Elderly Housing: HUD Should Do More to Oversee Efforts to Link Residents to Services
Published: 2016-09-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. population of persons age 65 and older is expected to grow to 73 million by 2030. With age, people are increasingly likely to face physical and cognitive limitations. HUD's Section 202 program funds supportive rental housing for very low-income elderly households. Section 202 property owners are expected to coordinate the provision of services to help residents live independently and age in place.
GAO was asked to review how Section 202 properties connect residents to services and HUD's related monitoring efforts. This report examines (1) the extent to which Section 202 properties have service coordinators, (2) how properties without coordinators connect residents with services and why they may not use coordinators and (3) HUD's monitoring of Section 202 properties' efforts to connect residents with supportive services, among other objectives. GAO analyzed HUD's fiscal year 2014 data (the latest available) on Section 202 properties and service coordinators; surveyed a generalizable sample of Section 202 properties not identifiable in HUD data as having service coordinators; reviewed monitoring policies, program descriptions, and agency notices; and interviewed HUD officials from each of HUD's five Multifamily Housing regions and stakeholders.
section_title: What GAO Found
paragraphs: While limitations in the Department of Housing and Urban Development's (HUD) data make an accurate assessment difficult, GAO estimates that roughly half of the 7,229 Section 202 Supportive Housing for the Elderly (Section 202) properties have HUD-funded service coordinators—staff who link residents to supportive services such as transportation assistance or meals. HUD's data indicate that 38 percent of Section 202 properties have a HUD-funded service coordinator, but these data likely underestimate the true number. GAO surveyed a generalizable sample of Section 202 properties not identifiable in HUD's data as having a service coordinator and, on this basis, estimates that an additional 12 percent of Section 202 properties actually had one—bringing the actual total of Section 202 properties with service coordinators to about 50 percent. Federal internal control standards note that it is important for management to obtain relevant data from reliable sources. Properties with service coordinators are subject to additional monitoring, but without accurate information, HUD risks not taking steps to monitor Section 202 properties with service coordinators to help ensure they are connecting residents to supportive services.
Properties without service coordinators connect residents to services in a variety of ways—for example, property managers may serve this function themselves, or they may utilize other local organizations. Several stakeholders told GAO that property managers are well-positioned to know their residents, and have some insight into their needs. Others noted that property managers generally lack the time and expertise to effectively manage this responsibility, and that the manager's role can conflict with that of the service coordinator. Through GAO's survey and site visits, managers of Section 202 properties without service coordinators cited a variety of reasons for not employing them, including lack of funding and having too few units to justify hiring someone to focus on supportive services for the elderly residents.
HUD requires its staff to monitor Section 202 properties' adherence to program requirements. However, HUD lacks written policies and procedures that describe how its staff should monitor the requirement for Section 202 property managers to coordinate the provision of supportive services. Available guidance describes general monitoring procedures for multifamily properties but does not address Section 202 specifically. HUD officials told GAO they plan to develop guidance on monitoring Section 202 properties with service coordinator grants by December 2016. Federal internal control standards note the importance of documenting responsibilities through policies. Without written policies and procedures, HUD cannot be assured that elderly residents are receiving assistance obtaining services. In addition, HUD collects performance data, such as the number of services provided, from Section 202 properties that have service coordinators but does not have policies or procedures in place to verify the accuracy of the data or for analyzing the data collected. Federal internal control standards also note the importance of evaluating data for reliability and processing data into quality information to evaluate performance. Until HUD takes steps to assess service coordinator performance data for reliability and analyze the data reported, its ability to use that information to monitor whether service coordinators are performing effectively and helping to fulfill the goals of the Section 202 program will likely be limited.
section_title: What GAO Recommends
paragraphs: GAO recommends that HUD (1) improve the accuracy of its data on Section 202 properties with service coordinators, (2) develop written guidance on assessing compliance with supportive services requirements, and (3) develop procedures for verifying and analyzing performance data. HUD concurred with GAO's recommendations.

section_title: Letter
paragraphs: The population of persons aged 65 and older in the United States is  expected to grow to 73 million by 2030, an increase of 33 million in two  decades. The number of low-income older adults is also expected to  climb. With age, people are increasingly likely to face physical and  cognitive limitations that pose challenges to living independently. The  purpose of the Department of Housing and Urban Development’s (HUD)  Section 202 Supportive Housing for the Elderly (Section 202) program is  to provide funding for the development and operation of supportive  housing for very low-income elderly households. Supportive housing for  the elderly is designed to meet the special physical needs of elderly  persons and to accommodate the provision of supportive services.  Under the Section 202 program, property owners are expected to help  connect residents to services that will help them to live independently and  age in place. One approach that Section 202 property owners use is to  employ a service coordinator—someone who assists residents by linking  them to community-based services (such as meal programs, in-home  care, and transportation) based on their individual needs. In fiscal year  2016, Congress provided approximately $433 million for the renewal of  support for existing Section 202 units and up to $77 million to renew grant  funding for service coordinators. Section 202 property owners can also  use their operating funds to pay for a service coordinator, with HUD’s  approval.
You asked us to examine how many Section 202 properties have a  service coordinator and how HUD tracks properties’ performance in  connecting residents to services. This report examines (1) the extent to  which Section 202 properties have service coordinators, (2) how  properties without service coordinators make services available to  residents and reasons why some properties do not have service  coordinators, (3) HUD’s monitoring of Section 202 properties’ efforts to  make services available to residents, and (4) HUD’s efforts to preserve  Section 202 properties given recent trends in annual funding.
To determine the number of Section 202 properties that have a service  coordinator, we obtained and analyzed HUD data on Section 202  properties as of the end of fiscal year 2014, which were the most recent  data available at the time of our review. We focused on Section 202  properties with active HUD funding for the property, either in the form of  direct loans, capital advances, or rental assistance. We compared this  information to available HUD data on service coordinators in an effort to  identify Section 202 properties that had a HUD-funded service  coordinator. To assess the reliability of HUD’s data, we conducted  electronic testing, reviewed documentation related to relevant information  systems, and compared data to published reports. We determined that  HUD data on service coordinators funded through HUD grants were  sufficiently reliable for our purposes. We determined that HUD data on  service coordinators funded through individual Section 202 properties’  budgets were not reliable for the purposes of determining the number of  Section 202 properties with service coordinators, which we discuss in  detail later in this report.
To determine how Section 202 properties without service coordinators  make services available to their residents and why some Section 202  properties do not have service coordinators, we surveyed a generalizable  sample of properties that were not identifiable as having a service  coordinator in fiscal year 2014 according to data supplied to us by HUD.  We also conducted site visits in each of HUD’s five Office of Multifamily  Housing regions and interviewed managers of Section 202 properties that  were not identifiable in HUD’s data as having service coordinators to  discuss their survey responses. Based on this information, we identified  alternative approaches to connecting Section 202 residents with services.  We summarized the benefits and limitations of these approaches  according to the views of federal officials, industry groups, and Section  202 property managers.
To evaluate HUD’s monitoring of Section 202 properties’ efforts to  connect residents to services, we reviewed available information on  monitoring-related policies and procedures, analyzed documentation of  monitoring efforts, and interviewed HUD officials from headquarters and  offices in each of HUD’s five Office of Multifamily Housing regions. We  compared HUD’s monitoring activities to federal internal control standards  related to program monitoring. We also interviewed HUD staff about the  current procedures for using the performance information that it collects  on service coordinators and compared this information to internal control  standards for processing data into quality information and leading  practices related to the use of performance information.
To describe steps HUD has taken to preserve Section 202 properties, we  identified and reviewed documentation of various tools that HUD has  used to help ensure that properties are maintained in good physical  condition and that property owners continue to provide affordable housing  through the Section 202 program. We also analyzed HUD data to identify  the number of Section 202 properties (funded with direct loans) that will  mature over the next 10 years. In addition, we spoke to HUD officials  from headquarters and from field offices in each of HUD’s five Multifamily  Housing regions, and we interviewed Section 202 property managers in  each of these five regions about steps HUD has taken to assist in the  preservation of existing Section 202 properties. We selected property  managers based on the proximity of their property to a local HUD office,  the presence of a service coordinator, and property size.
We conducted this performance audit from April 2015 to August 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: HUD’s Section 202 program was established by Section 202 of the  Housing Act of 1959. Since 1991, the Section 202 program has  provided capital advances and rental assistance to private nonprofit  organizations so that they can build housing that is affordable to very low- income elderly households. For this program, the term elderly refers to a  household composed of one or more persons at least one of whom is 62  years of age or more at the time of initial occupancy.
