Housing for the Elderly: Information on HUD's Section 202 and HOME Investment Partnerships Programs
Published: 1997-11-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed the similarities and differences between the Department of Housing and Urban Development's (HUD) Section 202 Supportive Housing for the Elderly Program and HOME Investment Partnership Program, focusing on: (1) the amount and types of new multifamily rental housing that each program has provided for the elderly; (2) the sources of each program's funding for multifamily rental projects; and (3) the availability of supportive services for elderly residents.
section_title: What GAO Found
paragraphs: GAO noted that: (1) during fiscal year (FY) 1992 through FY 1996, the Section 202 program substantially exceeded the HOME program in providing multifamily rental housing that was set aside for elderly households; (2) over 1,400 Section 202 projects opened during this time, providing homes for nearly 48,000 elderly residents; (3) at the same time, the HOME program provided housing assistance to 21,457 elderly households, including 675 elderly residents in 30 multifamily rental projects comparable to those developed under the Section 202 program; (4) the Section 202 program produced new multifamily rental housing for low-income elderly households through new construction, rehabilitation of existing buildings, and acquisition of existing properties that the Federal Deposit Insurance Corporation obtained through foreclosure; (5) the HOME program provided housing assistance to address the most pressing housing needs that local communities and states identified among low-income people of all ages; (6) for the elderly, HOME assistance helped rehabilitate the homes they already owned and in which they still lived, provided tenant-based rental assistance, helped new homebuyers make down payments and pay closing costs, and made funds available to acquire, construct, or rehabilitate single-family and multifamily rental housing; (8) in the Section 202 program, the capital advance, which HUD provides to a project's sponsor, is the only significant source of funds for developing the project; (9) in general, a HOME project typically attracts significant levels of additional public and private funding; (10) HOME multifamily housing that is similar to Section 202 projects is usually financed with a combination of HOME funds and other federal and nonfederal funds; (11) HUD does not pay for supportive services, such as transportation or subsidized meals programs, through the HOME program but does do so under limited circumstances through the Section 202 program; (12) the extent to which the Section 202 and HOME projects provided these services on-site for their residents usually depended on each project's ability to generate the operating income needed to pay for the services; (13) these projects often depended on and referred their residents to community-based supportive services; (14) five of the eight Section 202 projects that GAO visited employed a staff person or expected their on-site resident manager to coordinate services; and (15) both projects in many cases had common areas or activity rooms that service providers or residents could use for community-based services, group social or educational activities, and dining.

section_title: Letter
paragraphs: The Department of Housing and Urban Development (HUD) reported in 1996 that at least 1.4 million elderly individuals nationwide needed but did not currently receive housing assistance. These individuals need housing assistance because most have extremely low incomes, are paying more than half of their incomes for rent, or often live in homes that are physically inadequate. To alleviate these problems, the federal government provides housing assistance through a variety of programs that benefit low-income people, including the elderly. Two HUD programs—Section 202 Supportive Housing for the Elderly and HOME Investment Partnerships (HOME)—are receiving federal funds each year to fully or partially support the production of new multifamily rental housing for the elderly. However, only the Section 202 program provides housing assistance exclusively for the elderly.
As agreed with your office, this report describes similarities and differences between the Section 202 program and the HOME program in three areas: (1) the amount and types of new multifamily rental housing that each program has provided for the elderly; (2) the sources of each program’s funding for multifamily rental projects; and (3) the availability of supportive services for elderly residents. In general, we have described the programs at the national level and have illustrated some points with examples drawn from our visits to selected projects in four states with relatively high concentrations of low-income elderly residents and numbers of Section 202 and HOME-funded projects—California, Florida, North Carolina, and Ohio. (See app. I for pictures and descriptions of the Section 202 and HOME projects that we visited.)
subsections: section_title: Background
paragraphs: In general, federal housing assistance is available only to people or households that have low incomes. Consequently, income, not age, is the single biggest factor in deciding on an elderly person’s need and eligibility for federal housing assistance. HUD also identifies problems that, regardless of age, exacerbate a person’s need for assisted housing. These problems include housing that costs more than 30 percent of a person’s income or is inadequate or substandard. Figure 1 shows the magnitude of the housing needs among low-income elderly households in each state.
