Elderly Housing: Federal Housing Programs That Offer Assistance  
for the Elderly (14-FEB-05, GAO-05-174).			 
                                                                 
According to the 2003 American Housing Survey sponsored by the	 
U.S. Department of Housing and Urban Development (HUD), nearly	 
one-third of elderly households--those whose head was age 62 or  
older--were experiencing housing affordability problems. Further,
a congressional commission reported in 2002 that investment in	 
affordable housing is decreasing, although the elderly population
is expected to increase. A number of federal housing programs	 
provide assistance, including rent subsidies, mortgage insurance,
and loans and grants for the purchase or repair of homes, to	 
low-income renters and homeowners. These programs are		 
administered primarily by HUD or the U.S. Department of 	 
Agriculture (USDA). GAO was asked to determine the extent to	 
which federal housing programs provide benefits to elderly	 
households, summarize information on the programs' effectiveness 
in assisting the elderly and supportive services, and determine  
how HUD and USDA avoid overlap and duplication in their programs.
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-174 					        
    ACCNO:   A17597						        
  TITLE:     Elderly Housing: Federal Housing Programs That Offer     
Assistance for the Elderly					 
     DATE:   02/14/2005 
  SUBJECT:   Elderly persons					 
	     Federal aid for housing				 
	     Federal aid programs				 
	     Housing programs					 
	     Interagency relations				 
	     Low income housing 				 
	     Program evaluation 				 
	     Public assistance programs 			 
	     Redundancy 					 
	     Policies and procedures				 

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GAO-05-174

                 United States Government Accountability Office

                     GAO Report to Congressional Requesters

February 2005

ELDERLY HOUSING

         Federal Housing Programs That Offer Assistance for the Elderly

                                       a

GAO-05-174

[IMG]

February 2005

ELDERLY HOUSING

Federal Housing Programs That Offer Assistance for the Elderly

  What GAO Found

A total of 23 federal housing programs target or have special features for
the elderly. Specifically, one HUD and one USDA program target the elderly
exclusively, while three HUD programs target the elderly and disabled. The
remaining 18 programs serve a variety of household types but have special
features for elderly households, such as income adjustments that reduce
their rents. The 13 programs for which data were available provide about
943,000 housing units designated for occupancy by the elderly. However,
many programs also serve the elderly in undesignated units. Available
occupancy data show that the elderly occupied at least 1.3 million units
under rental assistance, public, and multifamily housing programs as of
spring 2004. Information on the effectiveness of housing programs that
assist the elderly is limited. HUD has an overall goal related to elderly
housing, but not all individual programs that assist the elderly are
explicitly linked to this goal. USDA does not have specific goals related
to elderly housing.

Most of the 23 housing assistance programs we reviewed are not designed to
provide supportive services for the elderly. Four programs require the
owners of program properties to ensure that services such as meals or
transportation are available to their residents. In addition, HUD
administers four programs-for example, the Service Coordinator
Program-that can be used in conjunction with various housing programs to
help the elderly obtain supportive services. Supportive services are also
available to elderly residents of subsidized housing through partnerships
between individual properties and local organizations.

To avoid overlap and duplication in the development of rural housing for
the elderly, HUD and USDA have established policies and procedures that
require field offices from both agencies to notify their counterparts of
applications to build new housing and consider each other's input on local
market conditions. GAO visits to selected HUD field offices and state USDA
offices revealed that staff were not consistently following these policies
and procedures but were analyzing markets to ensure the need for proposed
housing. Overall, however, funding and geographic constraints limit the
potential for overlap and duplication in the construction of rural housing
for the elderly.

Units Designated for the Elderly in Selected HUD and USDA Programs, 2004

Public Housing

Section 221(d)(3)/(d)(4) Mortgage Insurance

Section 515 Rural Rental Housing Loans 0 .2 .4 .6 .8 1.0 1.2

Units in millions

Units designated for elderly

Units not designated

Source: GAO analysis of HUD and USDA data.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Many Housing Programs Offer Assistance for the Elderly, but

Information on Their Effectiveness Is Limited Most Federal Housing
Assistance Programs Are Not Required To Provide Supportive Services for
the Elderly HUD and USDA Have Policies in Place to Avoid Duplicating
Programs Agency Comments

1 3 4

7

22

28 32

Appendixes

Appendix I:

Appendix II:

Appendix III:

Appendix IV:

Appendix V: Appendix VI: Objectives, Scope, and Methodology

Status of HUD's Efforts to Improve Administration of the Section 202
Program

Summaries of Federal Housing Programs That Serve the Elderly

Programs Targeted to the Elderly Programs Targeted to the Elderly and
Disabled Programs with Special Features for the Elderly

Additional Housing Programs

Department of Agriculture Department of Health and Human Services
Department of Housing and Urban Development Department of Veterans Affairs
Federal Home Loan Banks Internal Revenue Service

Comments from the Department of Housing and Urban Development

GAO Contacts and Staff Acknowledgments

GAO Contacts
Staff Acknowledgments

35

40

43 45 47 50

68 68 69 70 73 74 74

76

78 78 78

    Tables       Table 1: OMB PART Assessment Ratings on Selected Housing 
                                      Programs                             20 
             Table 2: Housing Assistance Programs That Require Supportive 
                                      Services                             23 

                                    Contents

Figures	Figure 1: Figure 2: Figure 3: Figure 4:

Figure 5:

Figure 6:

Figure 7:

Figure 8: Figure 9:

Housing Programs Targeted to or with Special Features
for the Elderly
Number of Units Designated for the Elderly in HUD and
USDA Public and Multifamily Housing Programs, 2004
Occupancy in HUD and USDA Public and Multifamily
Housing Programs, 2004
Active Loans or Grants to Elderly Recipients in USDA's
Single-Family Programs, October 1995 through April
2004
Housing Assistance Programs That Can Use Federally
Funded Supportive Services Programs
Section 504 Rural Housing Repair and Rehabilitation
Grants Description
Section 202 Supportive Housing for the Elderly
Description
Assisted Living Conversion Program Description
Section 231 Mortgage Insurance Description

Figure 10: Section 232 and 232/223(f) Mortgage Insurance

Description Figure 11: Section 502 Rural Housing Loan (Direct) Description
Figure 12: Section 502 Direct Housing Natural Disaster Loan

Description Figure 13: Section 502 Guaranteed Rural Housing Loan
Description Figure 14: Section 504 Rural Housing Repair and Rehabilitation

Loan Description Figure 15: Section 515 Rural Rental Housing Loan
Description Figure 16: Section 521 Rural Rental Assistance Description
Figure 17: Section 538 Guaranteed Rural Rental Housing

Description Figure 18: Housing Choice Voucher Description Figure 19:
Project-Based Rental Assistance Description Figure 20: Public Housing
Description Figure 21: Section 8 Moderate Rehabilitation Description
Figure 22: Section 207 Mortgage Insurance for Manufactured Home

Parks Description Figure 23: Section 207/223(f) Mortgage Insurance
Description Figure 24: Section 213 Mortgage Insurance Description Figure
25: Section 221(d)(3) Below-Market Interest Rate

Description

8 11 14

16

27

45

46 47 48

49 50

51

52

53 54 55

56 57 58 59 60

61 62 63

64

Contents

Figure 26: Section 221(d)(3) and (d)(4) Mortgage Insurance

Description 65 Figure 27: Section 236 Rental and Cooperative Housing

Description 66 Figure 28: Section 542(b) and 542(c) Risk Sharing Programs

Description 67

Abbreviations

ALCP Assisted Living Conversion Program
HCBS Home and Community-Based Services
HECM Home Equity Conversion Mortgage
HHS Department of Health and Human Services
HUD Department of Housing and Urban Development
IRS Internal Revenue Service
OIG Office of Inspector General
OMB Office of Management and Budget
PACE Program of All-Inclusive Care for the Elderly
PART Program Assessment Rating Tool
RHS Rural Housing Service
ROSS Resident Opportunities and Self Sufficiency
USDA Department of Agriculture
VA Department of Veterans Affairs

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States Government Accountability Office Washington, D.C. 20548

February 14, 2005

The Honorable Gordon H. Smith Chairman The Honorable Herb Kohl Ranking
Minority Member Special Committee on Aging United States Senate

The Honorable Larry E. Craig United States Senate

According to the 2003 American Housing Survey sponsored by the U.S.
Department of Housing and Urban Development (HUD), nearly one-third of
elderly households-generally those whose head is aged 62 or older-were
experiencing housing affordability problems. Whether homeowners or
renters, these households were spending more than 30 percent of their
incomes on housing. Further, according to a Congressionally-established
bipartisan commission, decreased investment in affordable housing and a
burgeoning elderly population that is projected to grow from about 12
percent of the population in 2002 to 20 percent by 2030 are likely to
increase the number of elderly who must spend large portions of their
incomes on housing.1

Housing affordability is an even greater problem for low-income elderly
households-those with incomes of less than 80 percent of area median
income. The 2003 American Housing Survey estimated that 66 percent of
low-income elderly renters spent more than 30 percent of their income on
housing. Like these renters, low-income elderly homeowners also have
affordability problems. While approximately 80 percent of the elderly own
their homes, about two-thirds of these households are considered low
income. In 2003, about 40 percent of these low-income homeowners were
spending more than 30 percent of their income on housing.

Since the 1930s, a number of federal housing programs have provided
assistance to low-income renters and homeowners, including rent subsidies,
mortgage insurance, and loans and grants for the purchase or

1Commission on Affordable Housing and Health Facility Needs for Seniors in
the 21st Century, A Quiet Crisis in America (Washington, D.C.: June 30,
2002). Available at http://www.seniorscommission.gov.

repair of homes. These programs are administered primarily by HUD or the
U.S. Department of Agriculture (USDA). However, these programs do not
reach all needy households, and waiting lists for many types of subsidized
housing, including housing for the elderly, are often long.

You requested that we review federal housing assistance programs that can
benefit the elderly. This report discusses (1) the extent to which federal
housing assistance programs provide benefits to elderly households and
what is known about the effectiveness of these programs in assisting the
elderly, (2) the types of supportive services that these programs provide
for the elderly, and (3) how HUD and USDA avoid overlap and duplication in
programs that offer similar types of housing assistance to the elderly. As
requested, we also obtained information on the status of HUD's efforts to
implement GAO's earlier recommendations to improve the timeliness and
oversight of the Section 202 Supportive Housing for the Elderly (Section
202) program, which subsidizes the development of rental housing and
provides rental assistance for elderly households with very low incomes.2
This information is included in Appendix II.

To address these objectives, we consulted with HUD and USDA officials to
identify housing assistance programs that benefit the elderly. We reviewed
laws and regulations to categorize the programs as either targeted
exclusively to the elderly, targeted at the elderly and disabled, or not
targeted but with special features for the elderly. We included housing
assistance programs that (1) subsidize mortgage interest rates, rent, or
housing repair or rehabilitation; (2) provide mortgage insurance, loan
guarantees, or direct loans for single-family or multifamily housing; or
(3) support the construction, rehabilitation, or purchase of multifamily
housing or assisted living facilities. Appendix III summarizes each of the
programs we include, and Appendix IV describes other housing-related
programs that can benefit the elderly but do not fit our three categories.