The Section 202 program is administered by HUD’s Office of Multifamily  Housing. Program monitoring is generally conducted by HUD staff located  in field office locations. During the course of our review, HUD was in the  process of reorganizing its Office of Multifamily Housing. Specifically,  HUD was consolidating field operations from its existing structure into  regional centers and other office types across five regions. As of the  end of fiscal year 2014, there were 7,229 active Section 202 properties  across the country, with over 366,000 units, as shown in figure 1.
subsections: section_title: Program History
paragraphs: The type of financing offered through the Section 202 program has  changed over time. At the program’s inception, HUD made direct loans to  private nonprofit organizations so they could build rental housing. The  interest rates were low (around 3 percent), and the loans had a term of up  to 50 years. In 1991, the Cranston-Gonzalez National Affordable Housing  Act replaced loans with capital advances. Capital advances bear no  interest, and the amount of the capital advances is based on an area’s  development cost limits. Repayment of the capital advance is not  required as long as the housing remains available for occupancy for very  low-income elderly persons for at least 40 years. Capital advances must  be used for the construction or rehabilitation of a structure, or acquisition  of a structure with or without rehabilitation. As discussed later in this  report, Congress last provided funding for new Section 202 developments  in fiscal year 2011.
Rental assistance programs available to be used at Section 202  properties and their contract terms have also changed since the  program’s inception. For example, the Housing and Community  Development Act of 1974 made project-based Section 8 rental assistance  available to Section 202 property owners. Owners could then subsidize  the rents of low-income households and, beginning in 1981, project- based Section 8 rental assistance was available primarily to very low- income households. Contracts for project-based Section 8 rental  assistance payments between HUD and Section 202 owners were initially  set for up to 20 years and were renewable. In 1991, the Cranston- Gonzalez National Affordable Housing Act introduced a different form of  rental assistance referred to as project rental assistance. The duration of  project rental assistance contracts was initially 20 years and is currently 3  years. As the initial contracts begin to expire, the rental assistance is  renewed on a 1-year basis.
Section 202 property owners have varying business agreements with  HUD, depending on factors including when their property came into the  program and whether they have prepaid or refinanced direct loans. For  example, Section 202 property owners are required by HUD to enter into  a Use Agreement when they prepay a loan for which HUD’s consent to  prepay is required. The Use Agreement binds all subsequent owners to  continue to operate the property for at least 20 years after the maturity  date of the original loan, under terms at least as advantageous to existing  and future tenants as the terms required by the original loan agreement or  any project-based rental assistance payments contract. Property owners  that prepaid or refinanced their direct loan and that do not have rental  assistance contracts are referred to by HUD as “stand-alone” Section 202  properties. These properties are contractually bound by their Section  202 Use Agreement to continue to operate under terms at least as  advantageous to existing and future tenants as the terms required by the  original loan agreement.
According to HUD officials, property owners that received a capital  advance must enter into both a Use Agreement and a Regulatory  Agreement. The Use Agreement for Section 202 properties that received  a capital advance requires the property to meet the terms of the Section  202 program for at least 40 years. The Regulatory Agreement sets out  various obligations, restrictions, and requirements on the owner beyond  those set forth in the Use Agreement.
The eligible resident population for the Section 202 program has also  changed over time. When the Section 202 program was established in  1959, its purpose was to provide housing for moderate-income elderly  households. Non-elderly persons with disabilities became eligible for the  program in 1964 when non-elderly disabled individuals and families were  added to HUD’s definition of “elderly families.” In 1968, HUD set income  eligibility limits for Section 202 developments, limiting new households to  those that were low income. Resident income guidelines changed in 1981  for Section 202 properties that received project-based rental assistance.  The law required that HUD units receiving project-based Section 8 rental  assistance be made available primarily to very low-income households. In  1990 the Cranston-Gonzalez National Affordable Housing Act established  HUD’s Section 811 program. The Section 811 program replaced the  portion of the Section 202 program that provided long-term loans for the  construction of housing for very-low-income persons with disabilities.
section_title: Supportive Services
paragraphs: The Housing Act of 1959 specified that the purpose of the Section 202  program was to fund housing and related facilities for elderly households.  Related facilities could include structures suitable for use as community  rooms or buildings, outpatient health facilities, infirmaries, or other  essential service facilities. Although the Housing Act of 1959 did not  explicitly mention supportive services, HUD officials told us that Section  202 properties have been required to connect residents to services for the  entire history of the program. The Housing and Community Development  Act of 1974 established a requirement that HUD seek to assure that  Section 202 developments be in support of and supported by state and  local plans which respond to federal program requirements by providing a  range of services such as health, welfare, counseling, referral services,  and services designed to encourage and assist tenants to use the  services and facilities available to them. Applicants for Section 202  funds must submit plans describing how the property’s residents would be  connected to supportive services and HUD must ensure that housing  assisted under the Section 202 program provides a range of services  tailored to the needs of the elderly persons occupying such housing.  Owners must have the managerial capacity to assess the service needs  of the residents and coordinate the provision of supportive services and  tailor the services to the individual needs of the residents. The cost of  providing services and employing a service coordinator is an eligible  project rental assistance cost under the Section 202 program.
Service coordinators in HUD-assisted developments for elderly persons  and persons with disabilities work with residents to provide a wide range  of services. According to HUD’s most recent funding notice for the service  coordinator grant program, a service coordinator is responsible for  ensuring that elderly residents, especially those who are at-risk or frail,  and non-elderly residents with disabilities are linked to the supportive  services they need to continue living independently in their current  homes. An at-risk elderly person means an individual 62 years of age or  older who is unable to perform one or two activities of daily living, and a  frail elderly person means an individual 62 years of age or older who is  unable to perform at least three activities of daily living.
Service coordinators can be funded through HUD’s Multifamily Housing  Service Coordinator grant program. Owners of eligible properties may  apply for funds through HUD’s grant process. For a development to  qualify, at least 25 percent of its residents must be considered frail  elderly, at-risk elderly, or disabled non-elderly. Applicants must show  that they have no other funds available to pay for a service coordinator.  Grants are made for an initial 3-year term and are renewable. Grants  provide funding for the salary, benefits, and related administrative costs  associated with employing a service coordinator. Service coordinators  funded with grant funds cannot organize activities that are unrelated to  supportive services or provide supportive services directly.
Service coordinators for Section 202 properties can also be funded  through the property’s operating budget with HUD approval. HUD  officials refer to these as budget-based service coordinators. For  example, owners of Section 202 properties can include the service  coordinator position in the development’s operating budget, where the  position is supported by rental assistance under a project rental  assistance contract or project-based Section 8 contract. Also, in cases  where properties accrue a rental subsidy that is not needed to pay  operating costs (residual receipts), the monies must be spent on activities  that will benefit the property and the residents, which can include a  service coordinator. In addition, Section 202 property owners that prepay  or refinance a direct loan and subsequently have a debt service savings  can use the additional cash flow to fund a service coordinator. Figure 2  illustrates sources of HUD funding for Section 202 service coordinators.
section_title: The Actual Number of Section 202 Properties Having Service Coordinators Is Unknown because HUD’s Data Are Incomplete
paragraphs: While limitations in HUD’s data make an accurate assessment difficult,  we estimate that roughly half of Section 202 properties have HUD-funded  service coordinators. HUD’s data show that, as of the end of fiscal year  2014, approximately 38 percent of Section 202 properties had HUD- funded service coordinators. However, HUD’s data likely underestimate  the number of properties with service coordinators. Specifically, when we  surveyed a generalizable sample of properties that were not identifiable in  HUD data as having HUD-funded service coordinators in fiscal year 2014,  31 respondents indicated that they did have one. Based on our survey  results, we estimate that an additional 12 percent of Section 202  properties had a HUD-funded service coordinator in fiscal year 2014.  Therefore, we estimate that around 50 percent of all Section 202  properties had a service coordinator funded by HUD in that year—38  percent identified in HUD’s data, plus the additional 12 percent suggested  by our analysis of survey results (see fig. 3).
In addition, HUD’s data on service coordinators with budget-based  funding appear to be less reliable than data for those funded by grants. Of  the properties that we identified in HUD’s overall data as having a HUD- funded service coordinator, 73 percent of them used budget-based  sources to pay for their service coordinator. However, of the properties  that had a HUD-funded service coordinator but were not identifiable as  such in HUD’s data, we estimate that no less than 91 percent used  budget-based funding, based on our analysis of survey results. The  significantly higher percentage of budget-based service coordinators  among those not identifiable in HUD’s data—no less than 91 percent,  compared to 73 percent in HUD’s overall data—suggests that HUD’s data  are less reliable for budget-based service coordinators than for those  funded through grants.
According to HUD’s headquarters staff, one possible cause of errors in  HUD’s data for budget-based service coordinators is that HUD field staff  do not always properly record information on the presence and funding  source of Section 202 properties’ service coordinators. According to HUD  officials, managers of Section 202 properties must submit budget  requests annually, including requests to use HUD funds for service  coordinators, to appropriate HUD field staff for review and approval.  According to HUD staff, generally a property’s first request for service  coordinator funding should be made using a specific HUD form, and a  version of this same form should be submitted in subsequent years as  well. HUD staff told us that upon receiving requests to use HUD funds to  pay for a service coordinator, field staff are supposed to record the  approved source of HUD funding in HUD’s centralized real estate  management database. According to HUD headquarters officials, if field  staff do not record the use of HUD funds for service coordinators in  HUD’s database, then HUD’s data will be inaccurate.
