it difficult to attract significant 

developer and lender interest is that insurance commitments are considered in 

eight funding cycles followed by a 60-day period for review and approval. This 

design feature is burdensome to the lender, adds costs to the development, and 

may impede affordable housing developers from securing favorable interest rates, 

thereby jeopardizing the project or increasing housing costs to borrowers. The 

program should be redesigned to operate similar to the way the FHA mortgage 

insurance programs work, that is, with a window open for applications at all 

times. 

4. A large percentage of the housing stock in rural areas consists of owner-occupied, 

single-family homes. In rural areas, many homes are in poor condition. This is 

particularly the case in the rural South, where 15 percent of seniors occupied rural 

housing has moderate to severe physical problems.116 Rural home repair and 

modification programs, such as the RHS Section 504 repair grants for seniors are 

essential to ensure that senior homeowners age in place in decent, safe, and 

affordable housing. This program should be supported. 

RECOMMENDATION 2.9: INCREASE THE AVAILABILITY OF 

APPROPRIATE HOME- AND COMMUNITY-BASED SERVICES IN RURAL 

AREAS. CONGRESS SHOULD ENACT A NEW FLEXIBLE RURAL WAIVER 

DEMONSTRATION PROGRAM THAT AUTHORIZES TARGETED FUNDS TO 

STATES AND THEIR RURAL COMMUNITIES. 

In order to adequately serve seniors who live in rural areas, Medicaid Home- and 

Community-Based Services (HCBS) services should be addressed by a waiver program, 

initiated on a demonstration basis. We recognize that seniors living in rural areas face 

housing and supportive service problems that are not encountered by their counterparts 

living in urban and suburban communities. Existing models of service delivery that may 

be effective in urban settings are seldom practical in rural areas, generally due to the 

inability to achieve the economies of scale necessary to offer services at a reasonable 

cost. In some cases, such economies can be achieved through the building of supportive 

housing and/or assisted living facilities that are associated with and located on the same 

campus as a nursing facility, hospital, or other health care facility. This ability to mass 

costs can contribute to greater efficiency of human and technological resources as well. 

In testimony to the Commission, Anne McKinley, consultant to the Institute for Applied 

Gerontology, noted the most common barriers and challenges affecting the provision of 

appropriate housing and supportive services in rural areas as: isolation, economic 

deprivation, and few, if any, economies of scale. 

Operating HCBS programs and providing supportive services in senior housing facilities 

in rural areas is inherently inefficient, and needs to be recognized in terms of setting 

public policy and providing financial support. Often there exists an earnest willingness 

and mission to develop HCBS services and supportive senior housing, but the financial 
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shortfalls prevent it. Optimizing the resources of other health care providers and 

recognizing the regional variations in service costs will greatly increase the ability to 

provide services to seniors living in rural areas. 

Flexibility and creativity are the keys to addressing the needs of rural seniors. In order to 

effectively accommodate these unique needs, Federal and State governments need to 

consider more flexible service standards and targeted demonstration programs and to 

encourage innovation, e.g., assistive technology and telemedicine. 

Seniors living in rural areas face housing and supportive service problems not 

encountered by their counterparts living in urban and suburban communities. Existing 

models of service delivery that may be effective in urban settings often are not practical 

in rural areas. 

RECOMMENDATION 2.10: THE COMMISSION STRONGLY SUPPORTS 

EXISTING EFFORTS BY FANNIE MAE AND FREDDIE MAC TO DEVELOP 

SINGLE-FAMILY PROGRAMS THAT MEET THE NEEDS OF SENIORS WHO 

DESIRE TO AGE IN THEIR OWN HOMES. 

For many senior Americans, their home is their greatest source of net worth. For senior 

homeowners with equity in their homes, reverse mortgages and flexible equity lines of 

credit can serve as a source of income. The Commission encourages the GSEs to 

continue to develop products that allow seniors to access their equity under flexible 

terms, thereby enabling seniors to borrow small amounts for home repair and 

modifications. The Commission also acknowledges the role that GSEs have in protecting 

the home equity of seniors by preventing predatory lending practices. 
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RECOMMENDATION NO. 3 

LINK SHELTER AND SERVICES 

 

In the area of long-term care services, it is critical that public programs look beyond 

institutionally based models of service delivery. Seniors want choices as to the type and 

location of services they receive. Public programs should provide services that are based 

on the needs and preferences of the individual whenever possible; services that can be 

delivered in the locations seniors prefer — be they private homes, apartments, or assisted 

living units. 

The goal of allowing seniors to remain active and independent for as long as possible will 

also be facilitated by expanding transportation options, improving services in rural area, 

and building upon successful innovations that integrate a range of services needed by 

seniors whose independence is threatened. 

RECOMMENDATION 3.1: CONGRESS SHOULD TAKE ALL NECESSARY 

STEPS TO IMPROVE AND FUND SERVICE COORDINATION IN 

FEDERALLYASSISTED SENIOR HOUSING. 

The Commission urges Congress to: 

• Assure funding for service coordination in all federally subsidized housing 

with senior populations;117 

• Continue and expand the existing HUD service coordinator grant program, 

especially for HUD and RHS housing developments without project-based 

subsidies; and provide resources to allow eligible developments to incorporate 

a service coordinator position into their operating budgets. This provision 

includes transferring grant-funded programs to operating budgets.

118

The first stage in providing a continuum of housing and service choices for seniors often 

is in-home supportive services. Individuals with ample resources have the greatest 

choice in how and from whom they receive these services. Those with low-incomes are 

more reliant on publicly or privately funded services. Publicly subsidized services are 

often overburdened and available resources often cannot meet demand. 

In addition, navigating a system of segmented service providers and benefits is difficult 

for many seniors. Service coordination is a profession that acts as a bridge between 

housing and an array of available services and providers. 

In the early 1990s, HUD created service coordinator programs to help seniors in 

subsidized housing find appropriate providers and services. Service coordinators are 

members of a housing development’s management team. Their role is to assist residents 

in obtaining affordable supportive services provided by community agencies. The 

service coordinator facilitates the receipt of home and community-based services to 

residents in their own homes, thereby promoting aging in place and preventing premature 
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Seniors Commission Report 

institutionalization. Service coordination also influences the cost of caring for seniors by 

allowing them to remain in non-institutional settings longer. 

Unlike case managers working in the health care field, service coordinators are based at 

housing sites. They may often be involved in creating new services or educational 

programs, advocating for residents, working with resident councils to improve the 

development’s community life, assisting with community outreach, and educating 

housing management staff on aging issues. They may also act as a broker for services 

that cannot be obtained through public resources. 

Currently, service coordinators work in various types of federally subsidized housing. 

Although many residents of developments benefit from this program, funding is not 

permanent and many housing facilities and individuals are still not served. At present, 

many HUD housing developments must compete for funds each year, with concerns of 

not being able to continue the program once it is established, because of a complex grant 

process. 

The service coordination movement has grown exponentially over the past 10 years, due 

to its success with residents and housing managers alike. Service coordinators and 

housing management staff report noticeable improvements in both the community’s 

environment and in the everyday lives of residents and their families. In the coming 

years, service coordination is poised to play an ever more significant role in the servicesenriched housing component of the continuum of care options for seniors. In testimony 

to the Commission, Janice Monks, executive director, American Association of Service 

Coordinators, stated that, “almost every property that has added a service coordination 

component to its operation has benefited from significant improvements.”119

RECOMMENDATION 3.2: REVISE THE ASSISTED LIVING CONVERSION 

PROGRAM (ALCP) TO FACILITATE ITS USE BY HOUSING SPONSORS. 

The HUD Assisted Living Conversion Program (ALCP) program provides grants to nonprofit providers of projects serving seniors and which are receiving Federal assistance 

through the following programs: HUD Section 202, 236, 221(d)(3) BMIR, and projects 

receiving project-based Section 8 rental assistance, including Rural Housing Service 

515/8 projects. Funds may be used to pay for the physical costs of converting some or 

all of the units to assisted living, as well as renovating or reconstructing necessary 

community spaces generally associated with assisted living facilities. 

The first ALCP grants, authorized in the HUD 2000 appropriations bill, were available 

for Section 202 developments only. Fifty million dollars was appropriated in FY 2000, 

and again in FY 2001, but the program was undersubscribed in both years. According to 

testimony received by the Commission from the Elderly Housing Coalition, the program 

is difficult to use and the application requirements are cumbersome. “A regulatory 

requirement that resulting units meet assisted living licensing requirements has increased 

the cost and discouraged use of the program. Indeed, failure to use all of the ALCP’s 

allocation is due to lack of funding for services,” commented the Coalition.120 A witness 

before the Commission in Florida reported that another factor making assisted living 

conversions infeasible was high insurance costs.121 
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The most feasible projects are those in States that have Medicaid waivers available to 

help pay the health care and supportive service costs. However, even States with waivers 

do not fully reimburse the costs of the required/licensed assisted living services. In 

addition, some States address assisted living reimbursement in their State Plans (e.g., 

New York and Ohio), and therefore, do not meet the threshold application criteria for the 

ALCP grant. 

The statute establishing the ALCP cross references Section 232 (a) of the National 

Housing Act (at 12 U.S.C. 1715(w)(a)) for the definition of assisted living facilities and 

establishes standards for personal care and assisted living. The statute also requires that 

assisted living facilities be licensed by a State, or, in the absence of State licensing, by a 

local political subdivision. This requirement has proved to be very difficult and costly to 

implement. 

Congress should authorize the Department of Housing and Urban Development to 

develop standards that protect residents, but are not so prescriptive as to prevent full 

utilization of ALCP funds. These standards should enable ALCP funds to be used, under 

the statute’s “or related use” language, for projects demonstrating intent to facilitate the 

delivery of enhanced levels of services to help keep at-risk seniors out of more costly 

institutional settings, but do not necessarily go all the way to a licensed assisted living 

facility, requiring local/State licensure. 

In order to accommodate all rural seniors, ALCP funds should not be limited to those 

Section 515 projects supported by Section 8 rental assistance, but all Section 515 projects 

should be eligible to qualify for ALCP funds. Program administrators should ensure that 

the RHS is compatible with the ALCP and other service delivery programs. 

RECOMMENDATION 3.3: THE DEPARTMENT OF HEALTH AND HUMAN 

SERVICES AND THE DEPARTMENT OF LABOR SHOULD DEVELOP 

COLLABORATIVE INITIATIVES TO TARGET WORK INVESTMENT ACT 

AND OTHER FEDERAL DOLLARS TO THE LONG-TERM CARE FIELD. 

The development of a responsive, quality long-term care system requires a prepared, 

committed, and stable workforce to deliver services and supports. Consequently, the 

Nation must ensure that Federal and State policies and provider practices include positive 

financial incentives, appropriate training and support, and working conditions conducive 

to recruiting and, more importantly, retaining a quality workforce. 

Currently, providers across all long-term care settings are experiencing significant 

recruitment and retention problems, particularly with respect to nursing staff and direct 

care workers, such as certified nurse aides, home care workers, and personal care 

attendants. Low wages and limited benefits, difficult and unsupportive working 

conditions, high injury rates, heavy workloads, and the stigma attached to long-term care 

jobs make recruitment and retention of workers problematic, even when unemployment 

rates are relatively high. According to testimony by Dr. Edward Salsberg, executive 

director, Center for Health Workforce Studies, School of Public Health, State University 

of New York at Albany, “Most of the factors contributing to health worker shortages 
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have not been addressed, and the Nation’s changing demographics will put great pressure 

on the system.”122 

The specific issues in the long-term care workforce demand solutions that are targeted to 

this area. Issues such as worker dissatisfaction, high turnover, inadequate life skills, and 

clinical training and quality problems, such as medical errors, must be addressed. The 

Federal Government invests more than $8 billion annually to prepare primarily lowincome and unemployed individuals for new and better jobs.123 The Federal Work 

Investment Act establishes a flexible State framework for a national workforce 

preparation and employment system and offers opportunities for experimentation with 

training initiatives in the long-term care field. The Departments of Health and Human 

Services and Labor must work together to ensure that these dollars are made available to 

providers and educational organizations at the State and local levels. 

RECOMMENDATION 3.4: CONGRESS SHOULD DIRECT THE GENERAL 

ACCOUNTING OFFICE (GAO) TO CONDUCT A COMPREHENSIVE 

EVALUATION OF INTERDEPARTMENTAL OPERATIONS BETWEEN HUD 

AND HHS AND GIVE RECOMMENDATIONS ON HOW TO MORE 

EFFECTIVELY COORDINATE THE PROVISION OF HOUSING AND 

SERVICES TO SENIORS. 

At the very heart of this Commission’s work is the recognition that the housing and 

service needs of seniors traditionally have been addressed in different “worlds” that often 

fail to recognize or communicate with each other. The Commission performed telephone 

interviews with and held a workgroup meeting of former HUD and HHS officials. 

Practicable recommendations better to bridge senior housing and service programs and 

policies were sought from these experts. A clear message from this investigative process 

was that, while policymakers have struggled to be responsive to the needs of seniors, the 

very structure of Congressional committees and Federal agencies often makes it difficult 

to address complex needs in a comprehensive and coordinated fashion. For example: 

medical needs of seniors are addressed by Medicare and Medicaid; social service needs 

are addressed by Medicaid, the OAA, and other block grant programs; housing programs 

are administered by HUD and the Department of Agriculture’s RHS; and transportation 

programs are administered by the U.S. Department of Transportation (DOT). 

The GAO should examine the broad range of programs that provide housing and services 

to seniors with disabilities and evaluate attempts that have been made to coordinate 

services and housing. Recommendations could cover improving the funding and use of 

the OAA system to coordinate access to housing and services. Because the Area 

Agencies on Aging (AAAs) are a central focus for seniors in many communities, they 

could, with adequate funding, be well suited to provide housing information and 

education to the public.

RECOMMENDATION 3.5: CONGRESS SHOULD RECOGNIZE AND 

FACILITATE INTERGENERATIONAL LIVING ENVIRONMENTS. 