We also analyzed data from HUD and USDA databases to determine the number
of units designated for or occupied by the elderly in federally subsidized
or insured housing. We reviewed studies and reports by federal agencies,
including the HUD and USDA Offices of Inspector General; research
institutions; and others for information on the effectiveness of these
programs. These reports included the HUD and USDA fiscal year

2GAO, Elderly Housing: Project Funding and Other Factors Delay Assistance
to Needy Households (GAO-03-512, May 30, 2003), 1.

2003 Performance and Accountability Reports.3 We obtained information
about supportive services from program descriptions and agency officials.
We also reviewed agreements, policies, and procedures HUD and USDA have
established to coordinate the development of subsidized housing in rural
areas and visited selected HUD and USDA field offices to determine whether
and how they coordinated with one another. Finally, we interviewed HUD
officials and reviewed related documentation to obtain information on the
status of GAO's earlier recommendations for the Section 202 program.
Appendix I provides more detailed information on our scope and
methodology.

We conducted our work in Baltimore, Maryland; Greensboro and Raleigh,
North Carolina; Columbus, Ohio; Oklahoma City and Stillwater, Oklahoma,
and Washington, D.C., between December 2003 and December 2004, in
accordance with generally accepted government auditing standards.

Results in Brief 	A variety of housing programs provide assistance for the
elderly, but information on these programs' effectiveness is limited.
Specifically, one HUD and one USDA program target the elderly exclusively,
and three HUD programs target the elderly and disabled. Eighteen other HUD
and USDA programs that do not target the elderly have special features for
them, such as income adjustments that reduce the amount of rent they must
pay for a subsidized unit. While comprehensive data on each of these 23
programs are not available, we found that 13 of the programs provide
approximately 943,000 housing units designated for occupancy by the
elderly. However, many programs also serve the elderly in undesignated
units; available occupancy data show that the elderly occupied at least
1.3 million units under rental assistance, public, and multifamily housing
programs as of spring 2004. Further, at least 69,650 elderly households
have received loans or grants under USDA single-family programs since
fiscal year 1996. Information on the effectiveness of these housing
programs in assisting the elderly is limited. While HUD has established an
overall goal related to elderly housing, not all individual programs that
assist the elderly are explicitly linked to this goal, and USDA does not
have goals specifically targeting housing for the elderly.

3Federal agencies are required under the Government Performance and
Results Act of 1993 to submit Annual Performance and Accountability
Reports to Congress.

Most of the housing assistance programs we reviewed were not required to
provide supportive services to the elderly. Of the 23 programs, 4 require
the owners of properties developed under these programs to ensure that
services such as meals or transportation are available to their residents.
For example, property owners who receive funding through HUD's Assisted
Living Conversion Program (ALCP) are required to provide supportive
services, including meals. In addition, HUD administers four programs that
can be used in conjunction with various housing programs to assist the
elderly in obtaining supportive services. HUD's Service Coordinator
Program, for instance, funds on-site coordinators who help elderly
residents access services such as transportation and healthcare.
Supportive services are also available to elderly residents of subsidized
housing through partnerships between individual properties and local
organizations.

HUD and USDA have established policies and procedures to avoid overlap and
duplication in the development of rural housing assistance for the
elderly. These procedures require HUD field offices and USDA state offices
to notify each other when they receive applications for construction of
new housing units, and to consider each other's input on the markets in
which new construction is proposed. In addition, both HUD and USDA
independently analyze the market conditions in locations where new
developments are proposed. GAO site visits to selected HUD field offices
and state USDA offices revealed that these offices were not consistently
following coordination policies and procedures. However, each office was
analyzing the markets where new construction was proposed to ensure that
the housing was needed. Finally, program funding levels and certain
geographic restrictions limit the potential for overlap and duplication
among HUD and USDA rural rental housing.

Background 	The federal government has helped provide affordable housing
to lowincome households since the 1930s. Since then, a number of federal
housing programs have subsidized the construction of housing for the poor,
provided rental assistance to tenants in existing privately owned housing,
and insured mortgages for both single- and multifamily properties. Today,
HUD administers the majority of federal housing assistance programs in
urban areas, and USDA's Rural Housing Service (RHS) implements housing
programs in rural areas.

In general, both HUD and USDA programs target families at lower income
levels. HUD programs target families with incomes that are: extremely low

(no more than 30 percent of an area's median), very low (no more than 50
percent of an area's median), and low (no more than 80 percent of an
area's median). USDA programs also target families with incomes that are
very low and low. In addition, some USDA programs target families with
moderate incomes (no more than 115 percent of an area's median).

HUD and USDA provide many types of housing assistance programs, including
single-family programs, multifamily programs, rental assistance programs,
and public housing. Housing developments can be assisted by multiple
programs. For example, a loan or mortgage on a multifamily property may be
insured through a HUD or USDA program, and the property may have tenants
that receive rental assistance from these agencies. Federal housing
assistance can generally be categorized as follows:

o 	Single-family programs that provide mortgage insurance, loan
guarantees, or direct loans for homeowners and grants or loans for home
repairs or modifications;

o 	Multifamily programs that provide loans, subsidies, mortgage insurance
or loan guarantees, or a combination of these to support the development
and rehabilitation of rental properties, including:

o 	Production programs that provide federal funds to construct or
substantially rehabilitate units for households with extremely low to
moderate incomes; and

o 	Mortgage insurance/loan guarantee programs that provide incentives for
lenders to finance rental housing by reducing risk;4

o 	Rental assistance programs, which can be used for multifamily and some
single-family housing and generally pay property owners the difference
between 30 percent of a household's adjusted income and its rent,
including:

o 	Tenant-based rental assistance that provides vouchers for eligible
tenants to rent privately owned apartments or single-family homes and that
tenants can use in new residences if they move; and

4Not all mortgage insurance programs are targeted exclusively to housing
for lower-income households.

o 	Project-based rental assistance that is attached to specific properties
and is available to tenants only when they are living in units at these
properties; and

o 	Public housing, which is provided through HUD and offers units for
eligible tenants in properties administered by public housing authorities.

The RHS implements all of the USDA programs we reviewed. Two offices
administer the HUD programs covered in this report:

o 	The Office of Housing, which administers multifamily subsidy and
mortgage insurance programs, multifamily production programs, and a
variety of single-family programs; and

o 	The Office of Public and Indian Housing, which administers the Public
Housing, Housing Choice Voucher, and Section 8 Moderate Rehabilitation
Programs.

HUD has specific goals for increasing housing opportunities for the
elderly. As outlined in its fiscal year 2004 Annual Performance Plan,
these goals include (1) increasing the availability of affordable housing
for the elderly, (2) increasing the number of assisted-living units, (3)
increasing the number of elderly households living in privately owned,
federally assisted multifamily housing served by a service coordinator,
and (4) increasing elderly families' satisfaction with their Section 202
units.

USDA does not have specific goals related to the elderly in its fiscal
year 2004 Annual Performance Plan. However, USDA does have the broad
objective of improving the quality of life of rural families by financing,
among other things, quality housing. To reach this objective, USDA has
established two housing-related goals: (1) to increase financial
assistance to rural households to buy a home, and (2) to increase the
number of minority homeowners.

Many Housing Programs Offer Assistance for the Elderly, but Information on
Their Effectiveness Is Limited

We identified a total of 23 federal housing programs that are targeted at
or have special features for the elderly: 2 that are intended for the
elderly only, 3 that are targeted to the elderly and disabled, and another
18 that have special features, such as properties designated for elderly
occupants and income adjustments that lower elderly households' rental
payments. Some or all units in many multifamily and public housing
properties are designated for the elderly. Data on the number of elderly
served are not available for each program; however, analysis of available
data shows that the elderly occupied at least 1.3 million units provided
through several of these programs. Limited information is available about
the effectiveness of most housing programs in assisting elderly
households.

A Variety of Programs Target the Elderly or Have Special Features for Them

HUD and USDA offer 23 housing programs that either target or have special
features for the elderly. Two programs-HUD's multifamily Section 202
program and USDA's single-family Section 504 Rural Housing Repair and
Rehabilitation Grants program-are currently intended for elderly
beneficiaries only.5 Three multifamily programs target the elderly and the
disabled: HUD's ALCP and two mortgage insurance programs (Section 231 and
Section 232). Although not targeted to the elderly, another 18 programs
have special features for them. For example, public housing and some
multifamily programs allow properties to be wholly or partially designated
for occupancy by the elderly. Also, rental assistance programs and USDA
single-family programs make adjustments to elderly households' incomes
when determining program eligibility or calculating benefits. These
programs are briefly described in Figure 1, and in more detail in Appendix

III. Although most of the 23 programs are intended for households with
low, very low, or extremely low incomes, 7 of the multifamily insurance
programs may provide benefits for households of all income levels (that
is, there are no income restrictions or limits).6

5Prior to fiscal year 1992, the Section 202 program produced housing for
the elderly and disabled. The Cranston-Gonzalez Affordable Housing Act (PL
101-625), enacted in 1990, changed the Section 202 program so that it
targeted only the elderly beginning in fiscal year 1992. That act also
created a separate HUD program, Section 811, to produce housing for people
with disabilities.

6Because these mortgage insurance programs have statutory limitations on
the insurable mortgage amount per unit, higher cost properties intended
for more affluent households would be unlikely to qualify for mortgage
insurance under these programs.

Figure 1: Housing Programs Targeted to or with Special Features for the
Elderly

S Single family M Multifamily P Public housing R Rental assistance The
elderly are the only benefciaries
Assisted living facilities and properties make supportive services
available
Properties can be designated for occupancy by the elderly
The elderly receive income adjustments when determining program
eligibility or rent
Sources: GAO analysis of authorizing legislation, program regulations,
program handbooks, and other HUD and USDA documents.

aBefore fiscal year 1992, the Section 202 program also supported the
development of housing for the disabled.

bInactive programs no longer provide assistance or insurance to new
properties, but existing properties continue to operate under the
programs.

cThe Section 515 program's Congregate Housing subprogram requires
properties to provide supportive services.

Among these 23 programs, 13 have approximately 943,000 units designated
for the elderly, based on available data (fig. 2). Some public and
multifamily housing programs may designate properties wholly or partially
for the

elderly, but the number of units set aside varies across programs.7 As
figure 2 shows, the Section 202 and Section 231 programs have designated
most of their units for the elderly (84 percent and 90 percent,
respectively), consistent with these programs' targeting of the elderly or
the elderly and disabled.8 The Section 202 program designates the most
units for the elderly-about 268,000 units.

7Designating housing units for the elderly is not a feature of
single-family programs. Data on single-family programs' loan and grant
recipients are presented in figure 4.

8Although the Section 202 program currently targets the elderly only, not
all of its units are designated for the elderly because prior to 1992 the
program also produced housing for the disabled.

Figure 2: Number of Units Designated for the Elderly in HUD and USDA
Public and Multifamily Housing Programs, 2004

Source: GAO analysis of HUD and USDA data.

