loan interest rates. We continue to believe that permanent fi- Second,... there has been in recent years a severe shortage Third, use of Section 202 loans for construction opens the way for assisting a larger number of elderly and handicapped individuals than is otherwise possible. The use of construction loans will permit HUD to provide construction financing for more units (subject to the annual authorizations of the Congress) without the need for additional borrowings from the Treasury Department to fund the program.19 No one will argue that interest on construction loans can be very high. A program of construction loans at reasonable rates would certainly be helpful; however, of what use is such a program if permanent financing is not available? HUD continues to believe that conventional financing will not be that hard to come by. Non-profit sponsors strongly disagree. Their opinion is supported by the current reactions to the Section 8 program now underway. Recognizing the very real difficulties of starting up the new Housing Assistance Payments program (Section 8), HUD has already lowered its goal of 400,000 units for Fiscal Year 1975 down to 200,000. If Section 8 does not work, Section 202 will be in deep trouble. In fact, it becomes an impossibility: without the subsidy of Section 8, the 202 program with Government interest rates would only produce rents far above the ability of even middle income elderly to pay. HUD is saying, in effect, that any non-profit sponsor desiring a Section 202 construction loan, must first obtain permanent financing. The non-profit must acquire its permanent loan through FHA or conventional means on the same basis as any builder or developer who is seeking a straight Section 8 project. Unfortunately, even experienced builders and developers are having trouble obtaining financing for Section 8. One housing development director highlighted this problem as follows: *** one of the most debilitating and curious shortcomings remains virtually unaddressed by HUD: evaluations by underwriter and issuer alike have concluded that, given the regulations set forth by HUD to govern implementation of Section 8, necessary financing almost certainly cannot be obtained. Echoing the assertion by HUD representatives that 19 Letter from Under Secretary of Housing and Urban Development, James L. Mitchell, to Senator John Sparkman, Mar. 19, 1975. "Section 8 is not a financing vehicle," Standard & Poor has If private developers cannot obtain long-term financing, non-profit sponsors certainly cannot be expected to do any better. It should be pointed out that using 202 as a construction loan program, per se, is not necessarily a bad idea-so long as permanent financing is readily available as well-through some other workable mechanism. In this manner, the 202 funds could be turned over more rapidly, and more housing for the elderly could be built. What remains to be seen is how HUD will react to these obvious difficulties. With the end of Fiscal Year 1975 looming very near, there is not much time remaining to put a solid housing program for the elderly into operation. III. AGED RENTERS AND THE HIGH COST OF ENERGY The fight for a new construction program for the elderly, specially designed for their needs, is, unfortunately, leading to a program of relief for only a limited number of older Americans of the many who desperately need housing assistance. The high cost of new construction is so great that it is unrealistic to view building new units as a sufficient answer except for a few. To many, especially the renter with no assets, maintaining rent payments has become a grim struggle. Testimony by HUD officials at a hearing entitled "The Impact of Rising Energy Costs on Older Americans" 21 shed little light on the strain placed on older renters. At that time HUD admitted that their data was "simply inadequate" to provide any meaningful statistics on this issue. A close look at 1970 Census statistics provides a ready insight into how grim that picture can be.22 There are about 3.8 million elderly households (with head 65 or older) who rent. Of this total over 1.7 million households (or 45 percent) pay over 35 percent of their income for rent. The figures are more startling when only the low income elderly are considered. About 2.2 million aged renters have incomes under $3,000 per year, and almost 1.5 million of this total (or 68 percent) pay over 35 percent of their income for rent. Close analysis of one-person elderly households reveals much the same picture. More than 2.2 million elderly renters live in one-person . households, and of this number almost 1.3 million (or 57 percent) pay over 35 percent of their income for rent, and their median income is only $1,600 per year. One-person elderly renter households with 20 Sangster, Robert P., "For Section 8 Housing-New Financing Relationship Between LHA's and State Housing Finance Agencies Proposed," Journal of Housing, No. 2, February 1975, at p. 67. 21 From prepared statement given before the Senate Special Committee on Aging, Sept. 25, 1974. 22 Housing of Senior Citizens, U.S. Department of Commerce, Social and Economic Statistics Administration, Bureau of the Census, Subject Report HC(7)-2, at p. 16. incomes under $3,000 total over 1.6 million, and of that total, over 1.1 million (or 70 percent) pay over 35 percent of their income for rent. Several developments since the 1970 Census have undoubtedly affected the statistics listed above. For example, a number of Social Security increases have been passed by Congress to improve the overall income status of older Americans. However, at the same time the Consumer Price Index has increased over 30 percent, and the housing portion of that index has increased over 32 percent. Inflationary pressures for housing costs have accelerated particularly over the past year as fuel and utility costs have soared in reaction to the energy crisis. For example, gas and electricity costs in New York City have doubled in the past year. What the Census figures do not show is how many elderly households are paying over 60, over 70, or over 80 percent of their incomes for rent. Testifying before the Subcommittee on Housing for the Elderly last year, Janet Baker, Director of Senior Citizen Activities for the Mayor of East Orange, New Jersey, told the Subcommittee: Twenty-five percent of income is supposed to be a good figure to budget for shelter costs. Some of our senior citizens in East Orange are paying 60, 70, some of them more than 100 percent of income for rent and taxes. This means rapid depletion of savings and/or dependence upon relatives.23 In short, an estimated 2 million elderly poor are today paying rent in excess of 35 percent of their incomes with little relief on the horizon. Despite these facts, and the continuing pressures of inflation and energy costs, no special program for the elderly, designed for their needs, is emerging from the Department of Housing and Urban Development. Instead, HUD continues to paint a