In July 2016 HUD finalized guidance for field office staff on collecting and  recording information on the presence and source of HUD funding for  service coordinators, including service coordinators at Section 202  properties. This guidance describes how HUD field office staff should (1)  review Section 202 properties’ initial requests to use budgeted funds for  service coordinators, (2) review subsequent budget requests, (3) identify  funding sources for service coordinators, and (4) enter this information  into an information system. According to HUD, this guidance went into  effect immediately. However, HUD has not developed plans for how staff  are to receive training on the guidance, and it is too soon to know whether  the guidance will improve the reliability of HUD’s data on budget-based  service coordinators.
Federal internal control standards note that it is important for  management to obtain relevant data from reliable internal and external  sources in a timely manner based on identified information  requirements. As discussed more fully later in this report, HUD employs  additional monitoring and oversight procedures at properties with HUD- funded service coordinators for the specific purpose of helping to ensure  that these service coordinators are effectively linking residents to  supportive services, in keeping with the goals of the Section 202 program.  If HUD does not have complete and accurate information about the  presence and funding source of service coordinators in Section 202  properties, it risks not taking all required steps to monitor all of these  properties to help ensure they are connecting residents with the  supportive services needed to age in place successfully.
section_title: Properties without Service Coordinators Generally Relied on Property Managers to Link Residents to Services and May Not Have Coordinators for Various Reasons
paragraphs: Based upon our survey results, site visits, and discussions with industry  groups, we identified various approaches that Section 202 properties  without service coordinators sometimes use to connect elderly residents  to services—most commonly, having the on-site property manager play  this role—as well as benefits and limitations of each of these approaches.  We also identified common reasons why Section 202 properties may not  have service coordinators, such as insufficient funding.
subsections: section_title: Properties without Coordinators Rely on a Variety of Means to Connect Residents to Services
paragraphs: The most commonly cited alternative approach to connecting Section 202  residents to services was to have the on-site property manager share  information with residents. We estimate that about 77 percent of  properties that did not have a HUD-funded service coordinator used this  approach. Besides working with residents to understand their needs and  to identify relevant community-based services, as a service coordinator  would, the property manager can also (or instead) supply written  materials. These materials (collected into binders or posted onto bulletin  boards, for example) provide descriptions of locally available services,  along with contact information. An estimated 47 percent of properties that  did not have a HUD-funded service coordinator provided an on-site  booklet or other written materials on local services.
Section 202 property managers, agency officials, and other stakeholders  identified benefits and limitations of this alternative approach. For  example, several of these stakeholders told us that property managers  are well-positioned to know their residents, and have some insight into  their needs. However, other stakeholders told us that having property  managers assist residents with supportive services has at least two  limitations. First, on-site managers do not necessarily have the time or  expertise to effectively address residents’ supportive service needs.  Second, some property managers and agency officials told us that there  is a certain degree of tension between the roles of property manager and  service coordinator. For example, one property manager told us that  because property managers are responsible for lease compliance and  evictions, it would not make sense for them to assist residents with  services while also trying to evict them. Further, while providing on-site  written materials is an inexpensive way of making some residents aware  of local services, some stakeholders noted that residents may need help  reading and interpreting written information. Also, some stakeholders  reported that they serve residents who do not read English, and thus  written materials need to be translated.
A second commonly cited alternative was for Section 202 properties to  work with Area Agencies on Aging or other local resources, which can  coordinate services for residents. We estimate that about 54 percent of  properties that did not have a HUD-funded service coordinator used this  approach. Area Agencies on Aging are public or private nonprofit  agencies that are designated by the state to address the needs and  concerns of all older persons at the regional and local levels.  They  coordinate and offer services that help older adults remain in their homes,  if that is their preference, aided by services that make independent living  a viable option. Besides Area Agencies on Aging, Section 202 properties  can also partner with other local organizations to connect residents to  services. For example, the on-site property manager at one Section 202  property we visited described partnering with organizations as diverse as  Adult Protective Services, local food pantries, and affordable  transportation services.
Relying on Area Agencies on Aging or other local resources to connect  Section 202 residents to supportive services also has benefits and  limitations, according to property managers and other stakeholders with  whom we met. Some Section 202 property managers told us that Area  Agencies on Aging can coordinate services for residents. These services  would not have a cost to the property. Further, the staffs at Area Agencies  on Aging contract with local service providers to deliver many direct  services, such as meals, transportation, and in-home services. However,  some property managers also identified several limitations to this  approach. First, these resources are not available (or not conveniently  available) to all Section 202 properties. Second, these resources have  limited funding, thus are limited in the assistance that they can provide.  Finally, even when they do have sufficient available staff, not being  located on-site poses disadvantages. Moreover, because they are not  visible to residents on a daily or recurring basis, they are less able to build  trust and rapport with residents, compared to on-site service coordinators.
A third approach we identified through our site visits and our discussions  with industry groups was for eligible residents to access services through  various Medicaid-funded programs. At 7 of the 15 Section 202  properties we interviewed, property managers told us that some or all of  the residents were assisted through either case managers, home-health  or personal care aides, or other service organizations funded by  Medicaid. Depending on how a state has structured its provision of  Medicaid home- and community-based services, a combination of  standard medical and nonmedical services may be available to eligible  individuals—including, but not limited to, case management,  homemakers, home health aides, personal care aides, and adult day  health services. However, most properties that cited this alternative  approach—five out of seven—serve disabled adults (which could include  elderly residents). The managers of these properties generally stated that  their property did not employ a service coordinator because their  residents’ needs were served by Medicaid-funded programs.
Stakeholders with whom we spoke described benefits of the availability of  home- and community-based services funded by Medicaid programs, but  cited eligibility requirements and Medicaid funding being based on the  individual (rather than on the place) as limitations of this approach to  helping residents of Section 202 properties. For example, some  stakeholders told us that personal care attendants can come to residents’  homes and assist them with personal care needs—including bathing,  shopping, cleaning, and medical management—and that home health  aides may provide medical services to residents who are unable to travel  to a physician. One Section 202 property manager told us that, because  of their expertise, these types of attendants and aides are better suited to  working with disabled residents, including disabled elderly residents, than  are service coordinators. Several property managers explained, however,  that only eligible individuals can benefit from Medicaid-funded care, which  limits its utility as an alternative to property-based service coordinators  who can serve everyone.
An additional approach that various stakeholders identified as a potential  alternative to service coordinators is a specific Medicare and Medicaid  program known as Programs of All-Inclusive Care for the Elderly (PACE).  Like the Medicaid home- and community-based services program, PACE  helps the elderly meet their health care needs in the community instead of  going to a nursing home or other care facility. However, PACE programs  also provide a range of integrated preventive, acute care, and long-term  care services to help manage the medical, functional, and social needs of  the frail elderly. PACE organizations provide care and services to  individuals who are eligible for Medicare or Medicaid, or both, in their  homes, the community, and at PACE centers. Many PACE participants  get most of their care from staff employed by the PACE organization in  the PACE center. Residents of Section 202 properties who are PACE  participants would thus be able to coordinate their supportive service  needs without the assistance of a service coordinator.
Stakeholders likewise cited benefits and limitations to the use of PACE.  Staff from an industry group explained that, unlike service coordinators,  PACE centers can supply an all-encompassing range of services to  PACE participants directly. Furthermore, a property manager noted that  PACE centers have a social component, essentially serving as a club  where elderly people can go. However, stakeholders also explained that  not all elderly residents would be eligible for PACE. To be eligible to  participate in PACE, an individual must need a nursing-home level of care  (as certified by that individual’s state) and live in a PACE organization  service area. Not all states offer PACE under Medicaid. At the time of our  review, 32 states offered the program through 118 PACE centers.
section_title: Managers of Section 202 Properties without Service Coordinators Cited Costs and Other Reasons for Not Having a Coordinator
paragraphs: The most common reason Section 202 property managers cited for not  having a service coordinator was that their properties did not have the  resources to pay for one. For an estimated 62 percent of Section 202  properties that did not employ a service coordinator in fiscal year 2014  and that principally serve elderly residents, insufficient funding was a  reason why the property did not employ a service coordinator.
Besides insufficient funding, another reason Section 202 property  managers commonly cited for not employing a service coordinator is that  their residents received services through other means. Specifically, for an  estimated 48 percent of properties that did not have a service coordinator  in fiscal year 2014, the availability of local resources, such as Area  Agencies on Aging, was a reason why the property did not employ a  service coordinator. During our site visits, some property managers  explained that a service coordinator was not needed because residents  received services (e.g., case management) through other programs,  including Medicaid. For example, a Section 202 property we visited in  Chicago that serves individuals with severe and persistent mental  illnesses (some of whom are elderly) is operated by a mental health  services provider that provides services directly to residents. This  provider is reimbursed by Medicaid. Also, at a property we visited near  Los Angeles that serves developmentally disabled adults, some of whom  are elderly, residents are required to spend 56 hours per week at a center  that provides federally-funded supportive services. Managers of other  properties we visited told us that some residents are assisted by home- health aides that come directly to their unit to help them with activities of  daily living. While some property managers with whom we met did not  know how their aides were funded, they thought such persons were  funded through Medicaid.