Notes: For the HUD programs, except public housing, the total unit counts
are from HUD's Multifamily Portfolio Reporting Database as of April 1,
2004. In 32 cases, HUD provided corrected unit counts in August 2004. We
reported the number of units designated for the elderly for HUD programs
except public housing from HUD's Multifamily Housing Inventory Survey
completed in January 2003; we also included units in properties that were
not included in the Multifamily Housing Inventory Survey but that HUD's
Multifamily Portfolio Reporting Database identified as serving the elderly
or as assisted living facilities. These two sources did not include data
on the number of Section 207 Manufactured Home Park spaces for the
elderly. The data on the Section 515 program are from USDA's Multi-Family
Integrated System as of April 30, 2004. The data on the Section 538
program are from USDA's Guaranteed Loan System and a USDA internal report
as of June 2004. "NA" means data were not available.

aAlthough the Section 202 program currently targets the elderly only, not
all of its units are designated for the elderly because the program also
produced housing for the disabled until fiscal year 1992.

bUnit counts were not available for 42 percent of the Section 207
Manufactured Home Parks properties, 57 percent of Section 232 properties,
and 23 percent of Section 542(b) and (c) properties, so we could not
produce a reliable count of the total number of units. For each of the
other HUD multifamily programs, fewer than 5 percent of the properties
were missing unit counts, so we considered the data sufficient for our
purposes.

cThe unit counts for HUD multifamily insurance programs and Section 515
include units in properties receiving Section 8 or Rent Supplement
project-based rental assistance. To avoid double-counting units, the row
for project-based rental assistance counts only units not included in
other program counts.

dThe total number of public housing units is an estimate from HUD's 2003
Performance and Accountability Report; an exact count was unavailable.
Because the total number of public housing units is an estimate, the
percentage of units designated for the elderly is also an estimate.

eThe number of public housing units designated for the elderly is the
number of units that HUD had approved under designated housing plans as of
July 14, 2004. An additional 6,004 units were designated for occupancy by
a mixed population of the elderly and the disabled.

fUnits designated for the elderly under the Section 515 program may also
be occupied by nonelderly disabled households.

gThe total number of units and units designated for the elderly represents
a minimum number because data on total units were not available for three
programs, and data on units designated for the elderly were not available
for one program.

HUD, USDA, and other agencies also administer other housing programs for
which the elderly are eligible, but which do not have special features for
the elderly. For example, under the Low-Income Housing Tax Credit program,
the largest active multifamily housing production program, states receive
annual allocations of tax credits and distribute them at their discretion.
In their guidelines for the distribution of tax credits, some states have
established preferences for properties intended for the elderly, but the
federal government does not require such preferences. Similarly, HUD's
single-family mortgage insurance program does not have features that apply
only to elderly borrowers. HUD's Home Equity Conversion Mortgage program,
which targets only elderly homeowners, did not meet our definition of
housing assistance for this review. This program allows elderly homeowners
to borrow against the equity in their homes and defer repayment for as
long as they occupy their homes, but the money can be used for any
purpose, not just housing. Appendix I explains our methodology for
determining which programs to include, and Appendix IV provides brief
descriptions of some programs that were excluded from this review.

The Elderly Occupied At Least 1.3 Million Units Provided under Federal
Housing Programs, but Complete Data on Elderly Occupancy Are Lacking

Elderly households occupied at least 1.3 million units provided through
HUD and USDA rental assistance, public, and multifamily housing programs
for which data on occupancy were available between April and June 2004
(fig. 3). The household counts by program do not match the unit counts
presented in figure 2 and Appendix III, because some units may have been
vacant or current data on tenants may have been incomplete.9 The data
include households in units designated for the elderly as well as other
elderly households receiving assistance through the programs.10 Overall,
elderly households comprised approximately 30 percent of the households
participating in programs for which data were available.11

9For example, for HUD's Section 202 and multifamily mortgage insurance
programs (Sections 207/223(f), 221(d)(3) Below-Market Interest Rate,
221(d)(3)/(d)(4), 231, 236, and 542(b)/(c)), occupancy data were available
only for households receiving project-based rental assistance. Not all
households under these programs receive such assistance.

10Elderly households include those in which the head of household,
co-head, or spouse was elderly as of the most recent reporting date.

11Occupancy data were not available for single-family programs. Data on
single-family programs' loan and grant recipients are presented in figure
4.

Figure 3: Occupancy in HUD and USDA Public and Multifamily Housing
Programs, 2004

Source: GAO analysis of HUD and USDA data.

Notes: The data for Housing Choice Vouchers, Public Housing, and Section 8
Moderate Rehabilitation are from HUD's Public and Indian Housing
Information Center as of June 3, 2004. The data for Section 515 are from
USDA's Multi-Family Integrated System as of April 30, 2004. The data for
the remaining programs (Section 202 and HUD multifamily insurance and
project-based rental assistance programs) are from HUD's Tenant Rental
Assistance Certification System as of May 25, 2004, and Multifamily
Portfolio Reporting Database as of April 1, 2004. Submission dates for
occupancy data vary, so the

available data do not provide a precise count of households on a
particular date. "NA" means data were not available.

aElderly households include those in which the head of household, co-head,
or spouse was elderly as of the most recent reporting date. Housing
assistance programs can also benefit households that have other members
age 62 and older.

bThe household counts for HUD's multifamily insurance programs include
only units receiving projectbased rental assistance.

cHUD does not maintain data on occupants of properties funded through
ALCP. However, because only multifamily properties subsidized by HUD are
eligible for this program, a household count for ALCP would likely overlap
with the counts for other programs.

dThe household counts for HUD's multifamily insurance programs and Section
515 include households receiving Section 8, Rent Supplement, or Section
521 project-based rental assistance. To avoid double-counting households,
the row for project-based rental assistance counts only households not
included in other program counts. Appendix III provides additional data on
the number of households receiving project-based rental assistance.

eThe total number of households and elderly households represents a
minimum number because data on households were not available for five
programs and were only available for units receiving projectbased rental
assistance for seven programs.

In addition to the elderly households in public and multifamily housing
programs, at least 69,650 elderly households received loans or grants
through 4 USDA single-family programs from October 1995 through April
2004, the time period for which we were able to obtain data (fig. 4).
Specifically, USDA's Section 504 grants program, which provides home
repair grants to elderly homeowners, made at least 40,697 grants to
elderly recipients during that period.12 Also, the Section 502 Rural
Housing Loans (Direct), Section 502 Direct Housing Natural Disaster Loans,
and Section 504 Rural Housing Repair and Rehabilitation Loans programs,
which offer loans for home purchase or repair, had at least 28,953 elderly
borrowers. USDA generally did not have data on the age of borrowers in its
Section 502 guaranteed loan program, which had more than 167,500 active
loans as of April 2004.

12USDA did not have data on the age of another 8,704 Section 504 grant
recipients. However, based on program requirements, nearly all of these
recipients were probably elderly. Specifically, the RHS Administrator has
the authority to allow Section 504 grants for nonelderly households in
exceptional circumstances. A senior RHS official said that the agency has
rarely exercised that authority and that USDA does not maintain statistics
on the number of exceptions granted.

Figure 4: Active Loans or Grants to Elderly Recipients in USDA's
Single-Family Programs, October 1995 through April 2004

Source: GAO analysis of USDA data.

Notes: We used data from USDA's Dedicated Loan Origination and Servicing
System and Guaranteed Loan System as of April 30, 2004. USDA has not
always required staff to record the age of the primary and secondary
borrowers or grantees in these systems, so data on age were incomplete.
The Guaranteed Loan System only had the primary or secondary borrower age
for about 2 percent of the 502 Guaranteed Loans, which was insufficient
for our purposes. We considered a loan or grant to have an elderly
recipient if the primary or secondary borrower or grantee was elderly at
the time of the loan or grant application. "NA" means data were not
available.

aThe percent of elderly recipients is derived only from those recipients
whose age was available.

bThe RHS Administrator has the authority to allow Section 504 grants for
nonelderly households, but we could not determine whether the 150 Section
504 grants that the USDA data showed as having nonelderly recipients were
exceptions or data errors.

Limited Information Is Available About the Effectiveness of Housing
Programs in Assisting the Elderly

Program effectiveness can be assessed in a number of ways-for example, by
evaluating the extent to which programs reach or serve intended
beneficiaries or examining the efficiency with which they serve those that
they do reach. In evaluation research, "effectiveness" is often defined in
terms of the achievement of program goals or outcomes. While HUD and USDA
have not established specific goals for each housing program that offers
assistance for the elderly in their annual Performance and Accountability
Reports, these reports contain limited information on some programs'
performance-that is, the extent to which a program met specific goals and
objectives or contributed to the attainment of larger overarching goals.
The Office of Management and Budget (OMB), has used its standardized
Program Assessment Rating Tool (PART) to assess five of the programs,
finding that three had not demonstrated results, one was ineffective, and
one was moderately effective.

While we also identified academic studies of some programs we reviewed,
they generally did not evaluate the effectiveness of a program in terms of
the extent to which it reached its goals. For example, some academic
studies analyzed the impact of the public housing and housing choice
voucher programs upon property values. However, affecting property values
is not a goal of these programs. Finally, we also identified information
on how effectively some of the housing programs are implemented.

Information on the Effectiveness Of the two programs that are targeted to
the elderly, only HUD's Section of Programs Targeted to the 202 program is
included in the agencies' fiscal year 2003 Performance and

Elderly

Accountability Reports. HUD addresses this program under its overall goal
of improving housing options for the elderly. According to HUD's
Performance and Accountability Report, HUD exceeded its goal of approving
250 Section 202 and Section 811 projects to start construction during
fiscal year 2003, approving 334 projects.13 While HUD exceeded this goal,
the number of projects approved for construction is a limited measure of
the effectiveness of the Section 202 program. USDA's fiscal year 2003
Performance and Accountability Report did not address the effectiveness of
the Section 504 program.

OMB rated the Section 202 program in its fiscal year 2004 PART assessment.
PART is designed to assess the effectiveness of federal programs through a
series of diagnostic questions intended to provide a consistent approach
to rating federal programs. Drawing on available performance and
evaluation information, the questionnaire attempts to determine the
strengths and weaknesses of federal programs with a particular focus on
individual program results. According to this assessment, the results of
the Section 202 program had not been demonstrated, and:

o 	The program lacked evidence showing the overall level of impact that
the program had on poor elderly individuals;

o 	HUD had not established quantifiable long-term performance goals with
outcomes for this program, so progress could not be measured;

13In HUD's fiscal year 2003 Performance and Accountability Report, data on
the number of Section 202 projects approved to start construction was not
available separately from data on the Section 811 program, which provides
housing assistance to the disabled.

Information on the Effectiveness of Programs Targeted to the Elderly and
Disabled

Information on the Effectiveness of Programs That Have Special Features
for the Elderly

o 	The program had produced about 6,000 units per year, yet there is a
need for over a million units for the elderly.

We also have reported specifically on how effectively the Section 202
program has been managed. Our 2003 report on the Section 202 program
outlined several factors that prevented efficient and effective
implementation.14 Appendix II contains an update on HUD's efforts to
improve these deficiencies.