According to HUD, the need for housing assistance, for the elderly as for the general population, far outstrips the federal resources available to address that need. As a result, federal housing assistance, which is provided through a variety of programs, reaches just over one-third of the elderly households that need assistance. Furthermore, most of the programs are maintaining, rather than increasing, the level of assistance they provide. Only two of these programs—Section 202 and HOME—are under HUD’s jurisdiction and are receiving annual appropriations for the sole purpose of increasing housing assistance for elderly and other households.
Under the Section 202 program, HUD provides funding to private nonprofit organizations to expand the supply of housing for the elderly by constructing or rehabilitating buildings or by acquiring existing structures from the Federal Deposit Insurance Corporation. Since it was first created in 1959, the Section 202 program has provided over $10 billion to the sponsors of 4,854 projects containing 266,270 housing units. At the same time that HUD awards Section 202 funds, it enters into contracts with these nonprofit organizations to provide them with project-based rental assistance. This assistance subsidizes the rents that elderly residents with very low incomes will pay when they move into the building. In addition to having a very low income, each household in a Section 202 project must have at least one resident who is at least 62 years old. Finally, sponsoring organizations must identify how they will ensure that their residents have access to appropriate supportive services, such as subsidized meals programs or transportation to health care facilities. When HUD evaluates sponsors’ applications, it awards more points to, and is thus more likely to fund, applicants who have experience providing such services or have shown that they will readily be able to do so.
The purpose of the HOME program is to address the affordable housing needs of individual communities. As a result, the day-to-day responsibility for implementing the program rests not with HUD, but with over 570 participating jurisdictions. These participating jurisdictions can be states, metropolitan cities, urban counties, or consortia made up of contiguous units of general local government. HUD requires these jurisdictions to develop consolidated plans in which they identify their communities’ most pressing housing needs and describe how they plan to address these needs. Each year, HUD allocates HOME program funds to these jurisdictions and expects them to use the funds according to the needs they have identified in their consolidated plans. The legislation that created the HOME program allows—but does not require—those receiving its funds to construct multifamily rental housing for the elderly.
Although the legislation authorizing the HOME program directs that its funds address the housing needs of low-income people, it allows local communities to choose from a variety of ways of doing so. These include the acquisition, construction, and rehabilitation of rental housing; the rehabilitation of owner-occupied homes; the provision of homeownership assistance; and the provision of rental assistance to lower-income tenants who rent their homes from private landlords. Finally, the legislation requires that communities target the rental assistance they choose to provide. Specifically, jurisdictions must ensure that for each multifamily rental project with at least five HOME-assisted units, at least 20 percent of the residents in the HOME-assisted units have incomes at or below 50 percent of the area’s median income; the remaining residents may have incomes up to 80 per cent of the area’s median.
section_title: Housing Assistance for the Elderly Reflects the Programs’ Intent
paragraphs: The Section 202 program, far more often than the HOME program, is the source of funds for increasing the supply of multifamily rental housing for low-income elderly people. In comparison, through fiscal year 1996, participating jurisdictions have seldom chosen to use HOME funds to produce multifamily housing almost exclusively for the low-income elderly. This result is linked to differences in the purposes for which each program was created and the persons each was intended to serve. The Congress designed the Section 202 program to serve only low-income elderly households. In creating the HOME program, however, the Congress sought to give states and local communities the means and the flexibility to identify their most pressing low-income housing needs and to decide which needs to address through the HOME program. As is consistent with each program’s intent, the Section 202 program focuses its benefits on the elderly, while the HOME program benefits those whom local communities choose to serve—regardless of age—through various kinds of housing assistance.
From fiscal year 1992 through fiscal year 1996, over 1,400 Section 202 and HOME program multifamily rental housing projects for the elderly opened nationwide. These projects included
1,400 Section 202 projects with 51,838 rental units, providing homes for at least 47,823 elderly individuals, and
30 comparable HOME projects with 681 rental units, providing homes for at least 675 elderly individuals.
On average, the Section 202 projects had 37 units, while the HOME projects had 23 units. Figure 2 illustrates the proportion of the total number of projects attributable to each program.