Finally, nearly half of the Section 202 property managers that we  surveyed reported that they did not employ a service coordinator due to  the property’s small size. Specifically, we estimate that of the properties  that did not have a service coordinator in fiscal year 2014, 49 percent did  not have one because of the small number of units at the property.  Property managers and an owner with whom we met told us that when a  property has a small number of units, it may not be cost-effective to  employ a full-time service coordinator. For example, the owner of a 19- unit property told us that the property manager was able to assist all the  residents with their service-related needs and that hiring a full-time  service coordinator would not be cost-effective. Furthermore, for  properties with fewer than 25 units, we estimated that 23 percent of these  properties would want a service coordinator, even if funding were  available for one.
section_title: HUD Lacks Guidance on Monitoring Supportive Services Requirements and Does Not Analyze Performance Data
paragraphs: HUD requires its staff to monitor Section 202 properties’ adherence to  program requirements but does not have written guidance for staff with  monitoring responsibilities on the level and type of activity a Section 202  property must perform to demonstrate meeting the program’s requirement  to help residents obtain supportive services. HUD also lacks written  procedures for how staff should identify and monitor Section 202  properties that are bound to the program through business agreements  rather than through HUD funding. Further, while HUD collects  performance information from Section 202 properties that have service  coordinators, HUD does not take steps to verify the accuracy of  performance information and does not analyze the data collected.
subsections: section_title: HUD Lacks Written Policies and Procedures on Assessing Section 202 Properties’ Adherence to Supportive Service Requirements
paragraphs: HUD requires that its staff monitor the Section 202 supportive services  requirement but lacks guidance for doing so. Section 202 properties are  subject to general monitoring procedures for HUD multifamily programs,  but these procedures do not specifically mention the Section 202  program’s service-related requirements or how HUD staff should monitor  Section 202 properties’ adherence to these requirements. For example,  HUD’s Monitoring Desk Guide provides general information on HUD’s  procedures for risk assessment, on-site monitoring, and monitoring  documentation. Because of its broad focus, the guide does not discuss  specific programs, including the Section 202 program, or how HUD staff  should assess the program’s requirements related to supportive services.  Similarly, a 2010 HUD handbook describes management and occupancy  reviews, which HUD (or contractors) performs on HUD-assisted  multifamily housing properties to help ensure that owners and managers  comply with program requirements. However, this handbook does not  specifically discuss the portion of the review that addresses supportive  services. Thus, it does not provide written guidance for HUD staff (or  contractors) with responsibility for conducting these reviews on the  minimum type, frequency, or level of activity a Section 202 property must  perform to demonstrate meeting the program’s statutory requirement to  help connect residents to supportive services. As a result, HUD staff (or  contractors) with responsibility for conducting management and  occupancy reviews may vary in their interpretation of whether the  activities are sufficient to indicate that the property is addressing the  program’s supportive service requirements.
HUD staff with whom we met consistently mentioned that management  and occupancy reviews are tools for monitoring Section 202 properties,  but they varied in their interpretation of the role of field staff in monitoring  properties’ adherence to requirements related to supportive services. For  example, staff from one office told us that properties without service  coordinators are not required to connect residents to supportive services  and that this is not an activity that they look for as a part of their  monitoring work. Staff from another office told us that they do not have a  formal process for assessing the efforts of properties without service  coordinators to link residents to services, and that they rely on property  owners and managers to address this requirement. Staff from two other  offices noted that they are alerted to issues related to supportive services  if residents complain. Officials from HUD’s headquarters told us that  Section 202 properties, whether they have a service coordinator or not,  are required to help residents obtain supportive services, and that field  staff have responsibility for monitoring services for residents through the  management and occupancy review process.
HUD staff also varied in their views of the field offices’ responsibilities for  monitoring stand-alone Section 202 properties. According to HUD, a  stand-alone Section 202 property is one that no longer has a direct loan  and does not have a rental assistance contract. Our analysis of HUD  data indicates that there were 75 stand-alone Section 202 properties in  fiscal year 2014. HUD headquarters staff told us that they do not have  written policies or procedures for identifying or specifically monitoring  stand-alone Section 202 properties. They also told us that the agency  does not conduct management and occupancy reviews for stand-alone  Section 202 properties. These staff stated that field staff should identify  the stand-alone properties in their geographic area of responsibility and  conduct risk assessments of these properties, consistent with the  agency’s procedures for its multifamily programs. According to HUD,  stand-alone Section 202 properties are generally required to annually  self-certify their compliance with the Section 202 program, including the  supportive services requirement, and provide this information to their  appropriate field office. Field staff are also responsible for collecting the  self-certifications and logging their receipt in a HUD information system,  according to HUD headquarters officials. However, staff from only one of  the five field offices that we met with told us that they took steps to  identify the number of stand-alone properties in their geographic area of  responsibility. Field staff from other offices varied in their descriptions of  the procedures involved with monitoring stand-alone Section 202  properties. For example, some staff told us that HUD does not have any  standardized monitoring procedures for stand-alone Section 202  properties, and others told us that HUD’s headquarters staff monitor  these properties.
As of July 2016, HUD did not have written guidance related to monitoring  service coordinators. HUD’s headquarters staff told us that they are in the  process of developing written guidance for monitoring service coordinator  grantees, which is also to be a written resource for field staff on  monitoring Section 202 properties with service coordinators. HUD staff  stated that the guidance was being developed as a part of the agency’s  reorganization of its Office of Multifamily Housing. According to draft  documentation related to this effort, HUD plans to work with a contractor  to develop guidance for service coordinator grantees on financial  management, reporting, and grant monitoring by December 2016. While  this effort may help clarify HUD’s responsibilities for monitoring Section  202 properties with grant-based service coordinators, the draft  documentation does not address how HUD should assess other Section  202 properties’ compliance with the program’s supportive service  requirements. More specifically, documentation related to this effort does  not mention how HUD staff should monitor the program’s supportive  services requirement for Section 202 properties with budget-based  service coordinators or Section 202 properties without service  coordinators.
Federal internal control standards note the importance of documenting  responsibilities through policies. Without written policies and procedures  that specifically delineate the roles and responsibilities of HUD staff in  monitoring Section 202 properties’ compliance with the program’s  supportive services requirements, HUD cannot be assured that the  elderly residents of these properties are receiving the assistance with  obtaining supportive services that the program is intended to provide.
section_title: HUD Collects Information on Section 202 Properties with Service Coordinators but Does Not Verify or Analyze This Information
paragraphs: Our review identified several processes HUD uses to monitor Section 202  properties—including management and occupancy reviews and  semiannual performance reports—but HUD does not verify the accuracy  of or analyze the service-related information it collects through these  activities. For Section 202 properties that receive funding from HUD in the  form of a direct loan, capital advance, or rental assistance, HUD staff (or  contractors) are to periodically conduct management and occupancy  reviews. Reviewing officials use a HUD form to assess the management  and oversight of the property and to determine compliance with HUD’s  business agreements. The form includes a one-page section for the  assessment of supportive services for residents. According to HUD  officials with responsibility for administering the Section 202 program,  management and occupancy reviews are not intended to be a tool for  assessing a Section 202 properties’ compliance with the requirement to  connect residents to services. Rather, HUD uses the form to document  services provided to residents and whether the property has a service  coordinator, among other things.
HUD takes additional monitoring steps for Section 202 properties that  have HUD-funded service coordinators. For example, HUD field staff  review semiannual performance reports to verify that individual service  coordinators are linking the residents of specific Section 202 properties to  services. Semiannual performance reports, which HUD requires from  Section 202 properties with HUD-funded service coordinators, are  prepared by service coordinators, and include both outputs and  outcomes. For example, a service coordinator can report the number  and type of services provided, which is generally considered an output. In  contrast, service coordinators can also report on outcomes—for example,  the reason that an elderly resident vacated the property, including  passing away or moving to a facility that provides a higher level of care,  such as a nursing home.
Additionally, for Section 202 properties with Multifamily Housing Service  Coordinator grants, HUD staff are to review semiannual performance  reports to determine if grants should be renewed. For example, HUD may  renew grants based on the grantee’s acceptable performance, and will  use semiannual performance reports to inform this decision. According to  HUD officials, the agency uses semiannual performance reports as a part  of its process for assessing requests for grant renewals. HUD officials told  us that they receive around 1,100 renewal requests each year and that  none have been denied as a result of semiannual performance report  information. According to HUD staff, if the agency has concerns about a  Section 202 property’s performance, HUD staff would take steps to work  with the owner to address them.