HUD's fiscal year 2003 Performance and Accountability Report also provides
information on two of the three HUD programs targeted to the elderly and
disabled-the Assisted Living Conversion Program and the Section 232
mortgage insurance program. According to this report, HUD:

o 	Met its goal for increasing the number of assisted living units for the
elderly by adding 2,618 units or beds to the estimated 18,000 already in
place in 325 properties insured by the Section 232 mortgage insurance
program;

o 	Exceeded its goal of converting 10 properties through the ALCP by
converting 13 properties, adding an additional 407 assisted living units.

While performance and accountability information does not directly address
the extent to which programs that have special features for the
elderly-such as HUD's public housing, project-based rental assistance, and
housing choice voucher programs-are effective in assisting the elderly, it
does provide additional context. For example, HUD's fiscal year 2003
Performance and Accountability Report has an indicator to track the share
of units receiving assistance through these programs that are occupied by
the elderly, but HUD has not established goals for this indicator because
housing providers have discretion regarding admissions policies.15

14GAO, Elderly Housing: Project Funding and Other Factors Delay Assistance
to Needy Households, GAO-03-512, (Washington, D.C.: May 30, 2003).

15Public housing authorities can establish tenant selection preferences
for public housing and housing choice vouchers. Public housing authorities
and property owners can establish tenant selection preferences for
project-based rental assistance. For example, preferences for the elderly
can be established to ensure that they are given priority for assistance.

USDA's Office of Inspector General (OIG) has reported on how effectively
USDA's multifamily housing programs are implemented. For example:

o 	In 2004, the OIG reported that USDA's Rural Housing Service missed by
three projects its target of having no more than 140 multifamily housing
projects with accounts more than 180 days past due. According to the
report, this indicator is a measure of how effectively and efficiently the
multifamily housing loan portfolio is being managed.16

o 	Also in 2004, the OIG reported that RHS had not implemented all of the
policy changes that it had agreed to implement to better monitor the
owners of Section 515 developments. As a result, according to the OIG,
rural rental housing funds remained vulnerable to theft and abuse.17

In addition, we identified two studies that provided information related
to the effectiveness of housing choice vouchers in assisting the elderly
and the effectiveness of the Section 502 Rural Housing Loans (Direct)
Program in helping the elderly become homeowners and obtain better quality
housing:

o 	A 2001 study on the Housing Choice Voucher Program showed that the
elderly had less success finding and leasing a unit than other household
types, possibly because elderly renters may have difficulty looking at
multiple units.18

16U.S. Department of Agriculture, Office of Inspector General, Financial
and IT Operations, Audit Report: Rural Development's Financial Statements
for Fiscal Years 2004 and 2003, 85401-11-FM (Washington, D.C.: Nov. 5,
2004), 9.

17U.S. Department of Agriculture, Office of Inspector General, Midwest
Region, Audit Report: Rural Housing Service Rural Rental Housing Project
Management (Washington, D.C.: Sept. 30, 2004), 3.

18Meryl Finkel and Larry Buron, Study on Section 8 Voucher Success Rates,
vol. 1, "Quantitative Study of Success Rates in Metropolitan Areas,"
report prepared for the U.S. Department of Housing and Urban Development
(Cambridge, Mass.: Abt Associates, Inc., 2001), 3-7.

o 	A 1999 study of USDA's Section 502 Rural Housing Loans (Direct)
Program, which provides loans to very-low and low-income rural residents
for the purchase or repair of single-family homes, reported the results of
a 1998 survey and found that of respondents with at least one elderly
person on the mortgage, 30 percent were first-time homebuyers, and almost
90 percent reported that their current home was of better quality than
their previous home.19

Finally, OMB's fiscal year 2004 PART assessments included information
about the effectiveness of 4 of the 18 programs that provide special
features for the elderly-the Housing Choice Voucher Program, projectbased
rental assistance, and the Sections 515 and 521 programs (table 1).

Table 1: OMB PART Assessment Ratings on Selected Housing Programs

Agency Program PART rating OMB comments on effectiveness evaluations

USDA Section 515 Rural Results not         While reviews are not regularly 
                                        scheduled, USDA's Office of Inspector 
         Rental Housing   demonstrated     General routinely reviews the      
                                               program's performance.         
          Loans/Section                
        521 Rural Rental               
           Assistance                  

HUD    Housing Choice      Moderately A variety of work shows vouchers to  
                               effective     be a cost-effective means of     
             Vouchers                         delivering housing. A number of 
                                         studies of this program are underway 
                                         that will provide useful information 
                                           on the program's effectiveness.    
HUD                      Ineffective   No comprehensive evaluation of the  
       Project-Based Rental                effects of this program on low-    
                                            income residents has ever been    
            Assistance                                conducted.              

Source: OMB's fiscal year 2004 PART Assessments of HUD and USDA Programs.

Limitations of Available While Performance and Accountability Reports can
be helpful in assessing

Information on Effectiveness	program effectiveness, their usefulness is
limited. For example, USDA's fiscal year 2003 report provides little
useful information on the effectiveness of USDA's housing programs in
assisting the elderly because of the lack of specific goals and objectives
related to improving housing options for the elderly. Similarly, HUD's
fiscal year 2003 report identifies such goals for only 3 of the 23
programs we reviewed. Further, HUD's goals are not necessarily specific;
for example, although information was

19James J. Mikesell and others, Meeting the Housing Needs of Rural
Residents: Results of the 1998 Survey of USDA's Single Family Direct Loan
Housing Program, Rural Development Research Report 91, Economic Research
Service, U.S. Department of Agriculture (Washington, D.C.: 1999), 47.

available on HUD's Section 232 program, targeted goals were not
established for this program, such as increasing the number of
assistedliving units through Section 232 insurance by a specific
percentage. Without such specific criteria, HUD management and outside
evaluators lack the essential information needed to assess this aspect of
the program's effectiveness.

In addition, GAO has previously reported that the usefulness of PART
assessments is limited, for the following reasons:

o 	Many PART questions contained subjective terms that were open to
interpretation. We noted that such subjective terminology could influence
program ratings by permitting OMB staff's views about a program's purpose
to affect assessments.

o 	OMB assigned overall program ratings and individual section scores.
Overall ratings encourage a determination of the effectiveness of a
program even when performance data are unavailable, the quality of those
data is uneven, or they convey a mixed message on performance.

o 	OMB inconsistently defined appropriate measures-outcomes versus
outputs-for programs.20

Most other studies we identified on various aspects of the programs we
reviewed did not evaluate either the programs' overall effectiveness, or
their specific effect on the elderly. We also found some academic studies
that provided information related to effectiveness but that were based on
a prohibitively small sample of elderly program participants or did not
use reasonably current data.

The overall lack of information on the effectiveness of the programs we
reviewed in assisting the elderly may be due to the fact that, as GAO has
previously reported, many agencies lack the capacity to undertake program

20GAO, Performance Budgeting: Observations on the Use of OMB's Program
Assessment Rating Tool for the Fiscal Year 2004 Budget, GAO-04-174
(Washington, D.C.: Jan. 30, 2004), 17, 20, 21.

evaluations to assess a federal program's contributions to results.
Agencies' capability to gather and use performance information has posed a
persistent challenge.21

Finally, we did not evaluate the extent to which the programs we reviewed
addressed the needs of eligible elderly households because (1) complete
data on the number of elderly households occupying units provided by
federal housing programs were not available, and (2) eligibility criteria
for each program varied, making it difficult to establish the number of
eligible elderly households.

Most Federal Housing Assistance Programs Are Not Required To Provide
Supportive Services for the Elderly

Generally, HUD and USDA's housing assistance programs are not required to
provide supportive services to the elderly. Of the 23 housing assistance
programs that we reviewed, 4 required the owners of properties developed
under the programs to ensure that supportive services were available. HUD
has programs that link the elderly to or provide them with supportive
services. Two of these programs, the Service Coordinator and the Resident
Opportunities and Self Sufficiency (ROSS) programs, link residents with
appropriate supportive services that are available in the community. In
addition, the Congregate Housing Services Program funds meals and other
needed services in public and multifamily housing properties, and the
Neighborhood Networks program provides resources for establishing computer
centers at such sites. Owners of public and multifamily housing may also
provide supportive services by establishing partnerships with public and
private organizations in the community.

Four Housing Assistance HUD's Section 202 program, the ALCP, and Section
232 Mortgage Programs Require That Insurance, and USDA's Section 515
Congregate Housing Program, which is Supportive Services Be a sub-program
of the Section 515 program (see Appendix III) require Made Available to
Elderly property owners to make supportive services available to their
residents.

Residents

21GAO, Program Evaluation: Studies Helped Agencies Measure or Explain
Program Performance, GAO/GGD-00-204 (Washington, D.C.: Sept. 29, 2000),
18.

Generally, HUD and USDA do not provide funding for these services.22 The
property owners typically obtain other funds to provide supportive
services or must ensure that appropriate services are available in the
community (see table 2).

     Table 2: Housing Assistance Programs That Require Supportive Services

Agency          Program               Supportive service requirements      
    USDA  Section 515 Rural Rental   Properties must include central dining   
                                          facilities and provide meals,       
          Housing Loans (Congregate transportation, housekeeping, personal    
                                    services, and recreational and            
             Housing subprogram)               social activities.             
    HUD        Assisted Living        Assisted living facilities must provide 
                 Conversion             personal care, transportation, meals, 
                   Program             housekeeping, and laundry services.    
    HUD      Section 202 Supportive Applicants for Section 202 funding must   
                            Housing demonstrate that services will be         
               for the Elderly         available at the development or in the 
                                          community where new construction is 
                                                    proposed.                 
                                          All insured facilities must provide 
    HUD                               supportive services that vary according 
            Section 232 Mortgage                                           to 
                  Insurance                   the type of facility.           

Source: GAO analysis of program requirements.

HUD Has Other Programs that Assist the Elderly in Obtaining Supportive
Services

While USDA does not generally provide funding for supportive services for
residents of federally assisted housing, HUD has two programs that link
residents of public and multifamily properties developed under HUD
programs to supportive services, and two that provide supportive services.
None of these four programs is just for the elderly, but they either can
be used in properties designated for the elderly or have funding
specifically for the elderly. The Service Coordinator Program, for
example, provides funding for managers of multifamily properties
designated for the elderly and disabled to hire coordinators to assist
residents in obtaining supportive services from community agencies. These
services, which may include personal assistance, transportation,
counseling, meal delivery, and healthcare, are intended to help the
elderly live independently and to prevent premature and inappropriate
institutionalization. Service coordinators can be funded through
competitive grant funds, residual

22Under the Section 202 capital advance program, if a sponsor indicates
that at least 25 percent of tenants are expected to be frail elderly, HUD
allows the sponsor to use funds from the project rental assistance
contract to pay for a service coordinator. A portion of the funds (up to
$15 per month per unit) may also be used to cover some of the cost of
supportive services.

receipts (excess income from a property), or rent increases. According to
HUD's fiscal year 2003 Performance and Accountability Report, service
coordinators were serving more than 111,000 units in elderly properties.