Although only a small portion of the HOME projects were comparable to Section 202 projects, participating jurisdictions used HOME funds to assist low-income elderly people in other ways. Most of the elderly households that obtained assistance from the HOME program—over 70 percent—used that assistance to rehabilitate the homes they already owned and in which they still lived. The remaining HOME assistance benefiting the elderly did so by providing tenant-based rental assistance; helping new homebuyers make down payments and pay the closing costs associated with purchasing homes; and acquiring, constructing, or rehabilitating single-family and multifamily rental housing. In total, the HOME program assisted 21,457 elderly households, approximately 40 percent as many as the Section 202 program assisted during the same 5-year period. Figure 3 illustrates how the HOME program assisted the elderly during fiscal years 1992 through 1996.
section_title: Section 202 Projects Rely on HUD Funding, but Most HOME Projects Leverage Private Financing and Other Subsidies
paragraphs: In nearly all cases, Section 202 projects rely solely on HUD to pay the costs of construction and subsidize the rents of the low-income elderly tenants who occupy the buildings. In contrast, HOME-assisted multifamily rental housing projects rely on multiple sources of funding, including private financing, such as bank mortgages and equity from developers. At the HOME-funded projects we visited, the use of HOME funds reduced the amount that the projects’ sponsors had to borrow for construction or made borrowing unnecessary. Reducing or eliminating the need to go into debt to build HOME projects enables the projects to be affordable to households with lower incomes than would be the case otherwise.
subsections: section_title: Section 202 Funds Generally Cover Projects’ Costs, but Some Need Supplemental Funding
paragraphs: For the Section 202 projects that became occupied during fiscal years 1992 though 1996, HUD provided over $2.9 billion in capital advances and direct loans. The average cost of these projects was about $2.1 million. HUD expects this assistance to be the only significant source of funds for the development of Section 202 projects. Furthermore, when HUD awards Section 202 funds, it also enters into contracts with the sponsoring organizations to provide project-based rental assistance to the tenants who will occupy the buildings once they open. As a result, HUD expects that successful sponsors will be able to develop and build multifamily housing projects that will be affordable to low-income elderly households.
The nonprofit sponsors of two of the eight Section 202 projects we visited said that the Section 202 funds were not sufficient to cover all of the costs associated with building their projects. HUD officials told us that this is usually the case when a sponsor (1) includes amenities in a project, such as balconies, for which HUD does not allow the use of Section 202 funds; (2) incurs costs not associated with the site on which the project is being built, such as costs to make the site more accessible to public transportation; or (3) incurs costs that exceed the amount HUD will allow, which can happen when a sponsor pays more for land than HUD subsequently determines the land is worth. Consequently, in some cases, sponsors of the projects we visited sought funding from other sources to make up for the shortfall. Those that found HUD’s funding insufficient primarily cited the high cost of land in their area or factors unique to the site on which they planned to build as the reason for the higher costs. For example, one sponsor in California said that the Section 202 funding was not sufficient to cover the high cost of land and of designing a project that was compatible with local design preferences.
Several of the Section 202 projects we visited received additional financial support from their nonprofit sponsors or in-kind contributions from local governments (such as zoning waivers or infrastructure improvements). However, this added support was typically a very small portion of a project’s total costs. For example, the Section 202 funding for the construction of a project in Cleveland was nearly $3 million. However, Cleveland used $150,000 of its Community Development Block Grant (CDBG) funds to help the sponsor defray costs incurred in acquiring the land on which the project was built. Another nonprofit sponsor in California estimated that the development fee waivers and other concessions the city government made for its project were worth over $160,000. The total cost for this project was over $4 million.
However, attempts to use other funds have not always been successful. For example, one of the Section 202 projects we visited obtained HOME and CDBG funds from the local county government, but officials from the HUD regional office subsequently reduced the final amount of the project’s capital advance to offset most of these funds. The project’s nonprofit sponsor had sought additional funding because the costs of land exceeded the appraised value that HUD had determined (and would thus agree to pay) and because the sponsor incurred additional costs to extend utility service onto the property where the project was being built. According to the sponsor, HUD reduced the project’s Section 202 capital advance because the sponsor was using other federal funds to meet expenses for which HUD had granted the Section 202 funding.
section_title: HOME Multifamily Rental Projects Usually Have Multiple Funding Sources
paragraphs: The HOME program is not meant be a participating jurisdiction’s sole source of funds for the development of affordable housing. By statute, the local or state government must contribute funds to match at least 25 percent of the HOME funds the jurisdiction uses to provide affordable housing each year. Additionally, one of the purposes of the HOME program is to encourage public-private partnerships by providing incentives for state and local governments to work with private and nonprofit developers to produce affordable housing. As a result, HOME projects typically attract significant levels of additional public and private funding from sources such as other federal programs, state or local housing initiatives, low-income housing tax credit proceeds, and donations or equity contributions from nonprofit groups.