As part of its Mandate, the Commission heard from witnesses about the increasing 

number of families headed by grandparents, and the merits of intergenerational living. 
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This increase has been significant. In 1997, approximately 3.9 million children lived in 

households maintained by a grandparent, an increase of 76 percent since 1970.124 This 

new family structure and an expressed preference by some seniors for intergenerational 

living environments deserve consideration by Congress. The Commission suggests the 

development of several demonstration programs, including: 

(1) The development of a Demonstration Program for Intergenerational Families within 

the Section 202 program, similar to that embodied in legislative proposals. To 

accomplish this would involve several waivers to the current program regulations, 

including the development of two- or three-bedroom units and the inclusion of amenities 

directed towards serving children. 

(2) The development of a Demonstration Program within the Public Housing Program, 

particularly as part of a HOPE VI development. 

Demonstration programs can provide opportunities for creative intergenerational 

activities. The program should look at the efficacy of combining intergenerational 

learning and care centers and social activities within low-income housing communities. 

Most PHAs provide a variety of social services and programming for their residents, and 

many may already be operating successful intergenerational programs. 

The Commission heard from witnesses who have successfully developed the first housing 

specifically designed for grandparents raising grandchildren. They told of the skepticism 

lenders had and the difficulties this produced in obtaining affordable financing. In 

addition to demonstration programs, Congress should urge HUD and the GSEs to 

encourage lenders to participate in these developments. 

RECOMMENDATION 3.6: CONGRESS SHOULD CONTINUE TO SUPPORT 

STATE AND LOCAL TRANSPORTATION PROGRAMS ENABLING 

COMMUNITIES AND OTHER SPONSORS TO OFFER PRIVATE TAXIS, 

HANDICAPPED ACCESSIBLE VANS, RIDESHARING, AND OTHER 

CREATIVE TRANSPORTATION ASSISTANCE ESPECIALLY IN RURAL 

AREAS. 

One of the most significant challenges associated with growing older is reduced mobility. 

Seniors lose their ability to drive or walk long distances to use public transportation. 

According to the Community Transportation Association of America, millions of seniors 

do not have access to or ownership of transportation they can afford. Identifying 

methods of transportation is particularly difficult for those 5.7 million senior 

householders in rural America where health facilities, grocery stores, pharmacies and 

other necessities are often tens of miles away.125

The ability of seniors to age in place in a healthy manner is greatly diminished if they 

cannot easily access transportation for both health and social aspects of their lives. 

Whether unable to visit the doctor or participate in normal social activities, the end result 

is the same — physical, mental, and emotional deterioration. This condition not only 

decreases quality of life and care, but also increases risk of premature institutionalization.
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RECOMMENDATION 3.7: CONGRESS SHOULD EXPAND THE 

DEPARTMENT OF TRANSPORTATION/DHHS COORDINATING COUNCIL 

ON ACCESS AND MOBILITY TO INCLUDE ALL APPROPRIATE FEDERAL 

AGENCIES THAT CAN FACILITATE THE REMOVAL OF BARRIERS TO A 

COORDINATED, ACCESSIBLE TRANSPORTATION NETWORK FOR 

SENIORS.126

The complex interaction of different agencies and transportation providers requires 

flexible policy solutions. Congress should expand the Department of 

Transportation/DHHS coordinating council on access and mobility to include all 

appropriate Federal agencies that can facilitate the removal of barriers to a coordinated, 

accessible transportation network for seniors. As the senior population grows, it is more 

important than ever that the Nation incorporates their transportation needs into public 

policy at the Federal, State, and local levels. In the reauthorization of the next 

Transportation Efficiency Act, Congress should pay special attention to the needs of 

seniors in both metropolitan and rural areas and continue to provide significant funding 

and impetus to States and localities to meet the needs of the senior population. States, 

localities, and other sponsors should continue their efforts to better coordinate 

transportation resources.127 
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RECOMMENDATION NO. 4 

REFORM THE FINANCIAL DELIVERY SYSTEM FOR 

HOUSING AND SERVICES FOR SENIORS 

Witnesses before the Commission spoke ardently about the need for reform in existing 

Federal programs and the importance of the private/public partnerships in meeting the 

needs. Financing involves risk and it has been the role of the Federal Government to 

create programs to share or reduce risk to attract private sector involvement. At the 

beginning of the 20th Century, mortgages could only be obtained for 11 to 15 years with a 

balloon payment at the end of the term. The housing market was considered to be too 

risky. To create confidence and liquidity in the market, the Federal Government 

established the Federal Housing Administration and the Federal Home Loan Bank 

System. 

Subsequently, Congress chartered the secondary market Government Sponsored 

Enterprises, now known as Fannie Mae and Freddie Mac. These systems have been the 

backbone of a housing system that has led to 68 percent of all American households 

owning their own homes, and 65 percent of all senior households owning their own 

homes.128 These systems continue to be the main engine of housing production for 

moderate and middle income Americans. 

The Commission calls on the Government Sponsored Enterprise (GSEs) such as Fannie 

Mae, Freddie Mac, and the Federal Home Loan Bank to be major players in expanding 

housing and care facilities, particularly for seniors with income between 50 and 80 

percent of area median income, a market segment with far too few options 

HUD, too, can serve this market by redesigning its mortgage insurance products to work 

together seamlessly. In rural areas, the ability to combine hospital, assisted living, and 

senior apartment financing together could result in housing and service options where 

none exist. Ease regulations, encourage creativity, allow more decision making at the 

local level – these were repeated mantras from witnesses before the Commission. 

One promising trend in the delivery of long-term care services is called “consumer 

direction,” in which seniors have the flexibility to choose their own caregivers. 

Providing more support for informal caregivers, who currently are the mainstay of the 

long-term care system, will also keep ensure that seniors receive the services they need 

and want. Congress should improve the ability of Medicare to meet the needs of seniors 

with chronic and long-term health needs including care coordination and adequate 

payment. 

RECOMMENDATION 4.1: THE GOVERNMENT SPONSORED ENTERPRISES 

(GSEs) NEED TO INCREASE THEIR INVOLVEMENT AND BECOME MAJOR 

PLAYERS IN FINANCING HOUSING FOR THE GROWING NUMBER OF 

SENIORS. 
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The GSEs (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks) have 

significant, but underutilized capacity to stimulate private capital investment in all areas 

of senior housing. The GSEs should play a leading role in meeting existing and future 

national demand for financing of service-enriched housing for seniors, and should 

develop and promote products that assist seniors to age in place in decent, safe, and 

affordable housing with services appropriate to their needs, both in urban and rural 

settings. 

Fannie Mae and Freddie Mac should: 

• Support the financing of a wide array of housing types such as independent living 

facilities (with or without services, as appropriate) assisted living facilities, and 

continuum of care facilities; and 

• Establish and actively promote credit products for the development of projects 

that are characterized by mixed funding sources (government and private), mixed 

uses, and mixed incomes, to serve low- and moderate-income seniors.

The GSEs will need to develop loan purchase standards that support innovative 

underwriting to finance service-enriched housing, requiring consideration of less 

traditional sources of project income such as health care payments, tenant payments, 

rental assistance vouchers, or income from affiliated ventures in continuum of care 

facilities. In addition, the Commission encourages Fannie Mae and Freddie Mac to 

provide “forward commitments”129 for service-enriched seniors projects, similar to those 

already provided for affordable multifamily projects. Such commitments of permanent 

financing reduce risk to construction lenders, making construction capital more available. 

The GSEs should actively partner with the private sector to transfer the benefits of their 

favorable rating agency status in order to expand private sector participation in senior 

housing. 

As a result of their government sponsorship, the GSEs have favorable ratings from the 

leading Nationally Recognized Statistical Rating Organizations (NRSROs) that lower 

their costs of raising capital in the capital markets. By partnering with lenders and 

developers of housing and services for seniors, the GSEs can pass on this benefit to 

secure financing for innovative projects, or to bring down the cost of project financing. 

For example, the Federal Home Loan Banks can enhance loans through their letters of 

credit, which brings AAA rating to the financing and lowers financing costs. The 

secondary market GSEs can purchase a security representing the non-mortgage portion of 

a service-enriched project, thereby enabling the financing of an ancillary service facility 

to go forward. 

RECOMMENDATION 4.2: THE FEDERAL HOUSING ADMINISTRATION 

(FHA) SHOULD MEET THE CHALLENGES OF THE 21ST CENTURY BY REALIGNING EXISTING MORTGAGE INSURANCE PROGRAMS IN ORDER TO 

PLAY A SIGNIFICANT ROLE IN SENIOR HOUSING AND HEALTH 

FACILITY LENDING. 

Although better known for its housing programs, such as the Section 221(d)(4) 

multifamily mortgage insurance program, FHA has played an important role in insuring 
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mortgages for nursing and assisted living facilities and hospitals. Under Section 232, 

FHA has insured approximately 2,000 mortgages on such facilities, and under the Section 

242 program FHA has insured more than 300 hospital loans for rural and urban 

communities. As a testament to their overall performance, and as an indication of their 

net positive contribution to the Federal Treasury through insurance premiums and fees, 

these programs have been scored in a positive manner (i.e., credit subsidy negative) by 

the Office of Management and Budget. 

Despite a climate with few affordable private sector alternatives, the nursing and assisted 

living facilities program under Section 232 and the hospital program under Section 242 

are little recognized, but stand as very important potential resources for bridging the 

financing gaps between housing and health-related services for seniors. In fact, these 

FHA programs have pivotal roles to play in ensuring that the private sector, working 

together with government, is able to respond to the capital formation needs of housing, 

health service, and continuum of care facilities required to serve the aging population 

most effectively and economically. 

The Section 232 and 242 programs have remained basically unchanged since their 

inception. Yet in the past 30 years, much has changed in society and health care delivery. 

Today there is greater emphasis on health maintenance, prevention, and chronic care 

management through home- and community-based services to allow seniors to age in 

place. These diverse services, when taken together, become what is commonly referred 

to as the “continuum of care.” It is an overarching goal to develop this continuum to be 

as seamless as possible for seniors to access and navigate. 

The FHA Section 232 and 242 programs of the 20th Century must now be modernized in 

order to address the realities of senior housing and health service delivery in the 21st

Century. 

Specifically, the Commission recommends the following actions that would modernize 

these programs and allow them to work together seamlessly: 

1. The FHA 221(d)(4) multifamily program and the FHA Section 232 and 242 

nursing and assisted living facilities and hospital programs need to be modernized 

to accommodate service enriched housing and continuum of care facilities. A 

“modern” FHA seniors program would simultaneously insure the housing portion 

of the complex as well as the ancillary capital improvements that house the health 

care and services portion of the facility. For example: The FHA could insure a 

campus with any combination of the following components: a multifamily 

independent living building, an assisted living facility, a health facility, and an 

adult day care program or a hospital or hospital-based integrated service facility. 

The seamless integration of these programs would allow them also to function in 

rural communities where the economies of scale are more difficult to achieve. 

2. The Commission recommends the following modifications to the Section 232 

program: (a) change existing definitions to support continuum of care health 

facilities and integrated service facilities; (b) change the existing Certificate of 

Need requirements for nursing facilities to permit HUD to establish alternate 
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means for determining need and feasibility for facilities in States having no 

Certificate of Need laws or implementing agencies so that such facilities are no 

longer automatically excluded from participation; and (c) allow FHA to develop 

alternative underwriting standards in States without assisted living licensing 

requirements. 

3. The Commission encourages the following changes in the Section 242 Program: 

(a) change the definition of “hospital” to eliminate outdated patient day tests and 

other exclusions; (b) add insurance authority for mortgages covering hospitalowned integrated service facilities so that community clinics and outpatient 

facilities can be funded, in keeping with continuum of care methodology; and (c) 

change the existing Certificate of Need requirements for hospitals to permit HUD 

to establish alternate means for determining need and feasibility for facilities in 

States having no Certificate of Need laws or implementing agencies so that such 

hospitals are no longer automatically excluded from participation. The 

Commission also recommends that HUD promulgate and implement regulations 

allowing the refinancing of hospitals as authorized under Section 223(f). 

4. FHA programs should be redesigned to ensure compatibility between FHA 

programs and other housing finance and subsidy programs. For example, the FHA 

221(d) (4) multifamily program should be able to work well with the Low-income 

Housing Tax Credit program. The HUD subsidy layering standards should not be 

rigidly applied to the FHA insurance programs, nor should they be overly 

rigorous in projects in which HUD has a shallow subsidy. Subsidy layering 

standards should not jeopardize other, more substantial, sources of project 

financing. 

RECOMMENDATION 4.3: CONGRESS AND HUD SHOULD CONTINUE TO 

SUPPORT AND IMPROVE THE REVERSE MORTGAGE PROGRAM AND 

HOME EQUITY PROGRAMS 

Information provided to the Commission indicates that currently 68 percent of 

Americans are homeowners and this trend of homeownership is increasing. Reverse 

mortgage and home equity programs may be an important way to assist seniors in paying 

for health care costs. Specifically, the Commission finds: 

In the single family FHA program area, the Home Equity Conversion Mortgage 

(HECM) reverse mortgage program can be an important resource for senior 

homeowners, 82 percent of whom own their homes without encumbrance.130 FHA 

should be encouraged to continue its current trajectory of innovation in allowing 

seniors to access the equity in their homes. 

In addition, the Commission encourages the development of secure mortgage and 

loan products that assist seniors to access their equity for home repairs and 

modifications. 
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RECOMMENDATION 4.4: THE FHA AND THE GSEs SHOULD 

STRENGTHEN EFFORTS TO PROTECT SENIORS FROM ABUSIVE 

LENDING PRACTICES. POLICIES TO ASSURE SECURITY OF SENIOR 

HOMEOWNER MORTGAGES SHOULD BE VIGOROUSLY ENFORCED. 

Many senior homeowners have significant equity built up in their homes. For many, this 

is their only source of substantial equity. While equity in their home can be a tool to help 

seniors meet their needs in later years, it is also a target for opportunists to take advantage 

of seniors and make windfall profits through abusive lending practices. While efforts 

have been made to correct such problems, particularly within the Home Equity 

Conversion Mortgage (HECM) program, more needs to be done to ensure that assets such 

as home equity remain a useful tool and that such assets, so vital in later years, remains 

safe and secure. 

Additional vigilance will be required to guard against abusive lending practices on the 

part of participating lenders or their affiliates, and, if such practices are found, to take 

immediate action, such as strengthening and enforcing laws, to preclude their further 

participation in senior programs.131

Specifically, the Commission supports the following: 

(1) Improve consumer literature and disclosures to seniors; 

(2) Prohibit harmful sales practices in the mortgage market; and 

(3) Restrict abusive lending terms and conditions on seniors. 