In addition to the semiannual performance reports, properties with HUD- funded service coordinators are to provide assurance that the service  coordination function is effectively implemented. According to HUD  guidance, property managers can use assessments of the quality of the  service coordinator’s work to provide this assurance. Quality assurance  assessments are an allowable administrative expense, not to exceed 10  percent of the service coordinator’s salary, and are to be conducted by a  qualified third party. For Section 202 properties with grant-funded service  coordinators, grant funds can be used to pay for the assessment.  According to HUD officials, field staff review quality assurance reports  when they are submitted along with the service coordinator’s semiannual  performance report.
While HUD field staff review the performance-related reports that are  submitted for Section 202 properties with service coordinators, HUD does  not have policies or procedures in place to verify the accuracy of  information that properties report about the performance of their service  coordinator. Further, HUD does not take steps to verify this information as  a part of the properties’ management and occupancy reviews. Although  verifying all of properties’ self-reported information may be challenging,  GAO guidance on data reliability recommends tracing a sample of data  records to source documents to determine whether the data accurately  and completely reflect the source documents. Further, federal internal  control standards note the importance of evaluating data for reliability.
Because HUD does not verify the accuracy of information from  semiannual performance reports, it lacks assurance that this information  is accurate. To the extent that HUD relies on this information to assess  the performance of service coordinators at Section 202 properties, its  understanding of coordinators’ performance may be limited.
In addition, HUD has not developed policies or procedures for analyzing  data from the semiannual performance reports that it requires Section  202 properties with service coordinators to submit, although it has taken  recent steps to improve its use of data. At the outset of our review, HUD  officials told us that they did not have an information system to collect this  information but that the performance data would be more useful if they  were aggregated. They also noted that it would be cost-prohibitive for the  agency to revise an existing information system to accommodate  performance data from the semiannual performance report. During the  course of our review, HUD began taking steps that would enable it to  electronically extract data from semiannual performance reports and put  them into a spreadsheet. The Office of Management and Budget  approved a change to information collection procedures for the  semiannual performance report in November 2015. This change required  service coordinators to submit the report using a fillable format, a feature  which would enable HUD to extract performance data. According to Office  of Management and Budget documentation, semiannual performance  reports had to be submitted to HUD in the fillable format for the reporting  period of October 1, 2015, through March 31, 2016. In July 2016 HUD  officials provided us with a spreadsheet of performance data they had  downloaded for this performance period. In providing the data, HUD  noted that the data are still in a preliminary and raw form and may have  quality issues. We requested documentation of HUD’s plans for analyzing  the data. According to HUD, the agency has not yet developed standard  procedures for analyzing the data and does not have a firm timeline for  the development of such procedures.
While improving the agency’s ability to extract performance data from the  most recent semiannual performance reports is a positive step, HUD has  not developed policies or procedures for analyzing the data collected.  Federal internal control standards note that management should process  data into quality information and use the quality information to make  informed decisions and evaluate performance in achieving key  objectives. In addition, our previous work has found that federal  agencies can use performance information to identify performance  improvement opportunities, improve program implementation and  organizational processes, and make other important management and  resource allocation decisions. Until HUD develops and implements  policies and procedures for analyzing the performance information that it  requires from Section 202 properties with service coordinators, its ability  to use that information to monitor whether service coordinators are  performing effectively and helping to fulfill the goals of the Section 202  program will likely be limited.
section_title: Appropriated Funds for New Properties Have Not Been Available for Several Years, but HUD Has Taken Steps to Preserve Existing Properties
subsections: section_title: Appropriated Funds Have Not Been Available for New Construction since Fiscal Year 2011
paragraphs: The Section 202 program last received appropriations for new  developments in fiscal year 2011. The fiscal year 2011 appropriation of  approximately $100 million for new units was a significant reduction from  previous years’ appropriations of more than $500 million. Currently, funds  are appropriated primarily for the renewal of existing properties’ rental  assistance contracts.
Because developing a new Section 202 property can take several years,  there is often a lag between the year in which Congress appropriates  funds for Section 202 capital advances and the year in which properties  are occupied. Thus, the number of new Section 202 properties opening  has not yet ceased entirely, as shown in figure 4. However, it has been  declining since 2008. While Congress has not appropriated any funds for  new construction since fiscal year 2011, it has continued to appropriate  funds for the renewal of Section 202 properties’ rental assistance  contracts.
As a result of the production and funding trends shown previously in  figure 4, the growth of the overall portfolio of Section 202 properties has  slowed over the past several years (see fig. 5).
section_title: HUD Has Taken Measures to Preserve Existing Properties and to Encourage Owners to Continue to Serve Low- Income Elderly Households
paragraphs: HUD officials described several avenues through which HUD helps to  preserve the current stock of Section 202 properties. First, HUD helps to  ensure the long-term physical viability of Section 202 properties by  routinely performing physical inspections. Second, because even well- maintained properties eventually require rehabilitation, HUD assists  owners who wish to refinance their properties to pay for capital repairs.  Third, HUD hosts clinics to encourage owners of Section 202 direct loan  properties to remain connected to the Section 202 program. Finally, for  owners of Section 202 properties who wish to leave the program, HUD  helps owners to transfer their properties to other parties interested in  maintaining them as Section 202 properties.
subsections: section_title: Physical Inspections
paragraphs: HUD helps to ensure the long-term physical viability of Section 202  properties by routinely performing physical inspections. Physical  inspections are performed by HUD staff or contractors, and HUD officials  told us that the frequency of the physical inspections varies according to  the physical condition of the properties. Properties found to be in good  condition are subject to follow-up inspections every 3 years, while those  with deficiencies receive follow-up inspections more frequently. When  physical inspections reveal deficiencies that threaten residents’ health  and safety, properties must carry out immediate remediation plans.
section_title: Refinancing
paragraphs: Section 202 direct loan properties can be refinanced for capital repairs,  which can extend both the physically useful life of the property and the  duration of the property’s commitment to the Section 202 program.  According to HUD officials, most Section 202 owners are mission-driven  and therefore wish to continue providing affordable housing for the  elderly. Nevertheless, the lack of public sector funding for capital  improvements is a challenge because many properties are old and need  physical improvements. Refinancing offers owners a way of accessing  funds to make improvements to properties, which may be deteriorating or  in need of modernization, so that they can continue to provide affordable  housing. In order to prepay a loan and refinance a Section 202 property,  property owners generally must obtain HUD approval.
HUD has published guidance that outlines the requirements Section 202  direct loan prepayments must meet in order to receive this approval.  Beyond extending the physically useful life of a Section 202 property,  refinancing also offers a means of lengthening properties’ obligations to  serve their target populations under the terms of the Section 202  program. As a condition of securing HUD’s approval to refinance, owners  of direct loan properties sign a Use Agreement, which, as previously  discussed, obligates the property to maintain the affordability terms of the  original loan and any existing project-based rental assistance contract for  a period of at least 20 years beyond the loan’s original maturation date.
Section 202 properties can be refinanced in a number of ways. For  example, owners can borrow from a conventional lender and use the loan  proceeds to pay off their original HUD loan and also to finance needed  capital repairs. HUD helps to encourage this practice by working with  approved lenders to make available mortgage insurance for the  refinancing and substantial rehabilitation of Section 202 properties  through the Section 221(d)(4) program. Section 202 owners can also  finance capital repairs through low-income housing tax credits (LIHTC).  LIHTCs are competitively awarded by state-level housing finance  agencies, and they allow awardees—for example, Section 202 owners  planning to make substantial rehabilitations on their properties—to attract  equity investment to their properties by selling ownership interests to  parties interested in using the tax credits. As with refinancing performed  via conventional lenders, HUD helps to encourage LIHTC-based  refinancing by providing certain flexibilities for using HUD mortgage  insurance products to insure transactions that use LIHTCs. For example,  HUD streamlined its procedures for processing HUD’s multifamily  mortgage insurance applications involving LIHTCs. As part of this effort,  HUD made program changes that reduce up-front and overall transaction  costs.
HUD has used Senior Preservation Rental Assistance Contracts as a tool  to assist some Section 202 properties in refinancing. The Section 202  Supportive Housing for the Elderly Act of 2010 authorized HUD to provide  Senior Preservation Rental Assistance Contracts with 20-year terms to  prevent displacement of residents of certain Section 202 properties, by  providing new rental assistance for previously-unsubsidized units in cases  where refinancing results in increased tenant rents. HUD made its first  award of these contracts in 2013, providing $14.8 million to preserve  rental assistance in 12 Section 202 properties. However, while HUD has  received appropriations in subsequent years sufficient to annually renew  this initial round of awards, the appropriations have not been sufficient to  make any further rounds of awards.