While a participating jurisdiction could conceivably develop new multifamily rental housing using only its allocation of HOME funds, HUD officials questioned why any jurisdiction might choose to do so. Multifamily rental housing is costly to build, and one such project could easily consume a community’s entire allocation of HOME funds in a given year if no other funding were used. Furthermore, using HOME funds to leverage other funds can not only significantly increase the total funding available for housing assistance but also allow communities to offer more types of housing assistance than if they devoted their entire HOME allocation to a single multifamily rental project.
Overall, with its current funding of $1.4 billion (for fiscal year 1997), the HOME program is a significant source of federal housing assistance. However, it has not been a major source of funds for new multifamily rental housing designed primarily or exclusively to serve the low-income elderly. From fiscal year 1992 through fiscal year 1996, such projects received a small percentage of the total HOME funds allocated to participating jurisdictions. During these 5 years, the jurisdictions built or provided financial support for 30 multifamily rental projects with 681 units, of which the elderly occupied at least 90 percent. These projects were financed with over $12 million in HOME funds. According to HUD’s data, these funds leveraged an additional $65 million in other public and private financing. Figure 4 illustrates the multiple funding sources used for these HOME projects.
Six of the eight HOME projects we visited had received funding from multiple public and private financing sources, reflecting the national pattern at the local level. These projects’ developers and/or sponsors told us that using HOME funds in conjunction with other funding sources enabled them to reduce the amount of debt service on their projects (or eliminate the need for borrowing altogether) so that they could charge lower rents and be affordable to more people with lower incomes. Two of the projects we visited were quite unlike the other projects we visited because they did not use the federal Low-Income Housing Tax Credit program and did not have a conventional mortgage or other bank financing. The same participating jurisdiction developed both projects using only public resources, including HOME and CDBG funds, donations of city-owned land, and interior and exterior labor provided by the city’s work force.
section_title: Availability of Supportive Services at Section 202 and HOME Projects
paragraphs: HUD does not pay for supportive services through the HOME program but does, under limited circumstances, do so through the Section 202 program. Information on the provision of services is generally not available because neither program collects nationwide data on the availability of such services at the projects each has funded. For most of the Section 202 and HOME projects we visited, some supportive services, such as group social activities or subsidized meals programs, were available to the residents on-site, but usually only to the extent that the projects could generate operating income to pay for them. Rather than provide such services themselves, the projects tapped into and availed themselves of various supportive, educational, social, or recreational services in their communities. Furthermore, most of the projects that we visited included common areas and activity rooms that gave the residents places to socialize and provided space for hosting community-based and other services.
subsections: section_title: Availability of Supportive Services at Most Projects Depended on Having Sufficient Rent Revenue
paragraphs: All eight of the Section 202 and seven of the HOME projects we visited ensured that their residents had access to supportive services. The range and nature of the services depended on the amount of operating income that was available to pay for the services and/or the proximity of community-based services to the projects. In addition, one of the Section 202 projects had a grant from HUD to hire a part-time service coordinator;the remaining Section 202 projects paid for a service coordinator from the project’s operating revenues, expected their on-site resident managers to serve as service coordinators, or provided services at nearby facilities. None of the HOME projects received outside support through grants from HUD and/or project-based rental assistance to pay for supportive services.
Six of the eight HOME projects and all but one of the Section 202 projects that we visited expected an on-site manager to coordinate the provision of supportive services to elderly residents or relied on rent revenue to pay for a service coordinator. The costs of having on-site managers, like the costs of providing most of the service coordinators, were covered by the projects’ operating incomes. One of the Section 202 projects that relied on rent revenue provided few services on-site, but its residents had access to a wide variety of services, including a subsidized meals program, at another nearby Section 202 project developed by the same sponsor. In another case, the nonprofit sponsor of the Section 202 project consulted a nonprofit affiliate that has developed services for various housing projects developed by the sponsor. In addition to keeping up to date with the needs of their residents, the sponsors or management companies of the Section 202 projects we visited expected their service coordinators or resident managers to refer residents to community-based services as needed or to bring community-based services to their facilities on a regular or occasional basis.