RECOMMENDATION 4.5: HUD SHOULD ESTABLISH HIGHER FAIR 

MARKET RENT (FMR) STANDARDS FOR UNITS IN ASSISTED LIVING 

FACILITIES AND OTHER SERVICE-ENRICHED HOUSING 132 THAN THE 

FMR CURRENTLY ESTABLISHED FOR COMPARABLE INDEPENDENT 

APARTMENTS. 

Under a policy issued in 2000, HUD allows Housing Choice Voucher (Section 8) holders 

to use their rental subsidy in market-rate assisted living facilities. The objective of this 

policy is to supplement the Medicaid Home- and Community-Based Waiver program to 

make assisted living facilities accessible to seniors with low-incomes. HUD subsidizes 

the housing cost portion of monthly fees. Medicaid, resident contributions, and other 

third-party funds pay the cost of meals and supportive services. 

This new provision takes a significant step toward making assisted living facilities 

affordable to seniors with low-incomes. Because of current program requirements, 

however, the Fair Market Rent (FMR) standards now issued by HUD, which are used to 

establish the maximum subsidy in Section 8 programs, do not accurately reflect the costs 

of assisted living facilities or of other service-enriched environments. In order to meet 

the aging in place needs of residents, senior communities require additional common 

areas (e.g., activity areas, dining areas, commercial kitchens, wellness centers) and 

specialized barrier-free design incorporating safety features. Providing these extra 

facilities significantly increases the construction and operating costs for this type of 

housing. As a result, it is difficult or impossible for low-income senior households to use 
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Housing Choice Vouchers to obtain housing in service-enriched senior housing or 

assisted living communities.”133 A realistic FMR is needed, reflecting these higher costs. 

RECOMMENDATION 4.6: CONGRESS SHOULD INCREASE THE MEDICAID 

MATCHING RATE FOR HCBS WAIVER SERVICES, SO THAT STATES HAVE 

AN INCENTIVE TO EXPAND SERVICES TO INDIVIDUALS WHO LIVE IN 

THEIR OWN HOMES OR IN ALTERNATIVE RESIDENTIAL SETTINGS, 

SUCH AS CONGREGATE HOUSING OR ASSISTED LIVING. 

Most seniors who need long-term care services prefer to remain in their own homes for as 

long as possible. Many seniors who need home care must turn to public programs for 

help, if they cannot afford to pay for all the services they need. The major public 

program that pays for long-term care services is Medicaid, but 73 percent of all Medicaid 

spending for long-term care pays for care in nursing facilities.134 Medicaid law requires 

States to provide nursing facility services, but the provision of home- and communitybased services (HCBS) is optional. Although all States currently use Medicaid funding to 

provide some level of home care services to seniors with disabilities, these programs need 

to be expanded. Testimony before the Commission presented by William L. Minnix, 

president of the American Association of Homes and Services for the Aging, aptly stated, 

“Most seniors obtain services in the settings under which costs can be covered by 

government programs, rather than according to what would best meet their needs.” 

Increasing the Medicaid matching rate for HCBS would help States move toward having 

HCBS, not nursing facilities, become the standard service offered under Medicaid. There 

is a clear need to expand Medicaid home care services in the community. An enhanced 

Federal matching rate will help States to manage this expansion. 

RECOMMENDATION 4.7: ALL SENIORS WHO RECEIVE HOME- AND 

COMMUNITY-BASED SERVICES (HCBS) UNDER MEDICAID SHOULD BE 

OFFERED THE OPTION OF ARRANGING THEIR OWN SERVICES AND 

CHOOSING THEIR OWN PROVIDERS, WHERE APPROPRIATE. 

A movement is growing in the delivery of home care services called consumer direction. 

This model allows seniors with disabilities to arrange and manage their own care, rather 

than using a care manager who authorizes service delivery through a home care agency. 

Many of these programs include a “counseling” component to help consumers manage 

their services, including related payroll and other administrative tasks. Preliminary 

evaluations from a Federal demonstration called “cash and counseling,” currently 

operating in Arkansas, Florida, and New Jersey, have been positive. Many other States 

have developed similar programs that allow beneficiaries to choose their own workers. 

Seniors who prefer to arrange for their own care and select their own service providers 

should be given the opportunity to do so. Consumers who prefer to use the existing care 

management model could retain that option. This action would make Medicaid more 

sensitive to consumer preferences and expand the pool of available workers, rather than 

being limited to workers provided through agencies, often at greater cost. 
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RECOMMENDATION 4.8: CONGRESS SHOULD REQUIRE THE STATES TO 

AUTHORIZE A MEDICAID SHELTER OR HOUSING EXPENSE 

ALLOWANCE IN DETERMINING MEDICAID ELIGIBILITY FOR ALL HCBS 

WAIVER PROGRAMS, PROVIDING NECESSARY FEDERAL FINANCIAL 

ASSISTANCE TO STATES THROUGH ENHANCEMENT IN THE MEDICAID 

MATCHING FORMULA. 

Home- and community-based services under Medicaid are an empty promise if people 

who meet the eligibility criteria cannot afford to stay in their own homes. Many State 

Medicaid programs have a “medically needy” eligibility provision that allows people to 

deduct their medical expenses in order to qualify for services. These provisions often are 

not practical for HCBS waiver beneficiaries in the community, because many States do 

not allow them to retain enough income to maintain their own homes. States are, 

however, allowed to establish deductions for costs, such as shelter, that can make it more 

feasible for community-based residents to take advantage of HCBS waiver services for 

which they are functionally eligible.135 Currently, nine State waiver programs allow a 

shelter deduction of some amount.136 

A related issue pertains to the manner in which Medicaid funds long-term care services. 

Medicaid payments for nursing facility care cover the resident’s room and board costs, as 

well as the services he or she receives. Medicaid is prohibited from paying for room and 

board costs in non-institutional settings. As a result, the inability to meet room and board 

costs of affordable residential alternatives, such as assisted living, put these options out of 

reach for many low-income seniors. A restructuring of Medicaid’s guidelines for paying 

room and board costs could level the playing field between nursing facilities and other 

residential options. For example, payments could be restructured so that separate pools 

of financing for services and for housing costs would follow the senior with disabilities, 

regardless of the setting in which care is delivered. This approach could, however, shift 

costs from the Federal Social Security Income (SSI) program to State Medicaid 

programs, because Federal SSI payments can finance room and board for Medicaideligible assisted living residents137. 

Including a shelter deduction in determining Medicaid financial eligibility for HCBS 

waivers would make home-based services more accessible to seniors with low-incomes. 

This provision would help both homeowners and renters preserve their ability to remain 

at home while receiving the services they need to lead healthy, safe lives. According to 

testimony by AARP President and Board Chairman Keith Campbell, “...we need...a 

national commitment to treat a senior’s residence, whether owned or rented, as a 

legitimate venue for the delivery of supported services.”138

RECOMMENDATION 4.9: CONGRESS SHOULD MODERNIZE MEDICARE 

TO ADDRESS THE GROWING NEEDS OF SENIORS WITH CHRONIC 

CONDITIONS BY: 

• Establishing adequate payments to primary care physicians who play a 

role in coordinating care; 
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• Compensating managed care plans for the higher costs involved in 

caring for frail and at-risk seniors with complex conditions; 

• Maintaining adequate funding for the Medicare home health benefit; 

• Monitoring the implementation of the prospective payment system for 

Medicare home health to ensure that individual case payments are 

sufficient to maintain adequate care; and 

• Repealing the 3-day prior hospitalization requirement for Medicare 

skilled nursing facility eligibility.

As people age, they often need an array of medical and long-term care services, 

addressing both acute and chronic health conditions, as well as help with everyday tasks. 

According to the Century Foundation’s 2001 report on improving Medicare, the scope of 

health care benefits covered under Medicare has not kept pace with changes in the health 

care field and benefits offered in the private insurance market, and should be expanded to 

include elements that can prevent or detect disease and manage chronic conditions. For 

example, Centers for Medicare and Medicaid Services (CMS) recently issued a program 

memorandum clarifying that providers may not automatically deny services to Medicare 

beneficiaries based solely on a diagnosis of dementia. This important clarification 

provides that services must be reasonable and necessary considering the beneficiary’s 

overall medical conditions, not just the dementia condition. 

Although the Medicare home health benefit provides a source of care to many seniors 

with post-acute and/or chronic health conditions, its scope and eligibility criteria can 

hinder the efficient and effective delivery of care. Reductions to the Medicare home 

health benefit, enacted as part of the Balanced Budget Act of 1997, have cut the level of 

services to beneficiaries beyond initial projections. As a result, these reductions have had 

a deleterious effect on the health of seniors with chronic and long-term health needs. 

Testimony before the Commission by Jeff Kincheloe, representing the National 

Association for Home Care, stated that, “Home health has decreased as a percent of 

Medicare outlays from 9 percent in FY 97 to 4 percent in FY 2001...[and] 900,000 fewer 

home health patients received services in 1999 than in 1997.” Deeper reductions that are 

planned, but have not been implemented, could worsen the situation. It is important that 

people with complex medical conditions have access to integrated and coordinated care 

delivery. Medicare payment systems need to take into account the higher costs of caring 

for people with complex and/or chronic health conditions. 

While Medicare covers skilled nursing facility (SNF) care of limited duration, it does not 

pay for long-term care. Currently, Medicare’s SNF eligibility is contingent upon a prior 

3-day hospitalization. This requirement limits access to SNF coverage for people who 

fail to meet the hospital requirement, which can result in unnecessary hospitalizations. 

Improvements in Medicare home health can prevent the deterioration of beneficiaries’ 

health status and ensure that people with chronic conditions receive the help they need. 

In addition, better coordination among Medicare home health and programs that deliver 
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long-term care will lead to a more seamless system of health and supportive service 

delivery. 

RECOMMENDATION 4.10: THE DEPARTMENT OF HEALTH AND HUMAN 

SERVICES (HHS) SHOULD EXPLORE WAYS IN WHICH STATE MEDICAID 

PROGRAMS CAN INCREASE REIMBURSEMENT RATES PAID TO 

PROVIDERS AND ENSURE THAT THESE INCREASES ARE REFLECTED IN 

THE WAGES OF LONG-TERM CARE WORKERS. 

Low wages and lack of benefits for direct care workers are major issues in recruitment 

and retention. Poorly trained workers and frequent turnover can affect the quality of 

service delivery. Low reimbursement rates under Medicaid can exacerbate these 

problems, resulting in deterioration in health status among Medicaid long-term care 

beneficiaries. Providers have few incentives to invest aggressively in quality 

improvement activities when reimbursement barely covers the costs of operation. 

Because Medicaid is the major public payer for services, it has a profound influence on 

the quality of service delivery. 

The vast majority of long-term care workers are women, many of whom lack health 

insurance coverage for themselves and their children. A disproportionate number of 

long-term care workers are minorities. A recent study139 found that health care workers, 

including those employed by nursing facilities and other long-term care providers, have 

lost insurance coverage over the past decade. Given the fact that access to health 

insurance has been identified as a reason for staying in a job, a critical step toward 

improving worker retention would include taking steps to provide worker benefits. In 

addition, because many of these workers are low-income, they may qualify for Medicaid 

and supplemental State programs. 

Access to health insurance coverage for workers and/or their dependents may increase 

job satisfaction, and encourage frontline caregivers to remain on the job. Increased 

retention, in turn, will help improve the staffing in long-term care settings and ultimately 

lead to better quality of care. The HHS should also take steps to maximize the use of the 

current State Children’s Health Insurance Program (SCHIP), in order to assure coverage 

for long-term care workers and their dependents. 
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RECOMMENDATION NO. 5 

CREATE AND EXPLORE NEW HOUSING AND SERVICE 

PROGRAMS, MODELS, AND DEMONSTRATIONS

Yesterday’s demonstration and pilot programs have often become today’s most 

successful ways to deliver service-enriched housing to seniors. Creative efforts on the 

part of many housing providers across the country have assembled today’s programs to 

provide seniors with housing accompanied by services they need and offer models for 

tomorrow’s new programs. 

RECOMMENDATION 5.1: CREATE AND MAINTAIN A CLEARINGHOUSE 

OF INFORMATION TO GATHER AND DISSEMINATE INFORMATION 

ABOUT STATE MEDICAID PROGRAMS THAT DELIVER HCBS. 

The Federal-State design of the Medicaid program results in wide variations in service 

design and delivery. There is no consistent mechanism by which States can access 

information about innovations and successes in State programs. It is critical that States 

have better information about effective ways to meet the needs of people with disabilities. 

One promising development is a recent initiative at Centers for Medicare and Medicaid 

Services (CMS) that has funded “systems change” grants to the States. These grants are 

designed to help States improve their delivery of Medicaid HCBS. New efforts should 

build upon the findings of the States’ experience. 

One area of particular concern is the issue of service delivery to seniors in rural areas. 

For example, some areas have implemented innovations in telemedicine that have been 

used to improve rural service delivery. There needs to be a better way to disseminate 

such information to all States, and to foster establishment of additional program models. 

This clearinghouse should be funded by CMS and should include the following 

information: 

• State functional eligibility criteria; 

• State financial eligibility criteria; 

• State methodologies used to count income and assets; 

• Innovations/best practices in HCBS service delivery; 

• Characteristics of State Medicaid programs, such as the availability of 

services in assisted living and other residential alternatives; 

• Numbers of individuals served by setting and disability category, and 

numbers of individuals waiting to receive services. 

Establishment of a clearinghouse will make it easier for successful innovations, including 

those funded by CMS through the systems change grants, to be replicated in other States. 

Access to clearinghouse information could be made available not only to Medicaid 

offices, but also to Older Americans Act offices, local housing authorities, and other 

providers of services to seniors with disabilities. 
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Better coordination will result in the senior consumers experiencing less frustration in 

locating and accessing the full range of services for which he or she is eligible. It also 

will prevent unnecessary and ineffective duplication of effort. 

RECOMMENDATION 5.2: REQUIRE HUD TO DEVELOP AND MAINTAIN A 

NATIONAL DATABASE OF SENIOR HOUSING. 