Similarly, HUD's ROSS grant program links residents with appropriate
services. This program differs from the Service Coordinator Program in
that it is designed specifically for public housing residents. The ROSS
program has five funding categories, including the Resident Service
Delivery Models for the Elderly and Persons with Disabilities (Resident
Services) and the Elderly/Disabled Service Coordinator Program. Resident
Services funds can be used to hire a project coordinator; assess
residents' needs for supportive services and link residents to federal,
state, and local assistance programs; provide wellness programs; and
coordinate and set up meal and transportation services. The
Elderly/Disabled Service Coordinator Program has not provided new grants
since 1995 but still services existing grants.23

The Congregate Housing Services Program provides grants for the delivery
of meals and nonmedical supportive services to elderly and disabled
residents of public and multifamily housing, including USDA's Section 515
housing. While HUD provides up to 40 percent of the cost of supportive
services, grantees must pay at least 50 percent of the costs, and program
participants pay fees to cover at least 10 percent.24 Like the
Elderly/Disabled Services Coordinator Program under ROSS, the Congregate
Housing Services Program has provided no new grants since 1995, but
Congress has provided funds to extend expiring grants on an annual basis.

In addition, the Neighborhood Networks program encourages property owners,
managers, and residents of HUD-insured and -assisted housing to develop
computer centers. Although computer accessibility is not a traditional
supportive service for the elderly, a senior HUD official told us that
having computers available enhances elderly residents' quality of life.
HUD does not fund each center's planned costs, but encourages property
owners to seek cash grants, in-kind support, and donations from sources

23In fiscal year 2004, new grants for the program were funded through the
Public Housing Operating Fund.

24Fees cannot exceed 20 percent of an individual's adjusted income.

such as state and local governments, educational institutions, private
foundations, and corporations.25

Private Partnerships and Federal Health Care Programs May Provide Some
Supportive Services

Elderly residents of public and federally subsidized multifamily housing
can also receive supportive services through partnerships between property
owners and local organizations and through programs provided by the
Department of Health and Human Services (HHS). For example, property
owners can establish relationships with local nonprofit organizations,
including churches, to ensure that residents have access to the services
that they need. At their discretion, property owners may establish
relationships that give the elderly access to meals, transportation, and
housekeeping and personal care services. In site visits to HUD and USDA
multifamily properties, we found several examples of such partnerships:

o 	In Greensboro, North Carolina, Dolan Manor, a Section 202 housing
development, has established a relationship with a volunteer group from a
local church. The volunteer group provides a variety of services for the
residents, such as transportation.

o 	In Plain City, Ohio, residents of Pleasant Valley Garden, a Section 515
property, receive meals five times a week in the community's senior center
(a $2 donation is suggested). A local hospital donates the food and a
nursing home facility prepares it. Volunteers, including residents, serve
the meals. The senior center uses the funds collected from the lunch for
its activities. In addition, local grocery stores donate bread products to
the senior center daily. The United Way provides most of the funding for
the senior center.

o 	In Guthrie, Oklahoma, Guthrie Properties, a Section 515 property, has
established a relationship with the local Area Agency on Aging. The agency
assists residents of Guthrie Properties in obtaining a variety of
services, including meals and transportation to a senior center.

Some elderly residents of public and federally subsidized housing may also
obtain health-related services through programs run by HHS. For example,
HHS's Public Housing Primary Care Program provides public housing

25Grant funding for Neighborhood Networks centers can also be provided to
public housing authorities through HUD's Office of Public and Indian
Housing.

residents with access to affordable comprehensive primary and preventive
health care through clinics that are located either within public housing
properties or in immediately accessible locations. The program awards
grants to public and nonprofit private entities to establish the clinics.
The organizations must work with public housing authorities to obtain the
physical space for the clinics and to establish relationships with
residents. Currently, there are 35 grantees, 3 of which are in rural
areas. According to a program administrator, although clinics are not
specifically geared toward elderly-designated public housing, they can be
established at such properties.

Elderly residents of federally subsidized housing may also be eligible for
the Medicaid Home and Community-Based Services (HCBS) Waiver Program,
which is administered by HHS's Centers for Medicare and Medicaid Services.
Through this waiver program, individuals eligible for Medicaid can receive
needed health care without having to live in an institutional setting.26
HUD has identified the use of these waivers as an innovative model for
assisting the frail elderly in public housing.

In addition, eligible elderly residents of federally subsidized housing
may also receive health care through the Program of All-Inclusive Care for
the Elderly (PACE), which is also administered by the Centers for Medicare
and Medicaid Services.27 Like the HCBS waiver program, this program
enables eligible elderly individuals to obtain needed services without
having to live in an institutional setting. The program integrates
Medicare and Medicaid financing to provide comprehensive, coordinated care
to older adults eligible for nursing homes. Figure 5 provides information
on the housing assistance programs that can use federally funded
supportive services programs that assist the elderly.

26In order to be eligible for health care services through the HCBS waiver
program, individuals must meet a "level of care" requirement that varies
by state but that typically is measured by standards of care for either
hospitals, nursing facilities or intermediate care facilities for persons
with mental retardation.

27PACE participants must be at least 55 years old, live in the service
area, and be certified as eligible for nursing home care by the
appropriate state agency.

Figure 5: Housing Assistance Programs That Can Use Federally Funded
Supportive Services Programs

Source: GAO analysis of housing assistance programs and supportive
services requirements.

Notes: Congregate Housing Services Program grants cannot be awarded to
Section 221(d)(4) housing. Information on the extent to which elderly
residents actually utilized these supportive services was generally not
available at the federal level.

HUD and USDA Have Policies in Place to Avoid Duplicating Programs

Although the potential for duplication exists, HUD and USDA have
established policies and procedures to guide the development of
multifamily housing for the elderly in rural areas. A 1991 agreement
between the agencies and subsequent guidance to HUD and USDA field offices
established a framework for coordinating efforts to provide housing
assistance to low-income rural households. As noted, HUD develops rental
housing for the elderly in rural areas through its Section 202 program,
and USDA can develop such housing through its Section 515 program. In
addition to obtaining one another's input on proposed developments, HUD
field office and state USDA office staffs assess the markets in areas
where a new development is proposed. Site visits to HUD and USDA field
offices in three states revealed that while staff did not consistently
follow coordination procedures, each office did analyze market conditions
in the proposed locations. In addition, the potential for unnecessary
overlap and duplication between these programs has been limited by funding
levels and the geographic areas in which HUD and USDA develop new housing.

Policies are in Place to Guide the Coordination of Rural Housing
Development

Policies and procedures designed to coordinate HUD and USDA efforts to
develop rental housing in rural areas have been in place since the early
1990s.28 In 1991 HUD and USDA signed a Memorandum of Understanding and
agreed to maintain an on-going working relationship to address issues
related to providing housing assistance to rural areas in a cooperative,
cost effective, and nonduplicative manner. As a result of this agreement,
HUD and USDA issued guidance, in 1991 and 1992 respectively, specifying
how the agencies should coordinate. Specifically, the guidance outlined
coordination procedures that each agency should follow when reviewing
applications for funds to develop rental units. For HUD, this policy
applied to several programs, including the Section 202 program. For USDA,
this policy applied specifically to the Section 515 program, which can be
used to develop properties for families or the elderly. Among the programs
we

28A 2000 GAO study on duplication between HUD and USDA rural housing
programs found that while some of USDA's housing programs are similar to
programs offered by other federal agencies, other USDA housing programs
and terms have no counterparts elsewhere. GAO, Rural Housing: Options for
Optimizing the Federal Role in Rural Housing Development,
GAO/RCED-00-241(Washington, D.C.: Sept. 15, 2000), 5-6.

included, HUD's Section 202 program and USDA's Section 515 program are the
only two that actively produce rental units for the elderly in rural

29

areas.

While neither the original agreement between HUD and USDA nor the
resulting guidance has been updated since the early 1990s, the Section 515
program instructions and the Section 202 program's annual Notice of
Funding Availability, which announces the availability of funding as well
as program requirements, describe current procedures. According to the
Section 515 program instructions, the purpose of the coordination effort
is to (1) foster better communication, (2) obtain additional documentation
to determine market feasibility, (3) prevent overdevelopment of subsidized
housing, and (4) prevent adverse effects on proposed or existing units
that provide similar types of rental housing. The program instructions
also state that state USDA offices will forward basic loan information on
Section 515 loan applications that are selected for further processing to
the applicable HUD field office. HUD field office staff will identify any
pending, authorized, or existing units in the market area and provide
comments, positive or negative, on the proposed market area to USDA within
2 weeks. When HUD staff have concerns about market feasibility or the
impact of a proposed project on existing or authorized HUD units, they
also provide documentation to support their concerns. HUD has established
a similar process for notifying USDA of proposed developments. HUD's
fiscal year 2004 Notice of Funding Availability for the Section 202
program requires HUD to seek USDA's input on Section 202 applications,
giving USDA the opportunity to respond if it has concerns about the demand
for additional assisted housing or possible harm to existing housing in
the same market area.

In addition to seeking input from one another on the markets in which new
rural rental housing is proposed, both HUD and USDA assess market
conditions when they evaluate applications for Section 202 and Section 515
funds. For example, HUD's guidance instructs HUD's economists to evaluate
the markets in which all Section 202 applications propose development to
determine if sufficient demand for the units exists and to assure that any
new units will not have a long-term adverse impact on existing assisted
housing for the elderly. If this analysis shows that

29Section 202 housing can be developed in metropolitan and nonmetropolitan
areas, which may or may not include rural areas. Section 515 housing can
be developed only in rural areas.

sufficient demand for the units proposed in an application does not exist,
then the application cannot be funded. Similarly, according to USDA
officials, USDA state office staffs analyze market data to determine need
and demand for the units proposed in Section 515 applications.
Applications are not approved if:

o 	another rural rental housing loan has already been selected for further
processing in the same market;

o 	a previously authorized USDA, HUD, Low-Income Housing Tax Credit, or
similar type of project in the same market area has not been completed,
has not reached its projected occupancy level, or is experiencing high
vacancies; or

o 	the need in the market area is for additional rental assistance and not
for additional housing units.

We visited HUD field offices and USDA state offices in North Carolina,
Ohio, and Oklahoma to determine whether and how these offices were
following these policies and procedures. We chose these states because
they had the largest numbers of approved Section 202 grants in rural areas
and Section 515 loan awards in fiscal years 2002 and 2003 (see Appendix
I). Our observations from the site visits are not necessarily
representative of all field offices.

Overall, the HUD and USDA field offices in the three states we visited did
not consistently follow the policies and procedures designed to facilitate
coordination in fiscal years 2002 or 2003. For example, while local USDA
officials in North Carolina and Oklahoma obtained input from HUD on
Section 515 loan applications in fiscal years 2002 and 2003, USDA
officials in Ohio did not. According to a senior official from USDA's Ohio
state office, the agency did not seek HUD's input on the sites funded in
fiscal years 2002 or 2003 because USDA determined that market demand
existed for the units. Moreover, this official stated that they had sought
HUD's input on Ohio's list of "designated places"-cities, towns, and
communities for which USDA could approve new Section 515 development.30
Based on input from HUD and USDA field offices, USDA state offices can
remove places from the list if a market for additional rental housing does
not exist.

30USDA officials in Oklahoma also sought input from a HUD field office on
that state's list of designated places.