One of the Section 202 projects we visited had hired a part-time service coordinator using a grant from HUD’s Service Coordinator Program. According to HUD, resident managers cannot always provide supportive services because they may lack the resources to do so and/or the experience needed to provide such services. As a result, the Congress began funding the Service Coordinator Program in 1992 to help meet the increasing needs of elderly and disabled residents in HUD-assisted housing and to bridge the gap between these needs and resident managers’ resources and experience. The program awarded 5-year grants to selected housing projects to pay for the salaries of their service coordinators and related expenses. The managers of this Section 202 project doubted that their operating revenues would be sufficient to continue paying for the coordinator when their HUD grant expires.
One Section 202 project that we visited was unique in that it did not have a service coordinator, but the project’s management company had structured the duties of the resident manager to include activities that a service coordinator performs. The project’s management company could do so because it manages over 40 Section 202 projects nationwide and handles nearly all financial, administrative, and recordkeeping duties in one central location so that its resident managers have time to become more involved with their residents.
The two HOME projects we visited that had neither a service coordinator nor an expectation that a resident manager would fill this role were the two projects that housed both the low-income elderly and families. At one of these projects, a nearby city adult center offered numerous opportunities for supportive services similar to those other projects provided on-site. At the second project, a social worker from the city visited the project on a part-time basis to provide information about and referrals to community-based services.
section_title: Projects for the Elderly Usually Included Congregate Areas
paragraphs: All of the Section 202 projects we visited had common or congregate areas for group activities, socializing, and supportive services. Six of the eight HOME projects we visited had similar common areas. At both the Section 202 and the HOME projects, these common areas were often the places in which residents could take advantage of the supportive services the project’s manager or service coordinator had provided directly or, in the case of community-based services, had arranged to come to the project on a regular or occasional basis.
The only projects that did not have common or congregate areas were the two HOME projects that housed a mixture of low-income families and elderly residents. One was a traditional multifamily apartment building in which 19 of the 29 units were set aside for the elderly. Although this project had no congregate space, it was near one of the city’s adult centers that provides adult education, recreational classes, and other services for seniors and others from the community. The second was a single-room-occupancy project in which about 20 percent of the tenants were elderly, although the project did not set aside a specific number or percentage of the units for the elderly. This project had more limited common areas, parts of which were devoted to kitchen facilities on each floor because single-room-occupancy units do not have full kitchens themselves.
section_title: Agency Comments
paragraphs: We provided a draft of this report to HUD for its review and comment. HUD generally agreed with the information presented in this report but said that the report (1) understates the contributions of the HOME program in providing assistance to the elderly and (2) assumes that the Section 202 model is the preferred way of providing housing for the elderly, without giving sufficient recognition to the other kinds of assistance the elderly receive from the HOME program.
In discussing the relative contributions of the HOME and the Section 202 programs, HUD said that comparable production of multifamily rental projects for the elderly could not have occurred in the first few years of the HOME program (which was first funded in fiscal year 1992) because of the lead time necessary for planning, selecting, and constructing projects. HUD also questioned whether our data included all HOME projects that might be comparable to Section 202 projects by taking into account the (1) projects developed through the substantial rehabilitation of existing buildings (as opposed to new construction), (2) projects in which vacant units might later be occupied by the elderly in sufficient numbers to achieve comparability with Section 202 projects, (3) projects in which 50 percent or more of the residents were elderly, and (4) projects that were under way but had not been completed at the close of fiscal year 1996.
We agree that our review probably would have identified more comparable HOME projects if the program had been funded before fiscal year 1992, and we have added language to this effect in the report. Our analysis and the data we present include projects from the Section 202 and HOME programs that were substantial rehabilitations of existing buildings. We agree that filling vacant units with elderly residents could increase the number of comparable HOME projects in the future, but any such units in our analysis were vacant as of the close of fiscal year 1996, and our report discusses each program’s activity only through that date. Data on the HOME projects in which 50 percent or more of the residents were elderly are reflected in figure 3 of this report, which illustrates the different types of HOME assistance the elderly received. We did not compare these data with Section 202 data because, as we note, comparable HOME projects are those in which 90 percent or more of the households have one elderly resident. We agree that some HOME projects that were under way but had not been completed at the close of fiscal year 1996 might in the future be comparable to Section 202 projects, but we note that the number of comparable Section 202 projects would also be greater because projects funded by the Section 202 program were also under way but had not opened as of this date.