In the course of its research efforts, the Commission found that no comprehensive 

database of government-assisted senior housing has been compiled. The Commission 

recommends that the Congress direct HUD to develop such a database and make it 

available on its website, to include senior housing developed and/or financed through the 

following programs: 

HUD Section 202 

HUD Section 236 

HUD Section 221(d)(3) BMIR 

HUD Section 221(d)(3) 

HUD Section 221(d)(4) 

HUD Section 231 

HUD Public Housing 

HUD Section 8 New Construction, Substantial, and Moderate Rehabilitation 

Low-Income Housing Tax Credits 

Freddie Mac 

Fannie Mae 

Federal Home Loan Bank 

Mortgage Revenue Bonds 

501(c)(3) Bonds 

RHS Section 515 

RHS Section 538 

At a minimum, the information needs to include project name, address, phone number, 

number of units, date of construction, occupancy rate, and type of financing. 

RECOMMENDATION 5.3: CONGRESS SHOULD ENCOURAGE AND, AS 

NEEDED, AUTHORIZE THE SECONDARY MARKET GSES TO DEVELOP 

MODEL SENIOR HOUSING DEMONSTRATION PROGRAMS THAT LEAD 

TO PERMANENT AND MEANINGFUL CHANGE IN THE DELIVERY OF 

SERVICE-ENRICHED HOUSING. 

The Commission recognizes that loan products supporting service enriched housing for 

seniors present different underwriting challenges from the GSEs’ mainstream products on 

the market today. Financing of service-enriched housing requires the involvement of 

different sets of private and public sector partners than is customary. In order for these 

new partnerships to establish a strong footing, Congress should encourage the GSEs to 

develop innovative demonstration programs that forge public/private partnerships among 

various agencies of government lenders, developers, housing providers, and service 

providers. 
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For purposes of these demonstration programs, any barriers presented by existing GSE 

statutory authorities should be waived. In addition, where necessary, the FHA Section 

232 and 242 programs should be employed to provide lenders and the secondary market 

with reasonable risk mitigation. It is the intent of the Commission that these 

demonstration programs result in the formulation of permanent programs that work for all 

of the GSEs’ stakeholders: senior residents, developers, financial institutions, and 

investors. 

RECOMMENDATION 5.4: FANNIE MAE AND FREDDIE MAC SHOULD 

DEVELOP EFFECTIVE RURAL PROGRAMS. FURTHER, HUD’S 

ENFORCEMENT OF THE GSES’ RURAL LENDING GOALS SHOULD TAKE 

INTO CONSIDERATION THEIR EFFECTIVENESS IN PROVIDING 

FINANCING TO SMALL, DIFFICULT-TO-SERVE RURAL COMMUNITIES. 

GSE loan standard and program guidelines should not carry an implicit bias against rural 

areas. A complete offering of financial products and services should be equally available 

in rural areas and urban areas. A good rural program should acknowledge and 

accommodate differences between rural and urban properties and borrowers. 

Lenders in rural areas face difficult and unique challenges when working with the 

secondary market GSEs. The GSEs should develop comprehensive guidelines, programs, 

and operating procedures designed specifically to meet the needs and conditions of rural 

lenders. Secondary market purchase standards and services should recognize that lowasset financial institutions do not have the resources or the volume of loans to sell to 

Fannie Mae and Freddie Mac or to meet standards that are designed for larger 

metropolitan markets. The secondary market GSEs should also relieve small financial 

institutions from excessive loan guarantee costs and onerous default liability 

requirements that are beyond the ability of small lenders to carry. 

Further, the GSEs, particularly Fannie Mae, play an important role as investors in the 

Low-Income Housing Tax Credit. GSE standards for purchase of tax credits may 

exclude some small communities entirely, however, or make it very difficult for 

developers to build tax credit projects up to GSE standards. (For example, Fannie Mae 

requires that tax credit project rents be 10 percent below market. This standard is 

difficult to achieve, given the absence of comparable properties and the difficulty of 

determining market rents in rural areas.) The Commission strongly recommends that the 

GSEs establish investment standards appropriate to rural areas. 

RECOMMENDATION 5.5: THE FEDERAL HOME LOAN BANKS AND THE 

FEDERAL HOUSING FINANCE BOARD SHOULD IDENTIFY, AND THE 

BANK SYSTEM SHOULD PROMOTE, WAYS IN WHICH FEDERAL HOME 

LOAN BANK SYSTEM PRODUCTS AND AUTHORITIES CAN BE USED TO 

SERVE THE HOUSING AND HEALTH FACILITY NEEDS OF SENIORS. 

The Federal Home Loan Bank System has several financial instruments to support 

lending and investments for the new types of housing and service facilities that will be 

needed to accommodate the growing number of 21st Century seniors. Among these 

financing instruments and programs are the Affordable Housing Program, Community 
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Investment Program, Community Investment Cash Advance Program, Bank letters of 

credit, and the individually tailored community support programs and products under 

each Bank’s community lending plan. 

In addition to the well-established community development programs, the Federal Home 

Loan Banks have newly enacted legislative authority to purchase loans and make targeted 

investments. Because this legal authority has been recently enacted, however, its full 

potential is yet to be explored. The Finance Board, as the Banks’ mission regulator, in 

keeping with its primary role as an arm’s-length safety and soundness regulator, could 

disseminate information on Bank System authorities and products and identify ways by 

which the Bank System might assist in the production of senior housing. Actions that the 

Finance Board could take are: 

• Holding hearings or sponsoring forums to identify ways in which the Banks 

can meet the growing demand for financing of community projects for 

seniors, and formulating ways in which Bank System authorities and products 

might be employed to finance senior housing and community facilities; and 

 

• Serving as a clearinghouse to describe Bank initiatives, products, 

underwriting challenges and solutions, best practices, and model programs 

that will support housing and services for seniors. 

RECOMMENDATION 5.6: THE FEDERAL HOME LOAN BANK SYSTEM’S 

PROGRAMS SHOULD BE FULLY UTILIZED IN RURAL AREAS. 

The Federal Home Loan Bank System has many member financial institutions that are 

located in rural areas. As a result, the Banks generally tend to be responsive to their rural 

markets and several Banks have undertaken specialized lending products to assist rural 

lenders. However, the reach into rural areas in those Bank districts where urban areas 

predominate needs to be expanded. 

An example of an innovative program brought to the Commission’s attention that assists 

small lenders is the Federal Home Loan Bank of Atlanta’s Affordable Multifamily 

Purchase Program, in which the Bank purchases loans from affordable housing lender 

consortia. The Commission encourages other Banks to develop similar innovative 

multifamily finance products to address the need for housing for low- to moderateincome seniors. Additionally, under new authority available to it, the Bank System is 

encouraged to invest in tax credit projects in rural areas and to develop specialized rural 

programs that will support both independent and service-enriched rental housing for 

seniors. 

RECOMMENDATION 5.7: CONGRESS SHOULD ADDRESS THE NEED FOR A 

PRESCRIPTION DRUG BENEFIT FOR SENIORS. 

An examination of housing costs alone does not tell the full story of affordable senior 

housing. Other factors, in particular the high cost of prescription drugs, weigh heavily on 

many senior’s budgets. Medicare’s lack of a prescription drug benefit leaves substantial 

gaps in coverage for seniors. The overwhelming cost of prescription drugs can squeeze 
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the budgets of seniors, leaving them with inadequate income to pay for other necessities. 

This very real and urgent problem often requires seniors to choose between the 

medications and health care they need, the quality of housing they also need, and the 

other necessities of life, such as food. One consequence can be premature 

institutionalization. 

The enactment of appropriate pharmaceutical interventions can prevent deterioration of 

health conditions and help individuals to maintain their quality of life. Relief from the 

weight of the prescription drug financial burden will go a long way toward ensuring that 

seniors can afford necessary medical care and services as well as the housing and 

supportive services they need. 

RECOMMENDATION 5.8: HHS SHOULD ACCELERATE THE TRANSITION 

TO PERMANENT PROGRAMS OF THOSE HCBS DEMONSTRATIONS THAT 

HAVE BEEN SHOWN TO BE EFFECTIVE, AND ENCOURAGE THE 

BROADER IMPLEMENTATION OF THE PROGRAMS OF ALL-INCLUSIVE 

CARE FOR THE ELDERLY (PACE) MODEL BY IDENTIFYING AND 

ELIMINATING BARRIERS TO ITS EXPANSION. 

People who are eligible for both Medicare and Medicaid generally have more intensive 

health needs than other Medicare beneficiaries. It is a challenge to coordinate adequately 

the delivery of services to this vulnerable population, and those who attempt to do so 

must navigate complex and conflicting program rules. According to a report by the 

National Chronic Care Consortium, more than $100 billion — 28 percent of Medicare 

expenditures and more than 35 percent of Medicaid expenditures — address the needs of 

the dually eligible.140 A renewed focus is needed on how to integrate funding for acute, 

primary, and long-term care, particularly for people with chronic illnesses. 

The Program of All-Inclusive Care for the Elderly (PACE) is one innovative Federal 

program that combines Medicare and Medicaid (or private pay) funding to deliver a 

comprehensive array of medical and long-term care services. Started as a demonstration 

program in 1990, PACE now has expanded and has permanent authorization by 

Congress. Each State may choose, however, whether to participate in the program. The 

PACE financing model uses a flat-rate, capitated payment to pay for a full range of 

services designed to facilitate the ability of seniors to remain in their communities. A key 

element of the PACE model is adult day care, which is often located in senior housing 

properties or in senior centers. The average PACE participant is 80 years old, needs 

assistance with three activities of daily living, and has about eight medical conditions.141 

Despite the proven ability of PACE to maintain these severely disabled seniors in the 

community, participation in PACE is limited. 

Research is needed to examine barriers to the expansion of PACE and to improve on the 

PACE model. For example, the Elderly Housing Coalition has suggested increasing 

collaboration between federally assisted housing providers and PACE programs. In 

recommendations to the Commission, the Elderly Housing Coalition addressed the 

challenges that PACE sponsors face in financing adult day centers. They recommended 

the development of a HUD financing program for property retrofitting or creating PACE 

program day centers within federally assisted housing facilities. Other barriers to the 
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expansion of PACE are rooted in States’ concerns about the growth of their Medicaid 

budgets. 

Expansion of cost-effective programs that coordinate and integrate services can improve 

the health and functional status of seniors with disabilities. Participants are able to go to 

one source for all their health and supportive service needs, and care providers can 

integrate services, thus preventing gaps in coverage. Continuing research is necessary to 

help inform the debate on issues such as the effectiveness of PACE and other capitated 

programs in preventing premature and unnecessary institutionalization, in meeting the 

expectations of participants, and enhancing the effectiveness of links among services and 

senior housing. The roles and responsibilities of the States as they pertain to PACE 

should be evaluated along with the feasibility of implementing new forms of capitated 

payment models that integrate acute and long-term care financing and services for the 

dually eligible. 

RECOMMENDATION 5.9: CONGRESS SHOULD CONSIDER ENACTING A 

REFUNDABLE TAX CREDIT AVAILABLE TO INDIVIDUALS WITH 

DISABILITIES OR BY FAMILIES THAT CARE FOR A SENIOR WITH 

DISABILITIES. 

Almost all seniors with disabilities (95 percent) receive at least some assistance from 

informal (unpaid) caregivers such as relatives, friends, and neighbors. Two-thirds (67 

percent) rely exclusively on unpaid help.142 Although this informal care fills a critical gap 

in the Nation’s service delivery system, it often takes a heavy toll on caregivers — most 

of whom are wives and daughters. These caregivers need both support and opportunities 

for respite from their responsibilities. 

The availability of informal caregivers is a key factor in preventing premature 

institutionalization. Half of seniors with long-term care needs who lack a family network 

live in nursing facilities, compared with only 7 percent of those who have family 

caregivers.143 Providing financial support to informal caregivers can minimize, delay, or 

prevent the use of public long-term care programs, especially nursing facilities. A tax 

credit would provide additional income to offset the costs of providing such services. 

RECOMMENDATION 5.10: SUPPORT PRIVATE SECTOR DEVELOPMENT 

OF HOUSING WITH SERVICES. 

With a small amount of government support and without government expenditure, the 

private sector can meet the housing and service needs of the majority of this and the next 

generation of America’s seniors. Making this modest investment will free federal, state 

and local monies to fund other programs for seniors. These monies will be available 

because the private sector can reduce both Medicare and Medicaid expenditures. 

The private sector has demonstrated that it can meet the needs of seniors who: 

 1. Own their home. According to the 2000 Census: 81.3% of the 65 –74 

year olds; 77.3% of the 75 – 84 year olds; and 66.1% of the 85 and over cohort own their 

home; and 
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 2. Have a low to moderate income. The Federal Interagency forum on 

Aging-Related Statistics reported in Older Americans 2000: Key Indicators of WellBeing that in 1998, 62% of seniors had low to moderate income (an additional 27% had 

high incomes). 

A private sector model, which has demonstrated efficacy in meeting the needs of low to 

moderate-income seniors, is the continuing care retirement community (CCRC). These 

communities provide independent living, home health care, assisted living and nursing 

care, along with a comprehensive array of health-related and social services. In addition, 

to address seniors’ evolving and long-range medical needs, many CCRCs offer an onsite 

physician group and hospice program. 

By providing these services on campus, acute care utilization can be dramatically 

reduced, creating significant savings for Medicare. In Older Americans 2000: Key 

Indicators of Well-Being, it was reported that in 1996, 29% of the health care 

expenditures incurred by Americans 65+ were consumed by acute care. Even marginal 

reductions in utilization can provide significant resources to fund other programs. 

In addition, residents of CCRCs are less likely to require long-term stays in nursing 

homes because: 

 1. The environment reduces the risk of falling. 

 2. Meal programs ensure good nutrition. 

 3. Preventive and primary care are convenient and readily available. 

 4. Social interaction is extensive. 

 5. Assisted living is available. 

By reducing the number and length of stays in nursing homes, CCRCs prevent seniors 

from requiring the support of the Medicaid program, a substantial fiscal drain on 

Government resources. 

CCRCs enable seniors to maintain active, connected lifestyles while having access to 

health care services and facilities, as they need them. Flexibility also exists in the type of 

contract that can be secured – ranging from full life care (which ensures complete care 

and service coverage for life) to modified life care (which covers a limited scope of care 

and service) to fee-for-service models (which offer a la carte service adaptability). More 

than 350,000 American seniors have already availed themselves of this option and the 

number is increasing rapidly. 