Since HUD officials had not raised concerns about the two places on Ohio's
list for which Section 515 housing was proposed in fiscal years 2002 and
2003 and funds were ultimately allocated, USDA officials did not think
that it was necessary to request their input again.

Only one of the HUD offices visited sought USDA's input on Section 202
grant applications in fiscal year 2002, and none sought USDA's input in
fiscal year 2003. According to HUD officials in the field offices we
visited, HUD offices did not seek input for various reasons. For example,
in North Carolina and Oklahoma there were staffing changes. In Ohio, funds
were awarded to a site that had been funded in fiscal year 2002. Since
contact was made with USDA officials in fiscal year 2002 regarding this
site, HUD officials did not see a need to contact them again in fiscal
year 2003.

Although coordination between the HUD and USDA offices we visited was
inconsistent in fiscal years 2002 and 2003, we found that these offices
based their funding decisions on market analyses. For example, HUD
economists evaluated the markets in which all Section 202 applications
proposed development. If the economists determined that a sufficient
market for development did not exist, the application was not funded.
Similarly, in each state USDA office we visited, officials explained that
if they determined that the market for Section 515 development was
insufficient in a place where development was proposed, they would not
fund the application. Possibly as a result of these market analyses, we
did not identify any examples of HUD and USDA providing unnecessarily
duplicative housing assistance for the elderly.

The Potential for Unnecessary Overlap and Duplication between Section 515
and Section 202 Developments Is Limited

Several factors limit the potential for unnecessarily duplicative Section
202 and Section 515 housing for the elderly in rural areas: funding
constraints, geographic restrictions, and, in some areas, demand for
additional rental units. First, the way that Section 202 funding is
allocated and the amount of Section 515 funding limit the number of units
these programs produce in rural areas. HUD generally allocates only a
portion of Section 202 funds to nonmetropolitan areas, which are more
likely than metropolitan areas to be considered rural and thus eligible
for USDA funds.31 In fiscal years 2002

31GAO conducted a study of USDA's definition of rural, which explored how
changing the definition of rural could improve eligibility determinations.
GAO, Rural Housing: Changing the Definition of Rural Could Improve
Eligibility Determinations, GAO-05-110 (Washington, D.C.: December 3,
2004).

through 2004, for example, HUD set aside enough funds for each of its
local offices to fund a minimum of five units in nonmetropolitan areas and
allocated 15 percent of all funds appropriated for the Section 202 program
to these areas. And although the Section 515 program provides funding
exclusively in rural areas, funding for this program has fallen sharply
since its peak in 1979. During the peak funding years, the program
produced more than 20,000 new units annually. Since 2000, fewer than 2,000
new units have been produced annually. Also, not all new Section 515 units
are for the elderly, further reducing the potential for overdevelopment of
elderly housing in rural areas.

Second, geographic restrictions on areas where Section 515 funds can be
used limit the extent to which the Section 515 and Section 202 programs
can overlap. Section 202 properties can be developed anywhere in the
United States. In contrast, not only must Section 515 properties be in
rural areas, but also new development can occur only in designated places.
State USDA offices develop lists of places with a need for multifamily
rental housing, and invite Section 515 applications for these places.
According to the USDA officials we interviewed, this list can be refined
through input from HUD and USDA field offices. As a result, new Section
515 properties could potentially be developed and overlap with new Section
202 development only in a small number of areas.

Finally, officials at the HUD field offices and state USDA offices we
visited told us that oversaturating a market with both HUD and USDA units
for the elderly was not a concern for several reasons, including a high
demand for such units. In some cases, they said, existing elderly
properties had waiting lists, and new properties generally rented quickly.
According to other officials, given the limited number of elderly units
that could be constructed with available funding, overlap and duplication
between HUD and USDA housing for the elderly was not a concern.

Agency Comments	We provided a draft of this report to USDA and HUD for
their review and comment. USDA had no comments on the report. HUD provided
comments in a letter from the Assistant Secretary for Housing - Federal
Housing Commissioner (see Appendix V).

The letter stated that the report does not give HUD's programs full credit
for their contributions in assisting the elderly. HUD's specific comments
in this regard, and our responses, are as follows:

o 	HUD commented that the report should include more detail on partnership
arrangements and overall supportive services provided to the elderly. We
believe that the report covers these issues at a level of detail
appropriate to our objective. The report includes information on the four
federal housing assistance programs that require that supportive services
be made available to elderly residents, and four programs that can be used
to either link residents to supportive services or provide services
directly. In addition, it includes examples of private partnerships and
health care programs to convey a broader sense of the supportive services
that can be available to the elderly.

o 	HUD noted that the draft did not include data on units designated for a
mixed population of the elderly and disabled. We initially determined that
the 6,004 units that fall into this category were not significant enough
to merit inclusion. However, in response to HUD's comment, we have
included this data as a note to Figure 2.

o 	HUD stated that the report fails to give Home Equity Conversion
Mortgages (HECM) sufficient credit. As detailed in the Objectives, Scope,
and Methodology (see Appendix I), this report focuses upon programs that
met our definition of housing assistance. While the HECM program did not
meet this definition, both the body of the report and Appendix IV
acknowledge HECM as a program that assists elderly families.

o 	HUD agreed that GAO used the appropriate definition of elderly
households, but stated that the report should acknowledge that other
households may have members aged 62 or older (that are not the head,
co-head, or spouse). While we did not initially provide data on such
households because they are not, by definition, elderly households, we did
add a note to Figure 3 to acknowledge that housing assistance programs can
also benefit this group.

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from
the report date. At that time, we will send copies to the Secretaries of
Agriculture and Housing and Urban Development. We will make copies
available to others upon request. This report will also be available at no
charge on GAO's Web site at http://www.gao.gov.

Please call me at (202) 512-8678 if you or your staff have any questions
about this report. Key contributors to this report are listed in Appendix
VI.

David G. Wood Director, Financial Markets and Community Investment

Appendix I

                       Objectives, Scope, and Methodology

To determine the extent to which federal housing assistance programs
provide benefits to elderly households, we first identified the relevant
programs through a literature search, review of the Catalog of Federal
Domestic Assistance, and consultation with Department of Housing and Urban
Development (HUD) and Department of Agriculture (USDA) officials.1 As used
in this report, housing assistance programs are those that:

o 	subsidize mortgage interest rates, rent, or housing repair or
rehabilitation;

o 	provide mortgage insurance, loan guarantees, or direct loans for single
family or multifamily housing; and

o 	support the construction, rehabilitation, or purchase of multifamily
housing or assisted living facilities.

We excluded programs that are administered by government-sponsored
enterprises such as Fannie Mae, Freddie Mac, and Federal Home Loan Banks;
are used exclusively to fund nursing homes or supportive housing for the
homeless; are not used exclusively to provide housing assistance; or lack
special features that apply to the elderly.

We then reviewed laws and regulations to determine which housing
assistance programs were (1) targeted to the elderly as the only
beneficiaries, (2) targeted to the elderly and disabled only, and (3) were
not targeted to the elderly but had special features for them. Appendix
III describes the programs we included, and Appendix IV describes some
programs we excluded, even though they can benefit elderly households. For
each of the programs we included, we interviewed agency officials and
reviewed laws, regulations, handbooks, and other documentation to describe
the programs and how they benefit the elderly.

We used various HUD and USDA databases to analyze the extent to which the
programs within our scope either designated units for the elderly or were
occupied by elderly households. Specifically:

1U.S. General Services Administration, Catalog of Federal Domestic
Assistance (Washington, D.C.: August 2004).

Appendix I
Objectives, Scope, and Methodology

o 	To determine the number of units under HUD's multifamily programs, we
used data from HUD's Multifamily Portfolio Reporting Database as of April
1, 2004. HUD provided corrected unit counts for 32 properties in August
2004. Unit counts were not available for 42 percent of the Section 207
Manufactured Home Parks properties, 57 percent of Section 232 properties,
and 23 percent of Section 542(b) and (c) properties, so we could not
produce a reliable count of the total number of units for these programs.
For the other HUD multifamily programs, fewer than 2 percent of the
properties were missing unit counts (except that 4.5 percent of Section
207/223(f) properties were missing unit counts), so we considered the data
sufficient for our purposes. We combined these data with the results of
HUD's Multifamily Housing Inventory Survey, conducted between June 2002
and January 2003, to determine the number of multifamily units designated
for the elderly under each

2

program.

o 	To determine the number of elderly households living in properties
under HUD's multifamily programs, we used data from HUD's Tenant Rental
Assistance Certification System as of May 25, 2004. However, we were only
able to determine the number of households receiving project-based rental
assistance. Not all units under HUD's multifamily program receive
project-based rental assistance, and occupancy data on these unassisted
units were not available. As a result, the numbers that we report for
these programs do not reflect the total number of elderly households in
these programs but only the number of elderly households receiving
project-based rental assistance.3

o 	To determine the number of elderly households living in public housing
or receiving rental assistance through the Housing Choice Voucher or
Section 8 Moderate Rehabilitation programs, we used data from HUD's

2HUD field office staff completed the Multifamily Housing Inventory
Survey, reporting the number of units designated for the elderly or the
disabled in insured or subsidized multifamily properties, excluding
unassisted hospitals, nursing homes, intermediate care facilities, board
and care facilities, and assisted living facilities. For properties that
were not included in the Multifamily Housing Inventory Survey, if the
Multifamily Portfolio Reporting Database indicated that the property was
wholly for the elderly or was an assisted living facility, we included the
property's units in our count of elderly-designated units.

3The HUD multifamily programs for which occupancy data were available only
on households receiving project-based rental assistance were Section 202,
Section 207/223(f), Section 221(d)(3) Below-Market Interest Rate, Section
221(d)(3)/(d)(4), Section 231, Section 236, and Section 542(b)/(c).

Appendix I
Objectives, Scope, and Methodology

Public and Indian Housing Information Center as of June 3, 2004. We
excluded outdated data (29 percent of the records) by including in our
analysis only households whose records had been updated within the last 15
months.4 To determine the number of public housing units designated for
the elderly, we used a July 14, 2004, Designated Housing Plan Status
Report-a spreadsheet that HUD uses to track public housing authorities
that have requested or been approved to formally designate units for the
elderly.

o 	For USDA's Section 515 program, we used data from USDA's Multi-Family
Integrated System as of April 30, 2004, and July 13, 2004, to determine
the number of units, units designated for the elderly, and units occupied
by elderly households (including households receiving Section 521 rental
assistance).5

o 	To determine the number of Section 538 units, we used (1) a report from
USDA's Guaranteed Loan System as of June 3, 2004, covering Section 538
properties guaranteed beginning in fiscal year 2000 and (2) a June 16,
2004, report listing data on Section 538 properties guaranteed through
fiscal year 1999 but not maintained in USDA's central data systems. Data
on the occupants of Section 538 properties were not available.

o 	For USDA's Section 502 and 504 single-family programs, we used data
from USDA's Dedicated Loan Origination and Servicing System and Guaranteed
Loan System as of April 30, 2004, to determine the total number of loans
and grants and the number of borrowers or grantees who were elderly at the
time they applied for a loan or grant. However, the Guaranteed Loan System
only had the primary or secondary borrower age for about 2 percent of the
Section 502 Guaranteed Loans, a percentage that was insufficient for our
purposes.