In stating its belief that this report assumes the Section 202 model is the preferred way of providing housing for the elderly, HUD expressed concern that we did not give sufficient recognition to the assistance the HOME program provides the elderly by other means. HUD noted, for example, that the HOME program provides a viable alternative to multifamily rental housing by offering assistance to the elderly to rehabilitate the homes they own with special features that allow them to continue to live independently. HUD also noted that smaller rental projects than those we compared with the Section 202 program (projects with 1-4 units) also present a viable alternative to multifamily rental housing, provided adequate supportive services are available if needed.
We disagree with HUD’s comment that this report assumes the Section 202 model is the preferred way of providing housing assistance for the elderly. In this report, we have described the operations of the two programs and presented data on the assistance each has provided nationally and at selected projects. We have not evaluated the manner in which either program provides assistance, and we have not expressed a preference for either approach to delivering housing assistance to elderly households. We have added statements to this effect to the report to address HUD’s concern. We acknowledge that the HOME program provides housing assistance to the elderly in several ways other than through the production of new multifamily rental housing that is set aside almost exclusively for the elderly. However, because this report describes comparable Section 202 and HOME-funded housing assistance and because the Section 202 program provides only one kind of housing assistance, we focused on the multifamily rental projects funded by the HOME program that are comparable to those funded by the Section 202 program. To address HUD’s concerns and to provide further recognition of the HOME program’s other types of housing assistance, we have revised the sections of the report cited by HUD to more prominently reflect the complete range of HOME-funded activities benefiting the elderly.
HUD also provided several technical and editorial corrections to the report, which we have incorporated as appropriate. HUD’s comments are reproduced in appendix II of this report.
section_title: Scope and Methodology
paragraphs: The information we present in this report describes the need for assisted housing, discusses the operations of the Section 202 and HOME programs, and presents data on the assistance each program has provided. We did not evaluate the manner in which either program provides assistance, and we did not express a preference in the report for either one of the approaches to delivering assistance to elderly households.
To determine the amount and types of new assisted housing that the Section 202 and HOME programs have provided for the elderly, we obtained and analyzed data from HUD headquarters on the Section 202 and HOME projects completed from fiscal year 1992 through fiscal year 1996. Fiscal year 1992 was the first year in which the HOME program received funding, and fiscal year 1996 was the most recently completed fiscal year for which data from the programs were available when we began our review. Our analysis of the HOME data also provided information on the amount and sources of funding for multifamily projects developed under the HOME program. The Section 202 data did not include information on any other federal or nonfederal funding these projects may have received because a Section 202 allocation is intended to cover 100 percent of a project’s development costs. In addition to using these data, we analyzed special HUD tabulations of Census data to identify the level of need among the elderly for housing assistance in each state.
We examined HUD’s data on the HOME program to identify all types of housing assistance that the program has provided for elderly households, but we also analyzed these data by the type of assistance in order to obtain information on the HOME projects that are comparable to Section 202 projects. To do so, we focused our analysis on the HOME multifamily projects in which 90 percent or more of the residents are elderly because, at a minimum, 90 percent of the residents of Section 202 projects must be elderly (before 1991, 10 percent could be persons at least 18 years old with a handicap).
Throughout our review, we also discussed housing assistance for the elderly with officials from HUD’s Section 202 and HOME programs, HUD’s Office of Policy Development and Research, and the Bureau of the Census. In addition, we reviewed relevant documents from each program and prior HUD and Census reports on housing needs of the elderly.
We supplemented this national information on each program by visiting a total of 16 projects to obtain more detailed data than HUD collects centrally on the use of other federal and nonfederal funding and the presence or availability of supportive services for elderly residents. Using Section 202 and HOME program data, we judgmentally selected two Section 202 and two HOME projects in each of four states—California, Florida, North Carolina, and Ohio. We selected these states because they have relatively high concentrations of low-income elderly residents and numbers of Section 202 and HOME-funded projects. In each state, we selected individual Section 202 and HOME projects that were in the same vicinity and were roughly comparable in size. Nearly all of these projects were reserved exclusively for the elderly or had a portion of their units set aside for the elderly. In one case, about 20 percent of a HOME-funded project’s residents were elderly, although neither the project nor any portion of its units was explicitly reserved for elderly residents.