In order to make these campuses affordable for low- to moderate-income seniors, 

economies of scale must be realized. While the average size of a CCRC is about 300 

units, developers in large metropolitan areas and their surrounding suburbs have designed 

very successful, affordable CCRCs with 1,000 to 2,000 independent living units and 200 

to 400 health care beds. At this size, a metropolitan CCRC can realize the necessary 

economies of scale to provide the full range of services at a cost that is accessible to lowand moderate-income seniors who previously owned a home. 
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It is challenging to identify, acquire, and obtain zoning approvals for sites large enough 

and suitably located to be appropriate for affordable senior housing communities. To 

achieve the necessary economies of scale for metropolitan area CCRCs, a site of 

approximately 50 to 100 acres is required. It is rare to find large, undeveloped sites in the 

communities in which seniors have lived most of their lives; therefore, redevelopment 

opportunities are particularly attractive. 

Another impediment of development is State-imposed limitations on the ability to 

construct and license health care facilities under certificate of need regulations. Many 

States exempt CCRCs from certificate of need; others do not. In every case, the rules are 

different and nearly always result in barriers to development. 

In order to promote the development of the CCRC model of service-enriched housing, the 

Commission recommends that the Federal Government: 

1. Provide access to government-controlled/owned property in major 

metropolitan areas by acknowledging service-enriched seniors housing 

developments as a preferred use in redevelopment plans. 

 2. Provide financing for the purchase price of the land by subordinating 

payment to a senior construction lender or make the property available under a 

senior housing development conveyance, similar to economic development 

conveyances; and 

 

3. Enact Federal legislation that permits CCRCs to license a full 

continuum of health care services that is adequate to serve their residents. This 

continuum should include nursing care, assisted living, home health care, and 

hospice services. This range of services should be available to anyone who has 

signed a continuing care contract and has paid the required entrance fee.

Taking these inexpensive steps will enable the private sector to meet the housing and 

services needs of low- and moderate-income seniors. By meeting the needs of this 

population, both Medicare and Medicaid expenditures will be reduced freeing monies to 

fund other programs needed to care for America’s seniors. 

RECOMMENDATION 5.11: CONGRESS SHOULD CONSIDER THE 

CREATION OF A TAX INCENTIVE FOR INDIVIDUALS PURCHASING 

LONG-TERM CARE INSURANCE. 

A promising source of private, long-term care service funding is long-term care 

insurance. At the current time, insurance accounts for a small fraction of long-term care 

spending; however, there has been a noteworthy growth pattern in insurance purchases. 

Of particular interest are those plans sold through employer-sponsored or life insurance 

markets. The Commission believes that long-term care insurance can be a valuable means 

to fill gaps in long-term care service coverage. More flexible and affordable products are 
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needed. In addition, consumers must have an ease of comparison among available 

insurance products. 

An "above the line" tax deduction can provide an incentive for individuals to obtain 

personal long-term care insurance and will, thereby, reduce future seniors’ reliance on 

public assistance programs such as Medicaid.
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PART VI. CONCLUSION: A MANDATE FOR 

CHANGE 

In the fall of 1999, Congress created this bipartisan Commission to provide insight into 

the future housing, health, and supportive services needs of seniors in America. Congress 

asked the Commission to undertake a broad examination of the future needs of seniors 

and the actions necessary to meet those needs. Congress mandated a review of Federal 

policy and programs, as well as policies that affect the private sector and individuals. 

The senior population in this country is growing at rates even beyond those anticipated. 

In 2020, one in six Americans will be age 65 and above; in 2030, it will be one in five. 

This is a dramatic increase from the start of the 20th Century, when the senior population 

constituted less than 5 percent of the U.S. population.144 

Such a profound change in the composition of the population creates a new challenge for 

our national policymakers and resources. As a Commission, we struggled time and again 

with the fact that we are a Federal commission and our recommendations need to be 

targeted to a Federal audience. But this "aging of America" requires actions and 

solutions far beyond what the Federal Government can provide. Although policy may be 

made at the Federal level, the implementation of solutions will be primarily at the local 

level. Effective solutions rest with private businesses and local governments, with 

volunteers and advocates, with charitable and faith-based organizations, and with socialminded investors. 

We see this as a community crisis, a State problem, and a national concern — without a 

simple answer, without a single solution. We call for the Federal Government to lead, to 

act as the catalyst for change, to make it easier for local governments and the private 

sector to serve, and to provide the necessary support. Our Commission may be Federal in 

scope, but this quiet crisis affecting seniors cuts across all levels of government, all 

communities, all races, creeds, and cultures, and all economic strata. 

The Federal role in meeting the needs of seniors is extensive. Federal health and housing 

programs, as well as other Federal policies, directly affect millions of seniors. Current 

policies already have significant shortcomings that affect the welfare of a large segment 

of this Nation’s senior population, however, and an even greater segment will be 

adversely affected in the future unless changes are made. 

Existing Federal policy is fragmented — not just as it relates to programs directed at lowincome seniors, but for the broader population of seniors as well. Inconsistency leads to 

a lack of clarity and coordination that can add needless expense, and undermines the 

effectiveness of well-intended efforts. For example, seniors in federally assisted housing 

often do not receive the health and supportive services they need and for which they are 

eligible. Low-income seniors living in the community often have unmet housing needs 

as well as inadequate or non-existent community-based services. Seniors in rural areas 

frequently have extremely limited housing, services, or health care options in their 

communities. Some low-income seniors find themselves eligible for housing assistance 

but ineligible for health-related assistance, because qualification standards differ among 
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programs that were all designed to help the same people in need. Finally, seniors who do 

not qualify for need-based assistance often find themselves without services because gaps 

in programmatic coverage sometimes lead to overwhelming health-related costs. Policies 

must be synchronized and modernized to meet the evolving needs and demands of a new 

generation of seniors, and to address the crisis. 

A Call To Action 

Federal policy must be more responsive to the needs and desires of the next generation of 

seniors. The Nation must embrace consumer choice and tailor programs to fit individual 

needs. Americans must think residential, not institutional. 

The existing senior housing stock needs to be preserved. The supply of service-enriched, 

affordable housing must be increased substantially to meet the growing demand. 

Shortages already exist, and data indicate that they will only worsen. Housing policy 

should also foster aging in place for homeowners and renters, by helping to ensure that 

housing quality is maintained and is adaptable to the needs of seniors. 

The majority of today's seniors are homeowners. Programs such as Medicare and 

Medicaid should build on that, and look toward expanding access to community-based 

services to better serve all seniors, so that they can age in place to the fullest extent 

practicable. 

Federal agencies must collaborate more closely to address the needs of future seniors in 

America, and address them in the least restrictive environment. Legislative and 

administrative action must streamline the interrelationships among agencies as they affect 

policies targeted to seniors. Often, even when programs theoretically match well with 

the needs of elders, the lack of connection at the agency level leads to ineffective 

implementation and inadequate utilization. 

Housing is usually built without regard to service provision. Health services are usually 

provided without regard to housing environment. Medicare and Medicaid do not work in 

concert to ensure efficient, quality health care. Too much policy is developed in a 

vacuum rather than in an open forum; too much policy is developed to serve narrow 

rather than broad interests. 

Comprehensive needs deserve comprehensive attention. Cross-cutting needs require 

cross-cutting thinking and solutions. It is, therefore, vital that the comprehensive needs 

of seniors be addressed in a coordinated fashion by all government agencies whose 

mandate includes aiding older persons. 

We call on the States to meet the needs of seniors. In the case of housing, homestead 

exemptions, wise use of HOME funds, and Community Development Block Grants 

(CDBG) can ensure that seniors living in the community can remain in the community. 

Helping to make dollars dedicated to seniors go farther, or giving seniors a hand in 

maintaining or adapting their homes, is being responsive to both consumer need and 

choice. The creation of goals for senior housing within Low-Income Housing Tax 

Credits, HOME, and other State-based programs should be developed so that these 
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financing tools can be used to develop affordable housing to meet this urgent demand. 

Effective use of transportation funds can help seniors remain independent in their 

communities by providing the necessary transportation infrastructure. 

States need to avail themselves fully of Medicaid waivers to provide home and 

community-based services that prevent premature institutionalization and allow more 

seniors to remain in the place they call "home," whether that be a single-family residence, 

a subsidized rental apartment, or with a family member. Congress should provide the 

financial incentives to make this happen. While skilled nursing care will always be 

needed, nursing facilities should no longer be the default choice for placement of seniors 

with health and service needs. Steps need to be taken to ensure that a quality workforce 

exists to provide those services in communities and facilities. 

Local government can take action by establishing senior-friendly communities that are 

safe and provide adequate transportation, services, housing, and supports. It can provide 

property tax exemptions or abatements, and use tax increment financing mechanisms as 

incentives to the development of affordable senior housing. Localities should endeavor 

to coordinate the resources already available to seniors and, working with local agencies, 

non-profits, and providers, establish clearinghouses of information that are both 

accessible and understandable to seniors. They should examine their senior population 

and consider their needs when developing community planning documents and tools. 

Larger communities, which receive allocations of HOME and CDBG funding, should 

target portions of these resources to promote senior housing and health services. 

Government is a major partner in ensuring that the future needs of seniors are met 

through its policies and actions, but it is only one partner. The private sector and 

individuals have leading roles as well. The Government Sponsored Enterprises, such as 

Fannie Mae and Freddie Mac, and the financial sector must endeavor to provide the 

capital needed to ensure that affordable senior housing and health facilities are 

constructed. Doors must be open to the provision of services and the creativity of various 

delivery models. Financial products must be available to address the needs of seniors, 

including affordable long-term care insurance, secure reverse mortgages, and other 

financial tools and incentives to help retirees take responsibility for their own future. 

There is also a need for reasonably priced, quality housing constructed by the private 

sector that includes the option of affordable services' packages. 

Community and faith-based organizations should increase their focus on senior 

constituents and endeavor to fill gaps for those in need. Organizations should work to 

educate themselves so that they can provide improved, comprehensive, and more 

accessible services and information to seniors and their families. Existing senior housing 

providers need to open their doors to the community, not just their residents. 

Finally, individuals must take action. This is not a crisis where the solution rests solely 

with government and business. Solutions must also start at the grassroots level — with 

volunteers in the community and local advocates. Non-profit, voluntary, and faith-based 

organizations have long been the mainstay of services to seniors, particularly those with 

limited incomes. They need continuing support. 
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The Baby Boomers begin to retire in less than a decade; there is limited time to plan for 

the future. Smart planning will help to ensure the maximum number of choices for 

tomorrow’s seniors. Whether it involves investing in long-term care insurance or simply 

setting aside savings for uncertainty, individuals can and should plan for their own 

futures so that when the time comes, the Nation can marshal and maximize the resources 

needed to ensure that America's seniors can enjoy the best quality of life. 

Congress created this Commission believing that the Nation faces a surge in the seniors 

population far beyond expectations. This Commission has reviewed the need, consulted 

with experts, and honored the seven Mandates given to us by Congress. We advise the 

Congress that, indeed, a crisis is on the horizon. We have identified the problem, we 

have shared our vision, and we have stated our recommendations. This is our Mandate 

for Change. To be effective, we must work together as a Nation, at all levels of 

government, as private and public partners, embracing the challenges set forth. 
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Seniors Commission Report 

Part VII. – BEST PRACTICES 

Philosophies of Care

The Eden Alternative

Independent Choices

Affordability 

Coming Home Program for Affordable Assisted Living

ElderChoice

Public Housing and Assisted Living: Two Success Stories

Sarah's Circle: Intergenerational Supportive Housing

Coordinating Health and Housing Services 

Friends Life Care at Home

CareConnections

Nursing Home Without Walls Program

Community Wide Approach to Care 

Naturally Occurring Retirement Communities

East Boston - A Health and Housing Partnership

SAFE HOME

Additional Supportive Services 

Umbrella Senior Services, Ltd.

Jewish Home and Hospital Transportation Department

Customized Health care: Meeting the Individual at the Point of Need

Home Repair: Insuring the Safety and Independence of Seniors
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The Eden Alternative

742 Turnpike Road 

Sherburne, New York 13460

The Eden Alternative is a radically different approach to long-term care. Although Eden 

Alternative programs focus on changing the culture of nursing facilities, the Eden 

ideology extends to all methods of long-term care service delivery. Founder Bill Thomas 

based the development of the Eden Alternative on his observation that individuals do not 

want to go to nursing facilities, primarily because many nursing facilities are undesirable 

places to both live and work. Nursing facilities are often institutional environments in 

which patients are treated. The Eden Alternative seeks to create a living environment in 

which care is exchanged, with residents and staff both giving and receiving. 

After completing his training at the Harvard Medical School, and residency at the 

University of Rochester, Dr. Bill Thomas served as a physician in a nursing facility. That 

experience changed his life. Dr. Thomas came to believe that even the best nursing 

facilities were flawed; the patients were deteriorating despite the careful attention of 

doctors and staff. Dr. Thomas concluded that the fundamental problem with nursing 

facilities was that they were devoid of life. To improve the quality of life of the residents 

and as a result, the health of residents, Dr. Thomas felt the nursing facility should be 

infused with life. He and his wife Judy developed The Eden Alternative to address what 

they identified as the three plagues of the long-term care institution — loneliness, 

helplessness, and boredom; radically re-imagining the delivery of long-term care. 

The Eden Alternative seeks to cure loneliness, not with medication, but by providing 

residents with companionship and surrounding them with life. A core philosophy of The 

Eden Alternative is that life creates life; the opportunity to care for other living things in a 

spontaneous environment, rather than the prescription of pills, can restore and maintain a 

individual's life no matter their age or physical impairment. Nursing facilities that adopt 

The Eden Alternative commit to changing the culture of their nursing facility, moving 

away from an institutional model to a team based model. The staff gets to know the 

residents, and provides the services and assistance that suit the individual's specific 

needs. 

By emphasizing a culture change, The Eden Alternative addresses the major problems 

affecting nursing facility care today: staff turnover, low staff retention and quality of 

care. Thomas has found that when the staff is treated well, the elderly are treated well, 

increasing the quality of life for employees and residents alike. The intimate atmosphere 

creates a homelike environment, invigorating both the staff and the residents. Eden 

disbands the hierarchical management structure of the typical nursing facility. The 

certified nursing assistants, a major part of the nursing facility staff, have control over 

their schedules and help to decide how tasks and responsibilities should be divided. 