very rosy picture. Speaking of the "general trends" in housing conditions for the elderly, Mrs. Helen Holt, Assistant to the Secretary for Programs for the Elderly and Handicapped at HUD, testified : By every available measure of housing conditions, the elderly have experienced significant and substantial improvements in their housing during the last decade.24 The Administration's poor response to the housing needs of older Americans is all the more displeasing when one considers... that hundreds of thousands of aged persons are today on waiting lists to get into public or other subsidized housing, ... that hundreds of dedicated, experienced non-profit sponsors have been anxiously waiting to build for needy senior citizens but still have no program with which to work, and, . that the supply of available, reasonablypriced rental housing continues to decline as more and more older buildings become condominiums. Perhaps the Federal response in this important area can best be summarized by two presidential policies. In 1973, after imposing a housing freeze, President Nixon concluded that the housing problem in this country is basically an income problem and, therefore, the solution was to raise incomes. In 1975, President Ford, despite Federal law to the contrary, called for a five percent ceiling on Social Security cost-of-living increases. 23 "Adequacy of Federal Response to Housing Needs of Older Americans," Part 12, hearings before the Subcommittee on Housing for the Elderly, East Orange, N.J., Jan. 19, 1974, at p. 831. 24 See source cited in footnote 19. FINDINGS AND RECOMMENDATIONS Notwithstanding the welcome passage of national housing legislation as embodied in the Housing and Community Development Act of 1974, opportunities for housing older persons in reasonably priced standard units remain scanty. In the field of new construction-even though Congress gave its blessing to the new Section 8 program and the renewed Section 202 program—there continues to be a strong reluctance on the part of HUD to launch a housing program for the elderly. Specially designed housing for the aged continues to be lost in the shuffle of larger, more general policy recommendations; and there is still no national policy for housing America's aged. Unless HUD is willing to implement the Section 202 program in such a way that permanent financing becomes available to nonprofit sponsors, the revisions of the Section 202 program will be of no assistance. While stressing the need to provide more new units specially designed for the elderly, the committee also recognizes the importance of assisting those elderly who are paying far too much of their incomes for shelter in existing housing. Many of these persons would gladly remain where they are if assistance were available. Housing allowances, or direct cash assistance, should be made available in these cases as soon as possible. To relieve the growing burden of paying for shelter of all kinds for the elderly, the committee recommends that: (1) A national policy for housing for the elderly be established. (2) An overall minimum of 120,000 new units for the elderly be approved on an annual basis. (3) An Assistant Secretary for Housing for the Elderly be established at HUD. (4) Special programs, such as "intermediate" housing and "congregate" housing, be encouraged to provide living arrangements that are alternatives to institutional care. (5) National legislation be passed encouraging the States to establish "circuit breaker" programs of tax relief for low-income elderly homeowners and renters. (6) New attention should be directed at opportunities for rehabilitation. In addition, and specifically with reference to the Section 202 program, as amended by the 93rd Congress, the committee recommends that: (1) HUD implement 202, as Congress intended, as a direct loan program for permanent financing, not construction financing. (2) A special "set aside" of Section 8 funding be made available for non-profit sponsors at the Regional level, and that the "Invitation to Bid" procedure now required under Section 8 regulations be eliminated for Section 202. (3) A "one window" procedure for simultaneous filing of Section 202, Section 8, and any available refinancing mechanism be made available at the Regional level. (4) The Section 202/Section 8 program be administered at the HUD Regional Office level by a separate specialized staff whose sole responsibility is this program. CHAPTER VII IMPROVING THE OLDER AMERICANS ACT Decisions are due in 1975 on the Older Americans Act, originally enacted 10 years ago to provide, in the words of the Congress: Assistance in the development of new or improved programs to help older persons through grants to the States for community planning and services and for training, through research, development, or training project grants, and to establish within the Department of Health, Education, and Welfare, an operating agency to be designated as the "Administration on Aging.1" Technically, the Act is to expire on June 30 of this year; but there seems no likelihood of this. The House of Representatives has already overwhelmingly passed an extension. The Administration has advanced a far less ambitious bill. And the Senate is nearing final action on what will probably be a measure combining features of several bills before its Committee on Labor and Public Welfare. Congressional readiness to act favorably on an extension is based partially upon a deeprooted conviction that steady growth of programs under the Older Americans Act must be continued. That conviction was expressed during House deliberations on the extension bill by Representative John Brademas, major sponsor of the legislation and Chairman of the Subcommittee which developed it: witnesses before the Select Education Subcommittee, including representatives of a wide variety of organizations serving the elderly, were unanimous in telling us that the time had come significantly to expand the programs supported under the Older Americans Act. The 4-year bill before us . . . does allow for that expansion.2 Senator Frank Church, Chairman of the Senate Special Committee. on Aging, made similar comments when he introduced his Older Americans Act Amendments of 1975: Ten years of experience under the Older Americans Act have amply demonstrated its value and worth for the Nation's elderly. The legislation that we introduce today is designed to build upon these solid achievements.3 Senator Harrison A. Williams, Chairman of the Senate Committee on Labor and Public Welfare and a sponsor with Senator Church of the extension legislation, said on the same occasion that the bill would 1 Public Law 89-73 (July 14, 1965). The Older Americans Act was later amended by: Public Law 90-42 (July 1, 1967), Public Law 91-69 (Sept. 17, 1969), Public Law 92-258 (Mar. 22, 1972), Public Law 93-29 (May 3, 1973), and Public Law 93-351 (July 12, 1974). 2P. H. 2479, Congressional Record, Apr. 8, 1975. P. S. 5876, Congressional Record, Apr. 14, 1975. |