At each project we visited, we discussed the project’s history and financing and the availability of supportive services with the sponsor or developer and relevant local and HUD officials. The observations we make about the individual projects we visited are not generalizable to all Section 202 or HOME-funded projects because we judgmentally selected these projects and did not visit a sufficient number from each program to draw conclusions about the universe of such projects.
We did not assess the reliability of the data we obtained and analyzed from HUD’s Section 202 and HOME program databases. However, throughout our review we consulted with the appropriate HUD officials to ensure we were analyzing the relevant data elements for the purposes of this report. Furthermore, the information we obtained from these databases was generally consistent with our observations during our site visits to the projects we selected using these databases.
We conducted our work from April through October 1997 in accordance with generally accepted government auditing standards.
We are sending copies of this report to the appropriate congressional committees, the Secretary of Housing and Urban Development, and the Director of the Office of Management and Budget. We will make copies available to others on request.
Please call me at (202) 512-7631 if you or your staff have any questions about the material in this report. Major contributors to this report are listed in appendix III.
section_title: Selected Section 202 and HOME Investment Partnerships Projects
paragraphs: As part of our review, we visited 16 low-income, multifamily rental projects—4 each in California, Florida, North Carolina, and Ohio—to obtain information that the Department of Housing and Urban Development (HUD) does not collect centrally and to discuss with program participants their experience in applying for, developing, and operating these projects. In each state, two of the projects we visited were funded by the Section 202 program and two received funds from the HOME Investment Partnership (HOME) program. As we noted in the Scope and Methodology section of this report, we judgmentally selected these states because, compared with other states, they had relatively high concentrations of low-income elderly residents and numbers of Section 202 and HOME-funded projects. We selected individual Section 202 and HOME projects that were in the same vicinity and were roughly comparable in size.
During each site visit, we discussed the history, financing, and availability of supportive services with the sponsor or developer of the project. We also discussed these issues with on-site management agents, local officials administering the HOME program, and HUD Section 202 and HOME field office officials. At each project, we walked through the grounds, selected residential units, and any common areas available to the residents for group activities.
Typically, the Section 202 projects we visited were high- or mid-rise apartment buildings with elevators, laundry facilities, and one or more community rooms in which residents participated in group activities and, in some cases, meals programs. In one project, which consisted of more traditional garden apartments on a single level, each apartment had its own outdoor entrance and front porch. Ranging in size from 42 to 155 units, most of the projects (5 of 8) had a resident manager. Current Section 202 regulations require that all residents of these projects have very low incomes—that is, the must earn less than 50 percent of the median income for their area.
The HOME projects we visited, ranging in size from 20 to 120 units, were more varied than the Section 202 projects. Several were high- or mid-rise buildings, although one of these was a single-room-occupancy hotel. In the single-room-occupancy hotel, the units were smaller than in a typical apartment building and much of the common space consisted of kitchen facilities, which were not included in the units themselves. At another project, the ground floor of the building housed a city-operated adult center offering a variety of educational and recreational programs. Other HOME projects we visited were multi-unit cottages or detached structures, each of whose units had its own outdoor entrance; one such project consisted of buildings scattered over three different sites. Unlike the Section 202 projects, two of the HOME projects housed both families and the elderly.
As we noted earlier in this report, at a minimum, in each multifamily rental project with at least five HOME-assisted units, at least 20 percent of the residents in the HOME-assisted units must have very low incomes (at or below 50 percent of the area’s median income); the remaining units may be occupied by households with low-incomes (up to 80 percent of the area’s median income). At the HOME projects we visited, half designated all of their units as HOME-assisted, meaning that the HOME program’s regulations about tenants’ incomes applied to those units; the other half designated some but not all of their units as HOME-assisted, meaning that the remaining units in these projects were subject either to the rules associated with other sources of funding or to those established by the local jurisdiction.
section_title: Comments From the Department of Housing and Urban Development
section_title: Major Contributors to This Report
subsections: section_title: Resources, Community, and Economic Development Division, Washington, D.C.
section_title: Chicago/Detroit Field Office
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