In the over 300 nursing facilities that have adopted The Eden Alternative model, the most 

visible change is the presence of plants, animals and children. One of the ten principles 

of The Eden Alternative, "Loving companionship is the antidote to loneliness" 

encourages nursing facility staff, residents and administrators to fill the facility with 
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plants, animals and children - all of which involve the planning and organization of 

residents and focus residents on giving care, not just receiving it. 

Thomas sums up the philosophy of The Eden Alternative by stating:" In long-term care, 

love matters. And the heart of the problem is, institutions can't love. When we rethink our 

mass institutionalization of elders, when we do these things, we're not just making a 

better life for the elderly, we're making life better for everybody in every part of society.” 

________________________________________________________________________ 

Write-up is based on: 

www.edenalt.com 

Willging, Paul, "The Eden Alternative to Nursing Home Care More than Just Birds" Aging Today. 

Salter, Chuck, "(Not) The Same Old Story" Fast Company February 2002. 

PBS Newshour Interview with Susan Dentzer February 27, 2002 

____________________________________________________________________________________________________________ 

Independent Choices

Cash and Counseling Demonstration in Arkansas 

IndependentChoices is a demonstration project funded by the Robert Wood Johnson 

Foundation and the US Department of Health and Human Services. The project is 

designed to measure the role of choice and flexibility in the quality of personal care 

services and to maximize the independence of Medicaid beneficiaries with chronic 

illness. The primary goal is to increase consumers' control over their personal care and 

assistance, enhance their satisfaction with that care, and meet their needs more fully 

without increasing costs. 

Eligible Arkansas Medicaid beneficiaries, who are willing and selected, exchange their 

agency personal care services for a cash allowance. Participants use the cash allowance 

to purchase their own personal assistance services. Empowering consumers to make their 

own choices about their own care is expected to improve consumer's independence and 

quality of life. Consumers can hire family members, friends, or acquaintances to provide 

care or use their cash allowance to buy equipment and devices that increase their 

independence. 

The state provides participants with a monthly cash allowance based on the number of 

hours of personal care that they require each week, as determined by a medical 

professional. The average monthly allowance is $350. Counselors help participants 

develop a spending plan. These counselors check in with participants on a monthly basis, 

and are always available to them by phone. Participants become employers when they 

hire a personal care aide. Bookkeepers are available to help participants with the 

paperwork required to pay an employee’s wages and withhold taxes. Participants who 

cannot or do not want to make the decisions regarding how to spend their allowance can 

rely on a representative decision maker, a relative or a friend, to help. 

Most enrollees are highly pleased with the care arrangements they’ve made; many have 

contracted with friends and family. The highly personal nature of the care provided, and 
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the vulnerability of the recipients, underscores the importance of giving consumers the 

option of hiring familiar caregivers who treat them with dignity and respect. By hiring 

someone who knows and cares for them, the quality and consistency of care improves. 

The program has allowed some individuals to purchase equipment needed to help them 

remain independent (e.g., a microwave for an elderly woman, a washing machine for a 

blind man). 

One Personal Story: 

Lillie B. is 88 and never leaves her home, except to go to the doctor or the hospital. The 

woman who, at one time or another in her life, worked as a cotton picker, a woodchopper, 

a peach grader, and a nanny, now has a difficult time getting around on her own. She 

can’t cook her own meals, can’t bathe herself, or get herself into or out of bed. She 

spends her days in an easy chair in her living room and her nights in bed, assuming she 

has help moving from one to the other at the beginning and end of each day. 

But Lillie knows how to take care of herself, even if she can’t manage it physically. This 

is why she was one of the first people to enroll in IndependentChoices. She likes to tell 

people: “I’ve been in four nursing homes, and I’ve escaped every one of them.” 

Lillie uses her $662 monthly allowance from IndependentChoices to pay Barbara W., a 

former aide who’s become “like a daughter,” to visit her daily and help her with getting 

out of bed, bathing, dressing, preparing meals, and some housekeeping. “Barbara will 

come any time I call,” says Lillie. Barbara averages about six hours a week working for 

Lillie, but she can only help out in the day time during the week, so Lillie is currently 

training another personal care aide to assist her around Barbara’s schedule. Lillie also 

pays a family friend to do her grocery shopping once a week and plans to hire her 67-

year-old son, David, to help her out a few times a week. And she uses part of her 

allowance to buy personal care items like facial tissue, bath tissue, and over-the-counter 

medications. “I like being able to have a say in who comes here and cares for me,” says 

Lillie. “It’s important to get someone who’s on the ball and can do the job.” 

Write up is based on: 

http://www.independentchoices.com/ICHome.htm 

Stone, Robyn "Providing Long-Term Care Benefits In Cash: Moving to a Disability Model" Health Affairs Volume 20(6). 

Brown, Randall and Foster, Leslie, "Cash and Counseling: Early Experiences in Arkansas" Issues in Brief Mathematica Policy 

Research December 2000. 

University of Maryland Center on Aging www.inform.um.edu/aging 

Coming Home Program for Affordable Assisted Living

National Cooperative Bank Development Corporation and 

Robert Wood Johnson Foundation 

 

The National Cooperative Bank Development Corporation partnered with the Robert 

Wood Johnson Foundation to address the overwhelming need for affordable long-term 

care services, which could meet the needs of the frail elderly, and in1992, the Coming 

Home Program was established. 
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The Coming Home Program is designed to bring the benefits of assisted living to lowincome, frail seniors living in rural areas. The rural elderly make up 25 percent of the 

population in some areas and often need services that are not available in their 

communities. As a result, many are forced to relocate or are unnecessarily 

institutionalized in nursing facilities. Assisted living can provide frail seniors with an 

alternative to such institutions as well as offer a “missing piece” in the continuum of care. 

The Coming Home program focuses on smaller communities where there are fewer 

options for frail seniors, particularly those with modest incomes. In order for the Coming 

Home program to be successful, it must reach Medicaid-eligible seniors, for they are the 

most "at risk" for premature institutionalization. Individual states determine the financial 

criteria for Medicaid eligibility. 

The Coming Home Program has taken on the challenge of creating housing that offers 

varying levels of service to meet the different needs of seniors, while remaining 

affordable to the very low-income elderly. The purpose of each project is to develop 

affordable assisted living facilities that integrate housing with services for frail or 

chronically ill seniors, and to assist them in living as independently as possible. This 

requires understanding both the intricacies of affordable housing development and the 

various funding sources, social and medical criteria that shape the delivery of services to 

the elderly with long-term care needs. 

As a result, the Coming Home Program partners with area non-profits to combine the 

local knowledge of the market needs with the technical expertise of national researchers 

and developers, to overcome the obstacles that arise when trying to combine a range of 

subsidies and loans. The project's units are 100% affordable to seniors living at 60% of 

the area median income, and 50% of the units must be reserved for individuals whose 

income is at 50% or below area median income. 

Success in Oregon: Rock Cove Assisted Living, a 30-unit facility located in The Dalles, 

Oregon, was created in response to an unmet need for decent housing and services for 

elderly of all income levels who were unable to live alone, but who did not need 

continuous skilled nursing care. Half of the units are targeted to low- to moderate-income 

seniors. Working in a collaborative effort with Columbia Cascade Housing Corporation 

(CCHC), they overcame challenges posed by the site and hostile community members, 

and obtained the financing needed to make the facility affordable to low-income elderly. 

A growing number of elderly who have lived and worked in the area all their lives can 

stay and live in dignity at an affordable rate. Parents of residents can live close to their 

children. Best of all, elderly of all income levels can enjoy the breathtaking setting in the 

scenic Columbia River Gorge, as well as receive the personalized services they need to 

remain as independent as possible and to age in place with self-respect. 

Private pay residents comprise an estimated 50% of the occupants of the facility. These 

residents pay rates starting at $1,400 per month for a studio apartment. Rates include all 

utilities except for phone and cable TV, three meals a day and all services provided by 

facility staff. The rates are much lower than the rates for a nursing facility. Medicaid 

eligible residents occupy the remainder of the units. The amount these residents pay is 
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based on their income. It is difficult to segregate the housing costs, but it is estimated 

that the housing costs of the 15 units targeted to low- income households is $285 per 

month, much lower than market rate rents in the area. 

Write up is based on 

www.ncbdc.org 

www.rwjf.org 

Interview with Matthew Haas Illinois Initiative 

Interview with Robert Jenkens Vice President National Cooperative Development Bank Community Development Corporation 

Testimony of Robert Jenkens of National Cooperative Bank Development Corporation, Columbus, Ohio September 24, 2001. 

Glashen, Leah "Assisted Living Creates Haves in Rural Areas: Coming Home Offers More Choice" AARP Bulletin July-August 2001. 

________________________________________________________________________ 

ElderChoice

Massachusetts Housing Finance Agency 

1 Beacon Street 

Boston, MA 02108 

(305) 547-0418 

ElderChoice is a program operated by the Massachusetts Housing Finance Agency 

(MHFA) that assists developers who are building and operating housing for seniors who 

need assistance to continue to live independently. The MHFA tackled the difficult 

challenge of building affordable housing with supportive services for low-income 

individuals by combining the lower interest rates provided through their tax exempt and 

taxable bond financing program with the subsidy of Medicaid waivers. 

Developers interested in providing affordable assisted living need not navigate the 

financing and Medicaid services separately. The funding streams are coordinated by the 

MHFA and the developer need only apply to the MHFA, a one-stop shop. In the MHFA 

program, the affordable assisted living model requires that 20% of the units remain 

affordable to low-income residents, while the other 80% are market rate units. 

The MHFA worked with the Massachusetts Medicaid office to qualify these 

developments for Group Adult Foster Care waivers. The waivers provide $34/day to 

fund the supportive services provided to the low-income residents of the assisted living 

facility. The guarantee of this waiver has allowed developers to move forward with their

projects knowing that the funds for service delivery can be worked into the operating pro 

forma. By streamlining the funding process, the MHFA has been able to build 14 

developments to date, producing over 1,200 assisted living units through the Elder 

CHOICE program. 

Impetus for the program came from state health and human services professionals who 

recognized that assisted-living housing could help rein in Massachusetts’ rising Medicaid 

costs and, in the process, provide a more satisfying living environment than nursing 

facilities for many frail elderly. 

The agency had tried to develop new housing with services for the elderly in the mid1980s, but cutbacks in state housing subsidies prevented progress until other funding 
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sources could be found. In 1992 the agency accepted, on a pilot basis, an application from 

a developer proposing to build assisted-living units, a portion of which would be reserved 

for low-income elders. The mix of housing and services made the application particularly 

complex. To speed its review, the agency assembled a working group of specialists in 

such areas as design, housing management, service delivery, and loan underwriting. This

interdisciplinary group developed a comprehensive, streamlined method that has proven 

to facilitate loan approvals. 

Financing for assisted living requires a creative mix of funds from multiple sources. 

Funding for the state’s assisted-living units comes from the sale of bonds to private 

investors, equity from private developers, proceeds from the sale of Federal Low-Income 

Housing Tax Credits, and other Federal sources. 

Operating costs for Elder CHOICE developments come primarily from tenants’ rents, 

Supplemental Security Income, and Group Adult Foster Care, a Medicaid program for 

low-income elderly. The Massachusetts’ Division of Medical Assistance estimates that 

Elder CHOICE will save about $5,000 per year for every low-income elder residing in 

assisted living rather than in a nursing facility. 

________________________________________________________________________ 

Write up is based on: 

www.mhfa.org 

Testimony of Tom Gleason, Executive Director, Massachusetts Housing Finance Authority, Cambridge, Massachusetts, March 1, 

2002. 

Interview with Frank Creeden, Massachusetts Housing Finance Authority 

1995 Innovations in Government Award, Kennedy School of Government

_________________________________________________________________________________________________ 

Public Housing and Assisted Living: 

Two Success Stories 

Helen Sawyer Plaza 

Miami, Florida 

Neville Place 

Cambridge, Massachusetts 

Helen Sawyer Plaza: The first public housing assisted living facility in the Nation, Helen 

Sawyer Plaza is a 104 unit facility operated by the Miami-Dade Housing Agency 

(MDHA). Originally built in 1976 as a center to house the frail elderly and handicapped, 

the changing needs of its residents forced the MDHA to rethink the traditional delivery of 

public housing. After a major conversion and remodeling, it re-opened in 1998 as an 

assisted living facility with 21 one-bedroom and 83 efficiency apartments. The Helen 

Sawyer Plaza provides a range of services to its residents, who are all Medicaid eligible 

and over the age of 60, to keep them in their apartments and out of institutions. Services 

include: attendant care, behavior management, companion services homemaking, 

intermittent nursing, medical administration, occupational therapy, personal care, 

physical therapy, access to specialized equipment and supplies, speech therapy and social 

and recreational activities. 
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The Helen Sawyer Plaza offers affordable housing to some of Miami's lowest income 

seniors, while insuring that they have the supportive services they need to remain 

independent as long as possible. The median income of residents in the Helen Sawyer 

Plaza is $7,451- just 35% of the area median income. Without an affordable assisted 

living option, most residents would be forced to move into nursing facilities. The project 

has received numerous awards and the support of the community, elected officials and 

funding partners. Helen Sawyer Plaza has been so successful that the Miami-Dade 

Housing Agency has plans to convert another one of its facilities, Ward Towers, into an 

assisted living facility. 

Neville Place: Neville Place is a development of Neville Community Partners, a joint 

venture led by the Cambridge Housing Authority (CHA). CHA formed Neville 

Community Partners, a consortium of Cambridge-based housing and health 

organizations, to redevelop the existing Neville Manor Building into affordable assisted 

living. This is the first phase of a planned senior living campus providing a continuum of 

care for local seniors in need of health care services and housing. The second phase of the 

development is the construction of a skilled nursing facility, scheduled to open in 2003.

Neville Place is a mixed income, 71-unit assisted living facility, operated by the 

Cambridge Housing Authority. It was designed to address the growing needs of the 

Housing Authority and the Cambridge community’s elderly populations. The facility has 

expansive grounds, mature woodlands, community gardens and a public walking path 

that follows the perimeter of Fresh Pond. 

Through the creativity of the Cambridge Housing Authority, the development partnership 

was able to find a way to combine Section 8 vouchers with the Massachusetts Medicaid 

Waiver program (i.e., the Group Adult Foster Care Waiver), to provide both housing and 

services to the lowest income seniors. 