HUD has also proposed regulations that would assist owners of Section  202 properties financed through capital advances by allowing owners to  borrow funds for needed capital renovations. Section 202 properties  developed subsequent to the 1990 passage of the Cranston-Gonzalez  National Affordable Housing Act were financed with capital advances, and  their ongoing operations are subsidized through rental assistance  contracts. However, current HUD regulations do not allow project rental  assistance funds to pay for debt service, which precludes owners of these  properties from borrowing money to make needed renovations. On  October 7, 2014, HUD proposed new regulations which, among other  things, would permit Section 202 properties that were financed through  capital advances to use their rental assistance funds to pay debt  service. This would allow Section 202 owners to borrow capital funds to  renovate existing properties and then adjust their rental assistance  contracts to allow them to service this new debt. As of July 2016, these  proposed regulations had not been finalized.
section_title: Preservation Clinics
paragraphs: HUD also hosts clinics to encourage owners of Section 202 direct loan  properties to remain connected to the Section 202 program. More  specifically, the clinics are intended to help owners understand and  evaluate their financing, recapitalization, and rental assistance options.  For example, from July 2015 through February 2016, HUD hosted nine  clinics in various regions of the country. According to HUD officials, to  identify properties to invite to the clinics, HUD staff (or contractors) review  HUD’s data to identify Section 202 properties whose agreements  (whether mortgage notes or rental assistance contracts) are set to expire  in the next few years. (Fig. 6 shows the annual number of properties  whose agreements are set to expire by 2026.) HUD staff told us that they  then invited to the clinics owners of properties for which the mortgages  would mature within the following 3 years. According to HUD officials, a  total of 550 people attended the recent series of nine clinics. However,  HUD officials explained that, because this series of clinics only recently  concluded, it is too early to attempt to measure their results, such as the  number of refinances that occurred as a result of them.
For properties that have rental assistance contracts through HUD’s  Section 8 program, including Section 202 properties, HUD’s Section 8(bb)  authority provides HUD with a means of preserving the rental assistance  associated with these properties. Under Section 8(bb), if a Section 8  rental assistance contract is terminated or expires and is not renewed,  HUD is required to transfer any remaining budget authority to another  contract to provide assistance to eligible families, including eligible  families receiving rental assistance at the time of the contract termination.  HUD officials described Section 8(bb) as an important preservation tool  for residents of Section 202 properties.
HUD also preserves existing Section 202 units by assisting owners with  property transfers. In cases where owners decide to sell their properties,  HUD can work with these owners to try to preserve their properties as  affordable housing for low-income seniors. One way they do this is via  transfers of physical assets. Through this process, with HUD approval,  the ownership of a Section 202 property is transferred to another eligible  organization. The new owner must agree to continue to operate the  property in accordance with the tenant-related provisions of the Section  202 program, among other things. HUD staff told us that they can assist  owners with this process by helping to identify organizations that may be  interested in purchasing the property. HUD officials told us that—while  HUD does not currently track the number of Section 202 property  transfers—they are uncommon and typically occur in conjunction with the  creation of a new ownership entity for purposes of a refinance.
section_title: Conclusions
paragraphs: HUD’s Section 202 program is intended to provide affordable rental  housing for the elderly and to help connect residents to supportive  services so that they can age in place. However, our review found that  HUD faces several impediments to effectively ensuring that elderly  residents of its Section 202 properties are connected to supportive  services.
First, HUD does not have reliable data on the number of Section 202  properties that have service coordinators. Specifically, HUD’s data are  missing information on the presence of a number of HUD-funded service  coordinators at Section 202 properties, in part because HUD field staff  may not be consistently following the agency’s procedures for identifying  and recording the presence of budget-based service coordinators at  Section 202 properties. This missing information could hinder HUD’s  ability to monitor and collect performance information on HUD-funded  service coordinators. Federal internal control standards note the  importance of obtaining relevant data from reliable internal and external  sources in a timely manner. While HUD finalized guidance for field staff in  July 2016 to improve its data on HUD-funded service coordinators, until  HUD field office staff fully implement this guidance, HUD may not be  identifying all cases where service coordinators’ performance does not  meet the goals of the Section 202 and service coordinator programs.
Second, while HUD staff (or contractors) are responsible for monitoring  Section 202 properties, HUD has not provided them with specific, written  guidance on monitoring properties’ compliance with supportive service  requirements. While HUD is developing written guidance that will address  monitoring, HUD’s plans for the guidance have limitations. For example,  the plans note that the guidance will focus on Section 202 properties with  grant-based service coordinators. The plans do not address how HUD  staff should assess other Section 202 properties’ compliance with the  program’s supportive service requirements, including properties with  budget-based service coordinators and properties without service  coordinators. In addition, HUD lacks written guidance on the agency’s  policies and procedures for identifying and monitoring stand-alone  Section 202 properties. Federal internal control standards note the  importance of documenting responsibilities through policies. Without  program-specific monitoring guidance, HUD may not be able to ensure  that the elderly residents of its Section 202 properties, including stand- alone Section 202 properties, are receiving the supportive housing that  the program promises.
Finally, HUD has not made effective use of the performance information  that it collects from Section 202 properties that have HUD-funded service  coordinators, including information from semiannual performance reports.  HUD has taken steps to improve its ability to extract data from the  semiannual performance reports, but it does not verify the accuracy of the  data. GAO guidance recommends verifying that data records accurately  reflect the source documents, and federal internal control standards note  the importance of evaluating data for reliability. Furthermore, HUD does  not analyze the data to better understand service coordinators’  performance. Internal control standards underline the importance of using  quality information to evaluate performance in achieving key objectives.  By taking steps to verify the accuracy of performance information and  analyze the information collected, HUD could increase its understanding  of the extent to which service coordinators help elderly residents of  Section 202 properties age in place, a goal of both the Section 202 and  service coordinator programs.
section_title: Recommendations for Executive Action
paragraphs: To better inform Congress and improve what is known about the extent to  which elderly residents of Section 202 properties are assisted by service  coordinators, we recommend that the Assistant Secretary for Housing  take the following three actions:  Implement HUD’s guidance on processes to improve the accuracy of  information on Section 202 properties with budget-based service  coordinators, and take steps to evaluate whether the guidance has  improved the reliability of this information.
Develop and implement written guidance that describes how HUD  staff should assess Section 202 properties’ compliance with the  program’s supportive services requirement. Such guidance should  include information on the roles and responsibilities of HUD staff for  (1) identifying stand-alone Section 202 properties and (2) monitoring  the supportive services requirement for Section 202 properties with  grant- and budget-based service coordinators, Section 202 properties  that do not have service coordinators, and stand-alone Section 202  properties.
Develop and implement policies and procedures for (1) verifying the  accuracy of a sample of the performance information that Section 202  properties submit through semiannual performance reports and (2)  analyzing the performance information collected.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to HUD. HUD provided written  comments, which are reprinted in appendix III.
In its letter, HUD agreed with our recommendations and pointed to  actions it has taken or intends to take to implement them, including the  following examples:
Consistent with our recommendation to improve the accuracy of  information on Section 202 properties with budget-based service  coordinators, HUD stated that it has started to make changes to  the Integrated Real Estate Management System (iREMS) to better  support data for the Service Coordinator program.
Concerning our recommendation to develop and implement written guidance on how HUD staff should assess Section 202 properties’ compliance with the program’s supportive services requirement, HUD noted that the agency had implemented guidance in July 2016 that would apply to the Multifamily Housing Service Coordinator grant program. HUD also noted that it will develop guidance and training that would standardize the role of Quality Assurance providers, which serve as a monitoring tool for the agency.
Furthermore, consistent with our recommendation for making more effective use of the performance information collected from Section 202 properties with HUD-funded service coordinators, HUD noted that it is determining a process for verifying and analyzing performance data.