In order to assess the reliability of the program data described above, we
reviewed related documentation and interviewed agency officials and

4Public housing authorities are supposed to certify data on tenants at
least annually and submit the data to HUD. Allowing for the time it may
take for public housing authorities to process and submit data to HUD, we
considered data submitted within 15 months of the data extract to be
current.

5Combined, the data include Section 515 properties that had active loans
as of April 30, 2004, that had not been paid off as of July 13, 2004.

Appendix I
Objectives, Scope, and Methodology

contractors who worked with these databases. In addition, we performed
internal checks to determine the extent to which the data fields were
populated and the reasonableness of the values contained in the data
fields. During our internal checks, for household counts based on the age
of household members, we identified 0.01 percent of cases where the age
appeared to be erroneous due to unreasonably high values. We concluded
that the data we used were reliable for purposes of this report.

To provide information on the effectiveness of the programs within our
scope in assisting the elderly, we reviewed studies and reports by federal
agencies, research institutions, and the HUD and USDA Offices of Inspector
General. We reviewed the methodologies used in relevant studies to ensure
that the results reported were reasonable. We excluded studies that did
not focus on the effectiveness of a program in assisting the elderly, were
more than 15 years old, or were not focused upon the goals of the program.
We also reviewed the Office of Management and Budget's Program Assessment
Rating Tool assessments for programs within our scope. In addition, we
used HUD and USDA fiscal year 2003 Performance and Accountability Reports
to determine if program goals or performance measures specific to the
elderly had been established for these programs. For those programs with
such goals, we provided information on whether the goal was reached. For
those programs that did not have these goals, we summarized available
information related to the effectiveness of the programs in assisting the
elderly.

To describe the types of supportive services that federal housing
assistance programs provide for the elderly, we first reviewed laws and
regulations to determine which of the programs within our scope were
required to ensure that supportive services were available. Next, we
identified supportive services programs that could be used with various
housing assistance programs, whether or not the housing assistance program
required such services. For example, while public housing authorities that
manage public housing are not required to provide supportive services,
housing authorities may implement such services voluntarily. We identified
supportive services programs by reviewing literature and descriptions of
housing assistance programs and interviewing administrators of the housing
assistance programs within our scope, as well as representatives of
advocacy organizations and professional associations interested in elderly
housing issues and supportive services. We obtained descriptions of these
supportive services programs by interviewing officials from HUD, USDA, and
the Department of Health and Human Services. We also reviewed program
descriptions, notices of funding availability, and other

Appendix I
Objectives, Scope, and Methodology

documentation to develop descriptions of these supportive service
programs.

To determine how HUD and USDA avoid overlap and duplication in programs
that offer similar types of housing assistance to the elderly, we first
determined which programs were actively producing new units in the same
areas. We found that both HUD and USDA were actively producing new
multifamily rental units in rural areas through the Section 202 and
Section 515 programs, respectively. While Section 202 units can be
constructed in metropolitan areas, Section 515 units cannot. As a result,
we focused our analysis upon rural areas. We reviewed agreements,
policies, and procedures established by HUD and USDA to coordinate the
development of subsidized housing in rural areas and interviewed HUD and
USDA officials responsible for administering these programs. We also
visited HUD and USDA field offices in Greensboro and Raleigh, North
Carolina; Columbus, Ohio; and Oklahoma City and Stillwater, Oklahoma to
determine whether and how the policies and procedures for coordinating
were being followed. We identified these states as having received, when
both programs are considered together, the most Section 202 grants in
rural areas and the most Section 515 new construction loans made in fiscal
years 2002 and 2003.

To determine the status of HUD's efforts to improve administration of the
Section 202 program (Appendix II), we interviewed HUD officials and
reviewed related documentation to identify steps HUD had taken to
implement the recommendations we made in our 2003 report on the Section
202 program. We also obtained a HUD report on the number of delayed
Section 202 properties as of November 10, 2004, and compared this report
with data we presented in our 2003 report.

We conducted our work primarily in Baltimore, Maryland; Greensboro and
Raleigh, North Carolina; Columbus, Ohio; Oklahoma City and Stillwater,
Oklahoma, and Washington, D.C., between December 2003 and December 2004,
in accordance with generally accepted government auditing standards.

Appendix II

Status of HUD's Efforts to Improve Administration of the Section 202
Program

Our May 2003 report to the Senate Special Committee on Aging noted the
significance of the Department of Housing and Urban Development's (HUD)
Section 202 Supportive Housing for the Elderly (Section 202) Program,
which subsidizes the development of rental housing and provides rental
assistance for elderly households with very low incomes.1 Among other
things, the report found that many Section 202 properties encountered
delays before beginning construction, and we made several recommendations
to improve the program's timeliness and oversight. Specifically, we
recommended that HUD:

o 	Evaluate the effectiveness of the current methods for calculating the
capital advances that project sponsors receive and make any necessary
changes to these methods, based on this evaluation, so that capital
advances adequately cover the development costs of Section 202 projects
consistent with HUD's project design and cost standards;

o 	Provide regular training to ensure that all field office staff are
knowledgeable of and held accountable for following current processing
procedures required to approve projects to begin construction;

o 	Update the Section 202 program handbook to reflect current processing
procedures; and

o 	Improve the accuracy and completeness of information that field staff
enter in the program's database system and expand the system's
capabilities to track key project processing stages.

At the time we completed our work, HUD had made some progress but had not
fully implemented these four recommendations. First, in our 2003 report,
we found that construction of Section 202 properties was sometimes
delayed, in part because HUD awarded inadequate capital advance amounts.2
As a result, sponsors had to put off construction while they sought
additional funding. We recommended that HUD evaluate the effectiveness of
its methods for calculating capital advances and make any

1GAO, Elderly Housing: Project Funding and Other Factors Delay Assistance
to Needy Households (GAO-03-512, May 30, 2003), 1.

2We considered a property to be delayed in beginning construction if it
had not met HUD's guideline that projects should be approved to begin
construction within 18 months of receiving a capital advance award.

Appendix II
Status of HUD's Efforts to Improve
Administration of the Section 202 Program

changes necessary to cover the development costs of Section 202 projects.
HUD commissioned a study to examine how the development cost limits used
to calculate capital advance amounts compared with indicators of local
construction costs and to recommend any needed changes in limits for
high-cost areas. A HUD official said that the agency received the results
of the study in the fall of 2004, but had not determined whether to make
any changes in its methods for calculating capital advances.

In addition, HUD had not implemented the two recommendations related to
training field staff and updating the Section 202 program handbook. We
concluded in our 2003 report that providing adequate formal training for
field office staff responsible for reviewing Section 202 properties before
approving them to begin construction and issuing an updated program
handbook could reduce delays in approving projects for construction by
ensuring that staff were accountable for applying and interpreting HUD
policies and procedures consistently. HUD agreed with these
recommendations. According to senior agency officials, HUD's goal at the
time we completed our work was to provide formal training to field staff
in fiscal year 2005 in the technical implementation of the agency's new
rules for using Low-Income Housing Tax Credits or other mixed financing to
help fund Section 202 properties. These officials also said that HUD's
goal was to update its program handbooks in fiscal year 2005 to reflect
these new rules and other updates to policies and procedures.

Although HUD had not fully implemented our recommendations for improving
the timeliness of the Section 202 program, the number of delayed Section
202 properties had declined. In our 2003 report, we found that
construction on 169 properties that had received Section 202 capital
advance awards had been delayed as of the end of fiscal year 2002. By
November 2004, all but 18 of these properties had been approved for
construction, according to our analysis of a report prepared by HUD. These
18 properties had been awarded capital advances in fiscal years 1998
through 2000. An additional 108 projects funded in fiscal years 2001 and
2002 had been delayed, for a total of 126 delayed projects as of November
10, 2004.3 Senior HUD officials said that management staff in headquarters
were monitoring the progress of these delayed projects by meeting

3As of the end of fiscal year 2002, less than 18 months had elapsed since
HUD awarded capital advances to projects funded in fiscal year 2001, so
none of these projects were considered delayed at that time.

Appendix II
Status of HUD's Efforts to Improve
Administration of the Section 202 Program

quarterly with field office managers to discuss steps that could be taken
to help the projects proceed to construction.

Finally, HUD had identified needed enhancements to its program database
but had not implemented the improvements, as we suggested. To improve
HUD's oversight of the Section 202 program, we recommended that HUD
improve the accuracy and completeness of information entered into its
program database and expand the system's capabilities to track key stages
of the development process. Senior HUD officials said that the agency had
hired a new contractor in the summer of 2004 to work on the program
database and had developed a list of needed enhancements that would
address our recommendation. The list included improving the system's
ability to track properties' progress, correcting data errors, and
automating reports. However, the officials did not have a timeline for
when they expected the enhancements to be complete.

Appendix III

Summaries of Federal Housing Programs That Serve the Elderly

This appendix presents information on 23 federal programs we identified
that provide housing assistance to the elderly. The programs, which are
administered by the departments of Agriculture (USDA) and Housing and
Urban Development (HUD), are organized alphabetically by agency into three
categories. The first category includes programs that are targeted to the
elderly, the second programs that are targeted to the elderly and
disabled, and the third programs that are not targeted to the elderly or
disabled but have special features for the elderly.1 This appendix
includes active programs as well as programs that no longer actively
produce or subsidize new units yet still fund existing units.

In general, both HUD and USDA programs target families at lower income
levels. HUD programs target families with incomes that are: extremely low
(no more than 30 percent of an area's median), very low (no more than 50
percent of an area's median), and low (no more than 80 percent of an
area's median). USDA programs also target families with incomes that are
very low and low. In addition, some USDA programs target families with
moderate incomes (no more than 115 percent of an area's median).

According to HUD and USDA officials, the terms "family" and "household"
are generally used interchangeably. HUD's definition of family
specifically includes elderly families, which are families whose head,
spouse, or sole member is a person who is at least 62 years of age. It may
include two or more persons who are at least 62 years of age living
together or one or more persons who are at least 62 years of age living
with one or more live
in aides. In general, USDA's definition of an elderly household also
includes the disabled-that is, the head, spouse, or sole member is at
least 62 years old or is a disabled person of any age. However, for the
Section 504 grants and Section 538 programs, nonelderly disabled
households are not included in the definition of elderly.

Project-based rental assistance provides subsidies for tenants in specific
properties so that the subsidy is not portable if a tenant moves. Tenant
based rental assistance provides vouchers for eligible tenants to rent
single or multifamily units. Through both project-based and tenant-based
forms of rental assistance, the renter generally pays 30 percent of
adjusted income towards rent.

1Generally, the income adjustments for the elderly are also available to
the disabled.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

Service coordinators are individuals that can generally be hired to work
in public or other federally subsidized multifamily housing to assist
residents in obtaining supportive services.

For each program, we identify the federal agency responsible for
administering the program, the type of assistance provided, and the type
of housing. We also provide brief descriptions of (1) the program's
purpose and objectives; (2) how the program is administered; (3)
eligibility requirements; (4) special features for the elderly; (5)
supportive services provided; and (6) available data on the extent to
which the program targets or serves the elderly.