Participation in the Group Adult Foster Care program also provides an important safety 

net for low-income residents who spend down their assets paying for assisted living at 

Neville Place. The state program offers assurance that any low-income resident who 

needs help with activities of daily living will not have to move from Neville Place due to 

depletion of savings and/or inability to continue to pay privately. 

Services provided at Neville Place include daily meals, a wellness program, activities, 

scheduled transportation, laundry services, housekeeping, residence security, dementia 

care, personal care, medication monitoring, and computer/internet access. 

Write up is based on: 

Testimony of Dan Weunschel, Executive Director, Cambridge Housing Authority, Cambridge, Massachusetts March 1, 2002. 

Interview with Jenn Faigan Cambridge Housing Authority 

Testimony of Rene Rodriguez Miami-Dade Housing Authority Miami, Florida January 14, 2002 

________________________________________________________________________
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Sarah’s Circle: Intergenerational Supportive Housing 

2551 17th Street, NW, Suite 103 

Washington, DC 20009 

(202) 332-1400 

www.sarahscircle.org 

Sarah’s Circle Inc., an award-winning example of supportive housing for the elderly in 

Washington, D.C., is an exemplary project that provides intergenerational programs for 

residents. In addition to the facility’s 38 residents, Sarah’s Circle serves over 250 seniors 

of the nearby community. Sarah’s Circle offers free lunch services five days a week, 

health maintenance programs, transportation, social services assistance and 

housekeeping. 

It also offers intellectually stimulating programs, including an intergenerational program 

in which children from a nearby elementary school participate in weekly events 

organized by the Sarah’s Circle Senior Center. The executive director of Sarah’s Circle, 

Ruth Sachs, credits the services and residents’ meaningful involvement in the community 

with keeping these elderly out of nursing facilities. 

Typically, Sarah’s Circle residents have incomes at or below 30 percent of the area 

median income and many are below the poverty level. The existing 34-unit project was 

started in 1983 with a $375,000 mortgage from CDBG funds. Rents are kept low by rent 

abatements raised through capital campaigns and donations. Yearly, Sarah’s Circle raises 

$100,000 for abatements. Rents range from $215 for an efficiency to $530 for a two 

bedroom, which is often shared by two persons. Of the yearly $540,000 budget, 

$190,000 is spent on the facility’s programs. 

A pillar in its community, Sarah’s Circle Inc. is an example of an organization that has 

demonstrated ability to self-fund through government and charitable contributions in 

order to meet debt service and maintain operations. Yet, Sarah’s Circle is also an 

example of an organization that will require access to mainstream financing if it is to 

expand its services to benefit other residents. 

The board of directors of Sarah’s Circle Inc. is currently seeking to purchase another 

building. However, this time around, it seeks a public/private partnership to include 

financing from a conventional lender. Sarah’s Circle and similar organizations across the 

country are facing a major challenge: underwriting standards for service-enriched 

projects are still under development. Credit enhancement, lender support by the 

Government Sponsored Enterprises and Federal Housing Administration, supportive 

Federal policies, and identification of best practice models for development and financing 

of service enriched housing will be required in order for the need to be met. 
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Friends Life Care at Home

1777 Sentry Parkway West Dublin Hall Suite 210 

Blue Bell, Pa 19422-2246 

Phone: (215) 628-8964 

Friends Life Care at Home began through the partnership of two non-profit Quaker 

organizations, a Philadelphia area hospital and a retirement community. They came 

together to address the needs of the increasing number of elderly individuals in the 

community who desired to live in their homes as they aged. In 1985, the Robert Wood 

Johnson Foundation and the Pew Foundation funded a research project to explore how 

these two organizations could develop a program to provide long-term care services 

which would keep individuals in their homes as long as possible. After the research and 

demonstration project ended, Friends Life Care at Home began to enroll members. 

Presently 1,500 individuals are members, receiving a range of long-term care services 

that include everything from assistance with grocery shopping to 24 hour, 7 days a week 

home health care. 

Friends Life Care at Home is a "hybrid" of long-term care insurance. An individual must 

be in good health and independent to join. All members are over the age of 50, but there 

is no upper limit on the age of applicants. Individuals pay a one- time entrance fee, 

followed by monthly fees to maintain their membership. The program is designed to 

provide care coordination that allows individuals to remain in their homes as long as 

possible, with adequate access to health care and supportive services to maximize their 

quality of life. There are six plans from which members can choose, all of which provide 

different packages of direct service. Those services include: proactive wellness and care 

coordination, home health care, homemaker services, emergency response system, home 

inspection, nutritional support, and adult day care. Additionally, some plans provide care 

in an assisted living or nursing facility. 

Friends Life Care at Home measures its success on its ability to provide individuals with 

choice, flexible service options and the supports they need to remain in their homes as 

long as possible. The Friends Life Care at Home program has begun to expand outside 

its original service area in Pennsylvania, offering services in Maryland, Virginia, 

Washington, DC and Delaware. 

________________________________________________________________________ 

Write up is based on: 

Interview with Joe Lukach 

www.friendslifecareathome.org 

Testimony of Peter Kaprielyan Friends Life Care at Home, Columbus, Ohio September 24, 2002 

_______________________________________________________________________
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CareConnections

Boston region 

CareConnections is a program operated by West Suburban Elder Services, the Area 

Agency on Aging serving the towns west of Boston, Massachusetts. Funded by the Older 

Americans Act and the Massachusetts Home Care Program, CareConnections makes the 

critical link between housing and services by providing service coordination and 

extended services to any housing agency within the West Suburban network, particularly 

senior public housing. While the services are tailored to the specific needs of each 

housing facility, services are available to those with subsidy as well as those who pay 

privately. They are affordable and flexible to provide individuals with the maximum 

benefit. 

The program's primary goal is to support individuals as they age in place and prevent 

them from entering nursing facilities. Coordinators assess individuals to both determine 

their service needs and their eligibility for state and federally supported programs. 

Individuals are involved in their care, helping to subcontract services and insure quality 

and consistency of care. There is a 24-hour live-in aide in each facility or a combination 

of home health aides and personal care assistance, to provide continual access to care, no 

matter when the need arises. 

The CareConnections program leverages the density in Boston area housing facilities to 

provide flexible and affordable care. Often, individuals only need 15-20 minute intervals 

of assistance (getting out of bed in the morning, assistance with lunch preparations, 

medication monitoring and preparing for bed at night). Normally these services are 

delivered in 1-2 hour blocks, more than an individual might need or could afford. 

CareConnections can coordinate services in a housing facility to deliver assistance in 

shorter service blocks, insuring that individuals receive the assistance they need, at a 

price they can afford. Additional services are provided as needed and include: meals-onwheels, home health aides, personal care services, homemaker services, and medication 

distribution. Services are both regularly scheduled and available on an as needed basis. 

As a result of CareConnections, elderly housing facilities in the Boston area have seen a 

decrease in the number of individuals who must leave their apartments and enter nursing 

facilities. 

Write up is based on: 

Testimony of Roberta Rosenberg of the Jewish Community Housing for the Elderly, Cambridge, Massachusetts March 1, 2002 

Testimony of Sue Temper of West Suburban Elder Services, in Cambridge, Massachusetts March 1, 2002 

Massachusetts Department of Elder Affairs 

West Suburban Elder Services www.wses.org 

____________________________________________________________________________________________________________ 
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Seniors Commission Report 

Nursing Home Without Walls Program

New York and Hawaii 

New York began the Nursing Home Without Walls program (also known as the 

Lombardi program, in recognition of its legislative sponsor) in the late seventies in an 

effort to reduce state expenditures on nursing facility care and provide individuals with 

the option they most desired- the option to stay at home rather than enter an institutional 

setting. 

The program is designed to reduce Medicaid state expenditures by providing individuals 

whose physical or cognitive impairments require nursing level services, services in their 

homes. As long as the necessary health and housing programs can be provided in an 

individual's home at 75% of the cost of a nursing facility in the individual's community, 

the state will fund the required combination of home-based services. 

Individuals must be Medicaid eligible and require nursing facility level of care. Services 

can include a range of health and personal care services, including housekeeping and 

chore services, home health aides, and medical equipment. Because the program is 

designed to allow individuals to remain in their homes rather than enter an institution, the 

program addresses the individual's health and housing concerns. Should an individual's 

home require repair (e.g., furnace replacement, plumbing or roof repair) or the 

individual's changing health require home modifications (e.g., grab bar installation, ramp 

construction, door way widening), the program can fund the necessary work. Individuals 

participate in the organization and supervision of their care plans as much as possible. 

After New York's success, Hawaii developed a program based on the New York model. 

Hawaii employed the Nursing Home Without Walls model to address the challenges of 

the delivering long-term care across non-contiguous land areas. Hawaii has an extremely 

tight supply of nursing facility beds and a limited ability to construct new facilities. The 

Nursing Home Without Walls program allows individuals to combine a range of services, 

employ professionals and friends to provide the support needed to age in place as long as 

possible. 

Write up is based on 

Interview with Dora Bluth- NY Long-term care 

Interview with Fran Galdera Hawaii Nursing Home Without Walls 

Testimony of Cullen Hayashida, Assisted Living Options Hawaii, Miami, Florida January 14, 2002 

____________________________________________________________________________________________________________ 

Naturally Occurring Retirement Communities

Penn-South and the Beginning of the NY State NORC Program 

Penn South is a cooperative housing development of 2,820 units and 6,200 residents in 

the Chelsea area of Manhattan in New York City. It is a moderate-income, non-profit, 
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limited-equity housing cooperative composed of ten high-rise apartment buildings. By 

1985, more than 75 percent of Penn South’s population was over 60, and the co-op board 

began to investigate possible ventures to support the senior residents. As part of these 

investigations, the board came across the research of Michael Hunt and Gail GuntherHunt in which the term “Naturally Occurring Retirement Community,” or NORC, was 

coined. NORCs have generally been understood as buildings, apartment complexes, or 

neighborhoods, not originally planned for older people but where, over time, the majority 

of the residents have become elderly. The researchers recognized in a 1985 study that 

NORCs differ from the stereotypical retirement community, and “yet are the most 

common form of retirement community in the USA.” 

Once the Penn South Co-op had begun to call itself a NORC, the co-op board set up a 

special committee, the Penn South Program for Seniors (PSPS), charged with developing 

programs to forestall nursing facility placement and encourage the elderly to remain in 

their own homes among family, friends and caring neighbors. PSPS selected three 

primary agencies to provide the programs and services to the NORC: Self-help 

Community Services, Inc., Jewish Home & Hospital for the Aged, Inc., and the 

Educational Alliances, Inc./UJA-Federation of New York, a major private philanthropic 

organization that contributed funds to assist the program. Many other social and health 

agencies in the community also agreed to bring their services to the co-op. 

Within a few years of operation, PSPS had achieved a firm level of organizational 

integrity, acceptance within the co-op community, and recognition within the field. A 

new non-profit corporation had been organized called Penn South Social Services, Inc. 

(PSSS) to assume the fiscal responsibility for and policy determination over PSPS. PSSS 

enabled the NORC to formally contract with social and health agencies and to receive 

direct government and foundation grants. PSPS was now mobilized, sheltered within its 

own 501(c)(3) organization, and gaining momentum. Soon, both the acronyms “NORC” 

and “N-SSP” (NORC Supportive Service Program) would be written into state 

legislation. 

In 1994, New York State passed legislation providing support for NORC Supportive 

Service Programs. The N-SSP legislation established a channel to fund housing and 

social services in a coordinated manner. The program sought to prevent costly housing 

problems common to senior residents, and strengthen intergenerational ties in the housing 

complex. It was endorsed by both political parties in the legislature and was approved by 

two governors of opposing political parties. As the result of the program’s early 

successes, New York City also took an interest in NORC programs, and their highly 

organized blocks of voting constituents, and created its own local N-SSP legislation to 

supplement the state program. 

Fourteen N-SSPs now operate in New York State under the N-SSP legislation and 

funding. These programs represent more than the individual demands of a senior 

population: they save public dollars by requiring each housing entity that requests state 

funds to match the grant with its own funds, as well as to attract philanthropic dollars. 

Each N-SSP is designed as a collaborative venture between New York State, a housing 

company, and social service and health agencies. The N-SSPs often receive collateral 

benefits by providing attractive sites for private medical providers, home-care agencies, 
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and other service providers. These private providers take advantage of the efficient 

service delivery produced by concentrated populations of seniors. As a result of 

partnerships with private providers, New York state dollars have leveraged almost four 

times as many dollars in private investment, above and beyond the required philanthropic 

match. According to the New York state legislature, N-SSPs have saved the state an 

estimated $11 million over three years by forestalling 460 hospital stays and 317 nursing 

facility placements.

Village Care, New York: Recent Developments in the NORC Model 

Village Care of New York is designed to confront the problems of an aging community 

through an "Urban Village" model, a model that provides an array of residential and 

community services seeking to provide the most appropriate service in settings that offer 

choice, safety and independence. Village Care first conducted a series of focus groups to 

better understand the needs of the elderly in the immediate community. They found that 

the need for adequate housing generally included a desire for personal care, 

housekeeping, meal preparation in a way that can be affordable to middle income 

households and low-income households, with the application of entitlements. When 

constructing this enriched housing environment, Village Care invented its own balance of 

appropriate rents, service delivery pricing and marketing that responded to the 

community's specific needs, yet could remain financially feasible. 

Write up is based on: 

Testimony of Arthur Webb of Village Care, New York in Syracuse, NY July 30, 2002. 

Testimony of Freda Vladeck of Aging in Place Initiative in Miami, Florida January 14, 2002. 

Interview with David Smith, Penn South Co-op 

Interview with Nat Yalowitz, Penn South Co-op. 

Interview with Cheryl Kliger, Strickers Bay Building NORC 

Bassuk, Karen and Nat Yalowitz. “Innovative Social Policies: The NORC Programs.” Presentation to the Asia-Pacific Regional 

Conference for the International Year of Older Persons, Hong Kong; April, 1999 

________________________________________________________________________

East Boston- A Health and Housing Partnership

10 Grove Street 

East Boston MA, 02128 

In response to the lack of appropriate elderly housing and facilities, the East Boston 

Neighborhood Health Center and the East Boston Community Development Corporation 

combined expertise and resources to construct a series of community adult day centers, 

community health centers and elderly housing in the East Boston community. This 

partnership represents the necessary links between health and housing services to 

promote the choice and flexibility American seniors desire. 