When HUD provides documentation of these actions we will review the  information to determine whether our recommendations have been fully  implemented.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Housing  and Urban Development and other interested committees. In addition, the  report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions concerning this report, please  contact me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. Key contributors to this report are listed in  appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to examine (1) the extent to which Section 202  Supportive Housing for the Elderly (Section 202) properties have service  coordinators, (2) how properties without service coordinators make  services available to residents and reasons why some properties do not  have service coordinators, (3) the Department of Housing and Urban  Development’s (HUD) monitoring of Section 202 properties’ efforts to  make services available to residents, and (4) HUD’s efforts to preserve  Section 202 properties given recent trends in annual funding.
subsections: section_title: Use of Section 202 Data to Determine Number of Service Coordinators
paragraphs: To determine the number of Section 202 properties that have a service  coordinator and the characteristics of such properties and their residents,  we obtained and analyzed HUD data on Section 202 properties, service  coordinators, and tenant characteristics as of the end of fiscal year 2014,  the most recent year for which data were available at the time of our  review. We assessed HUD’s data quality in terms of federal internal  control requirements for the use of quality information. We focused on  Section 202 properties with active HUD funding for the property, either in  the form of direct loans, capital advances, or rental assistance. HUD’s  data on Section 202 properties did not identify which ones had service  coordinators. We compared information on Section 202 properties with  active HUD funding to available HUD data on service coordinators in an  effort to identify Section 202 properties that had a HUD-funded service  coordinator. To assess the reliability of this information, we conducted  electronic testing of the data to identify outliers as well as missing data,  reviewed documentation related to relevant information systems,  compared data to published reports, and interviewed HUD officials with  responsibility for managing this information. We also compared HUD’s  data with results from GAO’s survey of a generalizable sample of Section  202 property managers (described below). We determined that HUD data  were sufficiently reliable for determining the number of Section 202  properties with service coordinators that were funded through HUD’s  Multifamily Service Coordinator grant program. We determined that HUD  data were not reliable for the purpose of determining the number of  Section 202 properties with budget-based service coordinators.
section_title: Use of Survey to Learn More about Properties Not Identifiable in HUD Data as Having Service Coordinators
paragraphs: We conducted a self-administered, web-based questionnaire survey of a  sample of managers of Section 202 properties to determine how well  HUD’s data captured the presence of HUD-funded service coordinators in  Section 202 properties, to identify steps that properties that do not have a  HUD-funded service coordinator take to connect their residents with  services, and to learn about Section 202 properties’ experiences with  HUD monitoring and oversight.
subsections: section_title: Survey Development
paragraphs: Each questionnaire began with a filter question to determine whether the  sampled property was in fact an active Section 202 property as of the end  of fiscal year 2014. Questionnaires focused on four primary topic areas:  property and resident characteristics, efforts to connect residents with  supportive service (with separate sets of questions for properties that had  service coordinators and those that did not), experience with HUD  monitoring, and steps taken to assess residents’ service needs and their  health and well-being.
Most survey questions were closed-ended, in which property managers  selected from a list of possible responses. To obtain additional narrative  and supporting context, survey respondents were given opportunities to  provide additional open-ended comments throughout the survey. In nine  cases, we performed site visits to properties included in our survey  sample before the survey link was distributed electronically. In these  cases, we administered the survey on-site.
section_title: Sample Selection
paragraphs: We selected a stratified random sample of 216 properties from the 4,499  that were not identifiable in HUD’s data as having had a HUD-funded  service coordinator at the end of fiscal year 2014. We computed the  overall sample size to yield percentage estimates with confidence  intervals no wider than plus or minus 10 percentage points at the 95  percent level of confidence. We then increased the sample size for an  expected response rate of about 70 percent. Our sample was designed to  allow us to make projections to all Section 202 properties that (according  to HUD’s data) lacked a HUD-funded service coordinator, as well as to  the subpopulation of these properties that principally served elderly  residents. This planned level of precision applied only to questions asked  of the entire sample; questions asked of only a subset of the sample (e.g.,  questions addressed only to properties that had service coordinators, or  only to properties that did not have service coordinators) would produce  estimates with wider confidence intervals.
section_title: Survey Administration
paragraphs: Using e-mail addresses supplied by HUD headquarters, we sent the  sampled Section 202 managers a link to a secure survey website, along  with a unique identifier and password to control access to each member’s  questionnaire. Except for the cases of on-site survey administration, the  survey began on February 22, 2016, and data collection ended on April  24, 2016. During the course of survey data collection, we sent periodic  reminder e-mails to all nonrespondents to encourage participation in the  survey. We also conducted tailored follow-ups by telephone with selected  nonrespondents—for example, those only partially completing their  questionnaires. From our stratified random sample of 216 properties, we  received valid responses from 149 properties resulting in a response rate  of 69 percent.
section_title: Weighting and Confidence Intervals
paragraphs: We identified 10 sampled properties that indicated they were either a  Section 811 property (3 properties) or were not an active Section 202  property at the end of fiscal year 2014 (7 properties). As a result, we  treated these respondents as being out of scope and generalized the  weighted survey results to the estimated target population of about 4,275  properties (plus or minus 5.6 percentage points) in the sample frame that  were active Section 202 properties at the end of fiscal year 2014. We  statistically adjusted, or weighted, survey results to account for the fact  that we oversampled properties that were funded with capital advances,  to produce estimates that represented the entire target population.  Because we followed a probability procedure based on random  selections, our sample is only one of a large number of samples that we  might have drawn. As each sample could have provided different  estimates, we express our confidence in the precision of our particular  sample’s results as 95 percent confidence intervals. This is the interval  that would contain the actual population value for 95 percent of the  samples we could have drawn. As a result, we are 95 percent confident  that each of the confidence intervals based on our survey includes the  true values in the sample population. Throughout this report, we disclose  the confidence interval for each estimate as a margin of error (e.g., plus  or minus 10 percentage points).
section_title: Steps to Minimize Types of Error
paragraphs: In addition to sampling error, questionnaire surveys are subject to other  potential errors. We included steps in the survey design, data collection,  and data analysis stages to minimize these types of nonsampling errors.
Measurement error. Measurement error can result from differences  in how a particular question is interpreted or from the different sources  of information available to respondents. To minimize the possibility of  measurement error, we designed draft questionnaires in collaboration  with GAO survey specialists. We conducted pretests by telephone  with five Section 202 property managers (one in each of HUD’s five  Multifamily Housing regions). On the basis of survey specialist input  and these pretests, we made revisions to questionnaire drafts as  necessary to reduce the likelihood of measurement and nonresponse  errors (the types of nonresponse associated with the perceived  burden, lack of question clarity, or relevance to the respondent). In  addition, our analysts answered respondent questions and resolved  difficulties that respondents had in completing our questionnaire. We  asked open-ended comment questions at various points in the  questionnaire to allow respondents to explain or provide context for  their answers, which helped inform and corroborate our interpretation  and analysis of the survey results.
Nonresponse error. Nonresponse error can result from failing to  collect information on some or all questions from those sampled. To  minimize the possibility of nonresponse error, we made multiple  follow-up contacts with nonrespondents throughout data collection to  reduce nonresponse. We performed nonresponse bias analyses to  determine whether those not responding may have answered in a  fundamentally different way on key questions we asked. Specifically,  we compared response rates across strata definitions and examined  the accuracy of estimates of the population by property size. We  observed similar response rates within each of the strata and found  no statistically significant differences in weighted estimates of property  size when compared to the sample frame. Based on this analysis we  found no evidence of significant nonresponse bias in the results.
Data processing error. Data processing error can result from faulty  or incomplete recording of survey responses, or from improperly  designed analysis of the survey results once collected. To minimize  the possibility of data processing error, a second data analyst  independently verified the accuracy of all computer analyses. In  addition, Section 202 property managers made their responses  directly into an automated web survey instrument, preventing errors  associated with manual data entry of written answers. (For the nine  surveys that were administered during our site visits, a GAO analyst  similarly entered the property managers’ responses directly into this  automated web survey instrument on the basis of the answers  recorded on-site.)
section_title: Use of Site Visits to Learn More about Properties Not Identifiable as Having Service Coordinators in HUD Data
paragraphs: To further determine how properties without service coordinators made  services available to residents, and to identify reasons some Section 202  properties did not have a service coordinator, we conducted site visits to  HUD field offices and Section 202 properties in and around major cities in  each of HUD’s five Multifamily Housing regions. We selected cities that  (1) had HUD field offices identified in HUD’s data as being “Hubs”; (2)  were in close proximity to GAO field offices; (3) had within a 100-mile  proximity at least two Section 202 properties from our survey sample; and  (4) had at least one Section 202 property that HUD’s data indicated had a  service coordinator in fiscal year 2014. The HUD field offices we  selected included three Regional Centers—located in Atlanta, Georgia;  Chicago, Illinois; and Fort Worth, Texas—and two Asset Management  offices—located in Los Angeles, California, and Washington, D.C. All of  the local HUD offices that we interviewed had staff with responsibility for  monitoring Section 202 properties. In each of the cities we visited, we  interviewed managers of properties that did not have service coordinators  and discussed their survey responses. We also visited at least one  property in each city that did employ a HUD-funded service coordinator in  fiscal year 2014. To identify property managers, we also considered  property size. Based on the survey responses and site visits, we identified  alternative approaches to connecting Section 202 residents with  supportive services. To identify the benefits and limitations of these  approaches, we summarized the views of HUD officials, industry groups,  and Section 202 property managers. We also conducted a review of the  relevant academic and industry literature in an effort to identify alternative  approaches of connecting residents of Section 202 properties to services  besides using a service coordinator.
section_title: HUD’s Monitoring of Section 202 Properties’ Efforts to Link Residents to Services
paragraphs: To assess HUD’s monitoring of Section 202 properties’ efforts to connect  residents to services, we obtained and reviewed available documentation  of monitoring-related policies and procedures. We analyzed  documentation of monitoring efforts, and we interviewed HUD officials  from headquarters and offices in each of HUD’s five Office of Multifamily  Housing regions. Based on these documents and interviews with HUD  staff, we identified two monitoring processes, management and  occupancy reviews and reviews of semiannual performance reports,  which focus to some extent on supportive services at Section 202  properties.