The East Boston Neighborhood Health Center had been operating the East Boston Home 

Care program since 1973. The Health Center provided the health and personal care 

services seniors needed to remain in their homes and in the East Boston community. In 

1982, the program administrators began to hear of the success of On Lok, the San 
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Francisco demonstration using capitated Medicaid and Medicare services to deliver 

comprehensive community based care to the frail elderly. The East Boston community 

became one of the first PACE (Program for the All Inclusive Care of the Elderly) sites, 

bringing the success of San Francisco to Boston. 

It became apparent that, while the East Boston Neighborhood Health Center could now 

more adequately address the health needs of individuals in the community, housing needs 

also had to be addressed or individuals would be forced to leave in order to find 

appropriate housing. At the same time, the East Boston Community Development 

Corporation began to notice that its residents had grown more frail. The building 

management was spending more and more time addressing the service needs of the 

tenants. Just providing a roof over their head was not enough. Elderly residents needed 

some supportive services to remain in their apartments safely. 

The partnership between the East Boston Neighborhood Health Center and the East 

Boston Community Development Corporation formed to increase the available affordable 

senior housing in the community and insure that the proper level of services could be 

provided to support individuals in their housing. Over the last two decades, these two 

East Boston groups have created a series of affordable housing developments with adult 

day care centers and supportive services. 

Now, even as the residents of East Boston are growing older and more frail, those who 

age in the community can stay in the community and receive the care they need. 

Write up is based on 

Testimony of John Cradock of East Boston Neighborhood Health Center, Cambridge, Massachusetts March 1, 2002 

Testimony of Al Caldarelli of East Boston Community Development Corporation Cambridge, Massachusetts March 1, 2002 

www.npaonline.org 

________________________________________________________________________

SAFE HOME

South East Senior Housing Initiative 

10 South Wolfe Street 

Baltimore, MD 21231 

In late 1989, discussions among several organizations that serve Southeast Baltimore City 

centered on the growing aging population in the community. Of constant concern were 

the increasing physical obstacles impeding the ability of older residents living in 

Baltimore row homes to remain independent, the problems these older residents faced 

trying to maintain their homes, the neighborhood deterioration that results when homes 

are not maintained, and the lack of affordable housing options within the community for 

older residents. The community in general and the elderly residents, more specifically, 

were at risk as these problems continued to grow. 

From these shared concerns, the South East Senior Housing Initiative (SESHI) was 

developed. Safe Home is a program of SESHI, which allows aging individuals to remain 
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in their homes and continue to play a vital role in the community. A unique partnership, 

this program combines the resources and expertise of the Baltimore Medical System- a 

neighborhood- based health care system, Johns Hopkins School of Public Health, Banner 

Neighborhoods, Neighborhood Housing Services of Baltimore and the Baltimore City 

Commission on Aging and the South East Senior Housing Initiative to prevent falls and 

keep seniors in their homes. 

The project attempts to address some of the particular challenges of individuals aging in 

Baltimore row houses--townhouses with 2-3 stories and the bathroom located on the 

second floor. The partnership promotes independent living for low to moderate-income 

seniors in their own homes through a program of integrated environmental modification, 

intervention and support. They maintain community health and stabilization by keeping 

independent older adults in their homes as long as possible. 

The Safe at Home program coordinates the services of health providers, local non-profits 

and community organizations to facilitate the supportive services, home modifications, 

and health care that the elderly residents need. Doctors, nurses, senior center staff, social 

workers or family members, refer clients to the program. The City Commission on 

Aging performs a complete assessment on the home evaluation of both the health and 

housing needs of the individual. A plan for home modifications and other services may 

be developed and then shared with client, caregivers and physician. 

The program connects individuals to the necessary health and supportive services and can 

provide home repair and home modification services. The program also has a community 

loan closet to distribute free durable medical goods, a volunteer program to assist 

individuals with chores and shopping, and an emergency loan fund that provides interest 

free loans for more extensive home repairs. Service coordinators maintain on-going 

supportive relationships with clients, and provide periodic contact and revisits to assess 

changing needs and conditions. 

Write up is based on: 

Interview with Peter Merels of South East Senior Housing Initiative 

www.seshi.org 

____________________________________________________________________________________________________________ 

Umbrella Senior Services, Ltd.

108 Erie Boulevard 

Schenectady, New York 12306 

(518) 346-5249 

Founded in 1988 on Long Island, NY, Umbrella Senior Services now serves seniors in 

New York, Florida and Montana. Umbrella is designed to respond to the basic needs of 

aging seniors who wish to remain in their homes, but find that many of the ordinary 

chores and tasks involved in maintaining a home are more than they can handle. 
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The basic membership is $200/year for a single-story house and $250/year for a twostory house, after which services are charged on an hourly basis. Services include 24-

hour emergency response, 7 days a week, annual home maintenance inspection, smoke 

alarm battery replacement, gutter cleaning, handyman services ($8.00/hr), domestic 

chores and shopping ($5.00/hr), parts and materials discounts, fixed rates for licensed 

plumbers and warranties on handyman services. 

The handyman service is the center of Umbrella operations. When a problem arises, the 

handyman goes to the member's home to perform an on-site inspection. In an 

emergency, the handyman is at the home within the hour. The handyman assesses the 

problem and, at the owner's discretion, either repairs the problem directly or makes the 

appropriate referral. The handymen are most often seniors themselves. The goal of the 

Umbrella Services is to prevent deferred maintenance by addressing a minor repair 

problem when it occurs, rather than waiting until a major repair is required. 

Umbrella Senior Services also conducts a home audit, identifying potential problems and 

assessing the need for a range of home modifications including grab bars, higher wattage 

bulbs, and a simple yet critical reorganization of the kitchen, moving all the essential 

items within reach. 

At the most basic level, Umbrella Senior Services, Ltd. provides home repair services to 

seniors, helping them to maintain and preserve the value of their home. On a much 

broader level, Umbrella Senior Services provides seniors with the security of knowing 

that they will receive high quality repair and modification services, by individuals they 

can trust. 

________________________________________________________________________ 

Based on: 

www.non-profits.org 

www.theumbrella.org 

_________________________________________________________________________________________________ 

Jewish Home and Hospital Transportation Department

New York (Bronx, Manhattan and Westchester) 

Frank Lipari 

(718) 579-0241 

The Jewish Home and Hospital in New York solves the challenge of decreasing mobility 

through its transportation department. For over 20 years, the Transportation Department 

has insured that the region's seniors can access the recreational, health and social services 

they need. The department primarily serves the clients of the Jewish Home's Adult Day 

Health Center; however, the recent restructuring of Medicaid reimbursement will allow 

the department to respond to the frequent requests to expand their services. Currently the 

department's 24 para-transit vans run 77,000 trips annually. 
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Quality Makes a Difference. The Transportation Department of the Jewish Home and 

Hospital seeks to provide quality transportation for those it carries. All drivers are 

certified and CPR-trained, and receive extensive training in serving the aging and 

disabled populations. Drivers get to know their clients and work to provide special 

assistance to those with dementia, Alzheimer's disease and those needing physical 

assistance. Pick-up and drop-off routes are specially arranged to minimize waiting and 

trip time. Jewish Home drivers wear uniforms and vehicles are clearly marked to insure 

services are delivered with professionalism, trust and respect. 

As Director Frank Lipari explained, the focus of the work at the Transportation 

Department is not on moving bodies from one place to another, it is about helping 

someone's grandmother or someone else's father to continue to live independently. "We 

know their name, before we know their apartment number. It's not about picking up the 

lady in apartment 3B, it's about taking Ms. Jones to the doctor, seeing her through the 

appointment and returning her home safely. It's about reminding Mr. Smith that he 

shouldn't eat chocolate on the bus because he is a diabetic, while making sure he enjoys 

that afternoon's recreation." The training and dedication of their drivers reflect this 

commitment to the individual, delivering quality service from door to door. 

Write-up based on: 

LINK Newsletter of the Jewish Home and Hospital Winter 2001 

www.jewishhomes.org 

Interview with Frank Lipari 

_________________________________________________________________________________________________ 

Customized Health Care: Meeting the Individual at the Point of Need

House Call 

Washington Hospital Center 

110 Irving Street, NW, Suite 2B-39 

Washington, DC 20010-2975 

(202) 877-0218 

The Washington Hospital Center House Call Program began in 1999 as a response to the 

needs of the frail elderly. Dr. George Taler and Dr. Eric DeJonge along with the support 

of Washington Hospital CEO, Ken Samet, set out to establish a patient centered system 

of care, and to support the needs of the frail elderly aging in place. Rather than place the 

office as the focus of outpatient care, the House Call program puts the individual, where 

they live, as the focus of care. Using portable technology, the House Call program 

provides personalized care, including diagnostic tests and treatment, in an individual's 

home. 

The primary objective of the program is to change a person's lifestyle. "Understanding 

where a patient lives allows me to make better recommendations regarding their 

treatment and care", says Dr. DeJonge. The House Call program allows doctors and 
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Seniors Commission Report 

other medical professionals to monitor home compliance with treatment and identify 

illness before it becomes an expensive emergency. Dr. Taler explains, "Our program has 

a built-in early warning system, allowing us to prevent illness and hospitalization." In 

fact when comparing the year prior to enrollment in the House Call program and the year 

after enrollment, individual Emergency Room visits dropped 45% and hospitalization 

rates dropped 20%. 

At present, 480 individuals are enrolled in the House Call program. Clients are frail 

elderly, ranging in age from 75 to 100. They are the individuals at risk for the greatest 

medical needs and the greatest medical expense. A majority of enrollees, though not all, 

are house bound. At a minimum, individuals receive monthly in-home visits. Should an 

individual require hospitalization, he or she is admitted to the geriatrics wing at the 

Washington Hospital Center. This continuity of service allows the same doctors to 

provide both outpatient and inpatient care, saving time, expense and improving the 

overall quality of care. Doctors do not have an office practice, in addition to their House 

Calls. The sole mission of the program is to provide compassionate and high quality care 

at the home. 

The House Call team not only cares for the individual patient but works closely with the 

individual's family, providing support and reassurance. House Call visits are part 

medical treatment, part counseling, and part education/training. The social worker on 

staff provides community resources for the support of the caregiver and family. The 

House Call program is available to a family 24 hours a day, 7 days a week. The 

personalized approach to health care and the delivery of services in an individual's home 

fosters a strong and personal relationship between the House Call team, the patient and 

the patient's family. This relationship can ease the transition to terminal care at home. 

House Call provides a national model, demonstrating a new way to deliver health care 

services to an aging population. The program is based on four principles: providing 

medical care for elderly persons that meets the needs of the patient and their family, 

reestablishing a humanistic approach to care of the elderly, providing state of the art 

diagnostic tests and treatment in the home, and coordinating all home and hospital 

services to promote communication and continuity of care. The current model of health 

care is one that requires the patient to go to the doctor, and does not meet the needs of the 

frail elderly. Instead, House Call brings the doctor to the patient, customizing care to fit 

an individual's particular need. This radical approach to health care not only recognizes 

the transportation challenges of an aging person, but the House Call model is a flexible 

model of care, understanding an individual's specific health care needs within the context 

of the of how an individual lives, particularly, the place they call home. 

Write-up based on: 

Transcript from ABC Nightly News May 12, 2002 

Interview with Dr. Eric DeJonge 

Interview with Dr. George Taler 

Materials furnished by the House Call Program 

____________________________________________________________________________________________________________ 
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Seniors Commission Report 

Home Repair: Insuring the Safety and Independence of Seniors

RESTORE 

Emergency Home Repair Program for the Elderly 

New York State 

The New York State Legislature appropriates funds annually for the repair of owner 

occupied elderly homes. Each year, not-for-profit programs submit proposals detailing 

how they will administer the funds including the selection of eligible recipients, 

construction managements(?), and program compliance. Those programs that are 

awarded funding serve individuals over the age of 60, with incomes at or below 80% of 

the area median income. 

Repairs concentrate on the remediation of hazardous conditions that may threaten the 

health and safety of the elderly owners. Total repair costs cannot exceed $5,000. To date 

the program has completed more than 3,500 repairs throughout 58 counties in the state of 

New York. 

Community Housing Resource Center 

753B Cherokee Avenue, SE 

Atlanta, Georgia 30315 

(404) 624-1111 

The Community Housing Resource Center (CHRC) serves the home repair needs of 

elderly and disabled individuals inside the City of Atlanta. Designed to address the 

health and safety hazards in a home, the CHRC's Home Repair Program focuses on 

critical repairs often too expensive to complete on a fixed income. Services include roof 

repair, plumbing repair, furnace repair or installation, and electrical system replacement. 

The CHRC also provides minor home modification and constructs wheelchair ramps. 

Since the repair program began in 1999, the CHRC has completed over 750 home repairs. 

To qualify, individuals must be either disabled or over age 62 and have an income below 

50% of the area median income. Priority is given to individuals with an annual income 

below 30% of the area median. Community Development Block Grant funding from the 

City of Atlanta and private philanthropic sources fund the repair program. 

Recently, the CHRC has formed a number of alliances to address the comprehensive 

needs of their clients, the majority of which are frail, elderly women struggling to age in 

place. The CHRC has partnered with the Visiting Nurses Association to coordinate the 

health and housing services of the lowest income seniors. The VNA administers the state 

Medicaid Waiver program (Community Care Services Program), providing home health 

and personal care services to low-income, frail seniors. While caseworkers assess the 

social service and health needs of an individual, the CHRC inspects the home, 

completing any needed repairs, particularly those that could affect an individual's health 

concerns. For example, if an elderly individual is suffering from a respiratory illness and 

receiving in home health care, the CHRC can inspect the heating system and replace the 
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furnace or supply weatherization services to insure that a home repair problem is not 

exacerbating their health problem. If an individual is having difficulty with balance, the 

CHRC can insure that there are no floorboards or doorways that present a potential 

hazard. In a similar relationship, the CHRC has partnered with the local Adopt-aGrandparent program to repair the homes of "adopted" elderly individuals. Residents 

receive the social supports they need to remain in the community while the CHRC 

insures that their home remains a safe and adequate place to live.