To assess the extent to which HUD staff were following these monitoring  policies and procedures, we reviewed available documentation of  management and occupancy reviews conducted from 2010 through 2015.  We included in our survey questions for property managers about HUD’s  monitoring efforts, and we analyzed responses to these questions. During  site visits to cities within HUD’s five Multifamily Housing regions, we  interviewed Section 202 property managers and local HUD staff about  HUD’s monitoring practices. We compared HUD’s monitoring activities to  federal internal control standards related to program monitoring. As a  part of this analysis, we compared HUD’s activities with the internal  control requirement for documenting responsibilities through policies.
We also examined HUD’s efforts to collect performance information on  service coordinators for Section 202 properties. We interviewed HUD staff  about requirements for properties’ reporting of performance information,  as well as HUD’s procedures for collecting and reviewing the  performance information that it collects on service coordinators. We  reviewed draft documentation of HUD’s plans to improve its procedures  for collecting and analyzing performance information as well as HUD’s  preliminary download of performance data. We compared HUD’s  practices for using performance information to GAO guidance on data  reliability and federal internal control standards related to evaluating data  for reliability. Additionally, we compared HUD’s practices to previous  GAO work on using performance information to identify performance  improvement opportunities as well as federal internal control standards  for processing data into quality information. Finally, we interviewed  managers of Section 202 properties with service coordinators, as well as  service coordinators themselves, about performance reporting  requirements during our site visits.
section_title: HUD’s Efforts to Preserve Section 202 Properties
paragraphs: To describe steps HUD has taken to preserve Section 202 units, we  identified and reviewed documentation of various tools that HUD has  used to help ensure that properties are maintained in good physical  condition and that property owners continue to provide affordable housing  through the Section 202 program. For example, we reviewed HUD  Notices on prepaying and refinancing direct loans as well as agency  documentation related to preservation workshops. We discussed these  tools with HUD headquarters staff and—in the case of one of these tools  (preservation clinics)—with HUD’s field office staff. We reviewed  documentation of HUD’s policies and procedures for monitoring the  physical condition of Section 202 properties, and interviewed HUD staff  and Section 202 property managers about preserving the property. We  reviewed HUD policies and procedures related to the refinancing of  Section 202 properties, as well as proposed regulatory changes to these  policies. We interviewed managers of Section 202 properties about  HUD’s efforts to encourage them to continue operating as Section 202  properties. We also analyzed HUD data to identify the number of Section  202 properties with direct loans that will mature from 2017 through 2026.
We conducted this performance audit from April 2015 to August 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Copy of Survey
paragraphs: Survey of Service Provision among Section 202 Properties  The U.S. Government Accountability Office (GAO) is an independent  nonpartisan research agency of the Congress. Congressional  appropriations committees asked us to conduct a study examining the  prevalence of service coordinators among Section 202 properties, the  reasons some properties lack service coordinators, and alternative  methods of making services available to residents.
The purpose of this survey is to obtain information from a sample of  Section 202 managers on the reasons Section 202 properties may not  have service coordinators and any alternative methods of making  supportive services available to residents. As Congress has requested,  we also want to learn about properties that have service coordinators and  obtain information on funding sources for these coordinators.
This survey asks about activity during fiscal year 2014 (FY2014) —  October 2013 through September 2014 — unless otherwise  specified.
You are listed as a contact for the Section 202 property below. However,  you may need to coordinate with additional staff to complete it or get it to  the best person to complete it. This questionnaire pertains only to the  following property (even if this property is one portion of a multi-phased  project):
Property: iREMS ID:
Address:
City/State:   Contact information; property and resident characteristics  1. Please provide the name, title, telephone number, and e-mail  address of the person responsible for completing this survey so that  we may follow up, if necessary.  a.  Name: ________________________________  b.  Title: __________________________________  c.  d.  E-mail address:_________________________  2. At the end of FY2014 was this property an active Section 202  property?     Don’t Know  If “no” or “do not know” was checked, please explain.  3. As of the end of FY2014, which of the following best describes the  composition of residents at this property?    Generally elderly (head of household is 62 or older)    More elderly than non-elderly disabled    More non-elderly disabled than elderly    Other (specify below)
If “Other” was checked for question 3 please explain below:  4.  During any part of FY2014, did this property employ a service  coordinator?    Yes (continue with question 5)    No (skip to question 8)
Properties that Do Employ Service Coordinators  5. During FY2014, which of the following funding sources were used  to pay for the service coordinator(s)? a. Debt service savings  c. Project Rental Assistance Contract (PRAC)  d. Service Coordinator Program Grant  e. Section 236 excess income  f. Section 8 operating funds  h. State or local funds   i. Other (specify below)
If “other”: What was the other funding source?  6. To what extent did the funding used cover the costs of employing  a service coordinator (e.g., salary, administrative costs)?    Covered all costs (skip to question 7)    Covered some costs  6A. If the funding used did not cover all costs, what percentage of  overall costs was not covered — and what types of costs were not  covered?  7. In FY2014, were any steps taken to ensure that the service  coordinator function was implemented effectively?  7A. If “Yes” was checked for question 7, please indicate what steps  were taken.    A third party conducted a quality assurance assessment    We conducted a quality assurance assessment “in-house.”    Other (specify below)
If “Other” was checked for question 7A, please describe the steps  that were taken to ensure that the service coordinator function was  implemented effectively.  7A. If “No” was checked for question 7, what were the reasons no  steps were taken?
Properties That Do Not Employ Service Coordinators  8. In FY2014, which of the following were reasons for not employing  (funding) a service coordinator for this property? (for each row  check Yes or No) b. Small number of units  c. Residents had access to a service  coordinator that was employed (funded) by  another Section 202 property  d. Residents had access to a service  coordinator that was employed (funded) by  another HUD-subsidized property (but not a  Section 202 property)  e. Residents used local resource(s) (e.g.,  Local Area Agency on Aging (AAA), Program  of All-Inclusive Care for the Elderly (PACE))  f. Other (specify below)
If “Other” was checked for question 8, please explain the reason.  9. Would the property manager want to employ a service coordinator  for this property if funding were available?    Don’t Know  10. Please briefly explain the response to question 9.  11. In FY2014, what resources were available to residents to help  them obtain supportive services? (for each row check one answer) a. Property manager’s assistance   b. On-site booklet/written information on       local services   c. Service coordinator of an adjacent       property  d. Service coordinator of a different property  e. Local Area Agency on Aging (AAA)  f. Program of All-Inclusive Care for the      Elderly (PACE)  g. Other (specify below)
If “Other” was checked for question 11, please describe the  resource(s) that were available to residents.  12. In your opinion, what would be the benefits of having a service  coordinator to link residents that are 62 or older with supportive  services?  13. Besides having a service coordinator, what other approaches  might link Section 202 residents that are 62 or older to supportive  services in order to help them age in place?  14. When was HUD’s most recent Management Review for this  Section 202 property?     Don’t know  15. Did HUD’s most recent Management Review examine residents’  access to supportive services (i.e., Section 24 of HUD Form 9834)?    Yes (continue with question 15A)    No (skip to question 16)    Don’t Know (skip to question 16)  15A. If “Yes” was checked for question 15, did HUD identify any  findings or concerns related to residents’ access to supportive  services?    Yes (continue with question 15B)    No (skip to question 16)  15B. If “Yes” was checked for question 15A, please describe HUD’s  findings or concerns as well as the corrective actions taken to  address them.
Residents’ Supportive Service Needs and Wellness Information  16. In FY2014, were residents’ supportive service needs formally  assessed?  16A. If “Yes”: How often are formal assessments of residents’ needs  updated? b. As requested by resident  d. Other (specify below)
If “Other” was checked for question 16A, please describe other  times when assessments of residents’ needs are updated.  16A. If you answered “No” to question 16, please explain why  residents’ supportive service needs are not assessed:  17. What resident-level information, if any, is gathered about how  well residents that are 62 or older manage living independently? a. Frequency of falls or other similar accidents    b. Frequency of hospitalizations d. Re-hospitalization within 30 days of  hospital discharge  f. Reasons for moving out   g. Type of facility moving into after moving out  of your property  h. Other (specify below)
If “Other” was checked for question 17, describe the other resident- level information collected (that relates to the potential impact of  supportive services).  18. What additional explanations of your answers or comments or  suggestions do you have about the Section 202 program and the  provision of supportive services?
section_title: Appendix III: Comments from the Department of Housing and Urban Development
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Paul Schmidt (Assistant  Director), Lisa Moore (Analyst-in-Charge), James Ashley, Vaughn Baltzly,  Collen Berracasa, William Chatlos, Emily Chalmers, John McGrail, Ruben  Montez De Oca, Carl Ramirez, Jennifer Schwartz, Jena Sinkfield, and  Nina Thomas-Diggs made key contributions to this report.