We obtained the information for the summaries from the Catalog of Federal
Domestic Assistance, program fact sheets, program handbooks, various HUD
and USDA databases, and agency officials.2

2U.S. General Services Administration, Catalog of Federal Domestic
Assistance (Washington, D.C.: August 2004).

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

Programs Targeted to the Elderly

Figure 6: Section 504 Rural Housing Repair and Rehabilitation Grants Description

           Source: GAO analysis of program information and USDA data.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

      Figure 7: Section 202 Supportive Housing for the Elderly Description

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. Elderly or
nonelderly households may occupy nonelderly units. Elderly households had
an elderly head, cohead, or spouse, regardless of whether the unit was
designated for the elderly. The number of households was less than the
number of units because HUD only had occupancy data on households
receiving project-based rental assistance.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Programs Targeted to the Elderly and Disabled

            Figure 8: Assisted Living Conversion Program Description

Source: GAO analysis of program information and HUD data.

aAssisted living facilities are designed to accommodate the frail elderly
and persons with disabilities who can live independently but need
assistance with activities of daily living. These facilities must provide
supportive services such as personal care, transportation, meals,
housekeeping, and laundry.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

              Figure 9: Section 231 Mortgage Insurance Description

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. Elderly or
nonelderly households may occupy nonelderly units. Elderly households had
an elderly head, cohead, or spouse, regardless of whether the unit was
designated for the elderly. The number of households was less than the
number of units because HUD only had occupancy data on households
receiving project-based rental assistance.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aCombination refers to properties that featured multiple facility types.
Unknown refers to properties where data on facility type were unavailable.
HUD did not have sufficient data to determine the total number of beds or
units in all properties. Approximately 16,972 units were designated for
the elderly.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

Programs with Special Features for the Elderly

           Source: GAO analysis of program information and USDA data.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and USDA data.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and USDA data.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and USDA data.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and USDA data.

aElderly units are designated for occupancy by the elderly or disabled.
Elderly or nonelderly households may occupy nonelderly units. Elderly
households had an elderly head, cohead, or spouse, regardless of whether
the unit was designated for the elderly.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and USDA data.

aSection 521 rental assistance can also be used in units financed by the
Section 514 and 516 Farm Labor Housing Loan and Grant Program (see
Appendix IV).

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and USDA data.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and HUD data.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and HUD data.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aElderly units are those designated for occupancy by the elderly. The
number of nonelderly units, which can be occupied by elderly or nonelderly
households, is an estimate by HUD. Elderly households are those in which
the head, cohead, or spouse was elderly. The number of households is less
than the estimated number of units because some units may be vacant, HUD
may not have current data on all households, or the estimated unit count
may be inaccurate.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and HUD data.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and HUD data.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. Elderly or
nonelderly households may occupy nonelderly units. Elderly households had
an elderly head, cohead, or spouse, regardless of whether the unit was
designated for the elderly. The number of households was less than the
number of units because HUD only had occupancy data on households
receiving project-based rental assistance.

Appendix III
Summaries of Federal Housing Programs
That Serve the Elderly

           Source: GAO analysis of program information and HUD data.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. Elderly or
nonelderly households may occupy nonelderly units. Elderly households had
an elderly head, cohead, or spouse, regardless of whether the unit was
designated for the elderly. The number of households was less than the
number of units because HUD only had occupancy data on households
receiving project-based rental assistance.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. Elderly or
nonelderly households may occupy nonelderly units. Elderly households had
an elderly head, cohead, or spouse, regardless of whether the unit was
designated for the elderly. The number of households was less than the
number of units because HUD only had occupancy data on households
receiving project-based rental assistance.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. Elderly or
nonelderly households may occupy nonelderly units. Elderly households had
an elderly head, cohead, or spouse, regardless of whether the unit was
designated for the elderly. The number of households was less than the
number of units because HUD only had occupancy data on households
receiving project-based rental assistance.

                                  Appendix III
                     Summaries of Federal Housing Programs
                             That Serve the Elderly

Source: GAO analysis of program information and HUD data.

aElderly units are designated for occupancy by the elderly. We did not
have sufficient data to determine the number of nonelderly units. Elderly
households had an elderly head, cohead, or spouse, regardless of whether
the unit was designated for the elderly. The number of households includes
only those receiving project-based rental assistance.

Appendix IV

                          Additional Housing Programs

This appendix describes some additional housing programs that can benefit
the elderly but that either did not meet our definition of housing
assistance or were not considered by agency officials to be "key" in
assisting the elderly. The appendix does not include all of the housing
assistance programs that serve the elderly.

A variety of federal agencies are responsible for these programs,
including the departments of Agriculture (USDA), Health and Human Services
(HHS), Housing and Urban Development (HUD), and Veterans Affairs (VA). The
programs are organized in alphabetical order according to their
administering agency.

Department of Agriculture

Community Facilities Direct Loan, Guaranteed Loan, and Grant Programs

These programs provide a direct loan, guaranteed loan, or project grant
assistance to construct, enlarge, extend, or otherwise improve community
facilities, such as medical clinics, schools, fire and rescue stations,
and child care centers for public use in rural areas. These programs
finance a range of service centers for the elderly, including nursing
homes, boarding care, assisted care facilities, adult day care, and
intergenerational care facilities.

To be eligible, applicants must be entities such as city, county, and
state agencies; private nonprofit corporations; or federally recognized
tribal governments. Priority is given to projects that will enhance public
safety or provide health care facilities.

Section 514/516 Farm Labor This program provides loans or project grants
to provide decent, safe, and

Housing Loans and Grants	sanitary low-rent housing for domestic farm
laborers. Loans are available to farmers, family farm partnerships, family
farm corporations, or associations of farmers. Loans and grants are
available to states, public or private nonprofit organizations, federally
recognized Indian Tribes, and nonprofit corporations of farm workers.
Grants are available to eligible applicants only when there is a pressing
need and when such facilities cannot be obtained without grant assistance.
Loans are usually for 33 years

                    Appendix IV Additional Housing Programs

at 1 percent interest, and grants may cover up to 90 percent of
development costs.

Section 533 Rural Housing Preservation Grants

This program provides grants to sponsoring organizations for the repair or
rehabilitation of housing for very low-and low-income rural residents. To
be eligible, an applicant must be a state or political subdivision, public
nonprofit corporation, Indian tribal corporation authorized to receive and
administer housing preservation grants, private nonprofit corporation, or
a consortium of such entities. Organizations may use less than 20 percent
of the Housing Preservation Grant funds for program administration
purposes, such as to hire personnel and pay necessary and reasonable
administrative expenses. Eighty percent or more of the funds must be used
for loans, grants, or other assistance on individual homes, homeowners,
rental properties, or cooperatives to pay any part of the cost for repair
or rehabilitation of structures.

Department of Health and Human Services

Low-Income Home Energy Assistance Program

This federally funded program helps low-income households meet their home
heating and cooling needs. The program provides funding to states,
federally-or state-recognized Indian tribes and tribal organizations, and
insular areas, such as Puerto Rico and Guam, in the form of block grants
for home energy assistance, energy crisis intervention or assistance, and
low-cost residential weatherization and other energy-related home repair.
The program targets (1) households with a high energy burden (those
households with the lowest incomes and highest home energy costs), and (2)
vulnerable households, including those with frail older individuals,
individuals with disabilities, and very young children.

                    Appendix IV Additional Housing Programs

Department of Housing and Urban Development

Community Development Block Grant Program

According to the Congressional Research Service, this program is the
largest source of federal financial assistance for state and local
governments' community development and neighborhood revitalization
activities. The program's objective is to develop viable urban communities
by providing housing and expanding economic opportunities, principally for
individuals with low to moderate incomes. For example, Community
Development Block Grant funds have been used to rehabilitate affordable
senior housing, construct senior centers, and provide services such as
congregate meals and transportation.

Home Equity Conversion Mortgages

This program enables elderly homeowners to withdraw some of the equity in
their home in the form of monthly payments for life or a fixed term, or in
a lump sum, or through a line of credit. This reverse mortgage program
allows families to stay in their home while using some of its equity. The
total income that an owner can receive through the program is the maximum
claim amount, which is calculated with a formula including the age of the
owner, the interest rate, and the value of the home. The borrower remains
the owner of the home and may sell it and move at any time, keeping the
sales proceeds that exceed the mortgage balance. No repayment is required
until the borrower moves, sells, or dies.

HOME Investment Partnerships Program

This program is a federal formula block grant to state and local
governments designed to create affordable housing for low-income
households. The program provides funds to states and localities to build,
buy, and rehabilitate affordable housing for rent or homeownership. Also,
funds can be used to provide direct rental assistance to low-income
people. For rental housing, at least 90 percent of HOME funds must benefit
lowand very low-income families at 60 percent of the area median income;
the remaining ten percent must benefit families below 80 percent of the
area median income. Assistance to homeowners and homebuyers must go to
families below 80 percent of the area median. HOME gives grantees the
flexibility to use a variety of mechanisms to fund housing projects that

                    Appendix IV Additional Housing Programs

meet local priorities, and is routinely combined with other public and
private financing for affordable housing such as Housing Choice Vouchers
and the Low-Income Housing Tax Credit.

                     Housing Counseling Assistance Program

This program provides counseling to consumers on seeking, financing,
maintaining, renting, or owning a home. The Housing Counseling Assistance
Program enables individuals wanting to rent or own housing- whether
through a HUD program, a Veterans Affairs program, other Federal programs,
a State or local program, or the regular private market- to get the
counseling needed to make their rent or mortgage payments and to be a
responsible tenant or owner in other ways. The counseling is provided by
HUD-approved housing counseling agencies.

There are three strategic goals for the program: (1) to improve the
quality of renter and homeowner education, (2) to develop a reliable
stream of funding and resources for counseling agencies, and (3) to
enhance coordination among local housing providers.

Section 203(b) Mortgage Insurance

This program promotes homeownership among families with low to moderate
incomes by providing mortgage insurance for the purchase or refinancing of
a principal residence. This program provides mortgage insurance to protect
lenders, such as mortgage companies, banks and savings and loan
associations, against the risk of default on loans to qualified buyers.
Insured loans may be used to purchase new or existing one- to four-family
homes, as well as to refinance debt. The insurance allows homebuyers to
finance up to 97 percent of the home's cost through their mortgage.

Section 203(k) This program enables homebuyers and homeowners to finance
the Rehabilitation Mortgage purchase (or refinancing) of a house that is
at least a year old and the cost Insurance of its rehabilitation through a
single mortgage. The cost of rehabilitation

must be at least $5000, but the total value of the property must still
fall

within the mortgage limit for the area.

                    Appendix IV Additional Housing Programs

Section 220 Mortgage Insurance (Urban Renewal Mortgage Insurance)

This program provides federal insurance for mortgage loans on multifamily
rental projects located in urban renewal areas and areas where local
governments have undertaken designated revitalization activities. The
purpose of Section 220 is to encourage the development of quality rental
housing in urban areas targeted for overall revitalization, and to insure
lenders against loss on mortgage defaults. The maximum amount of the
mortgage loan may not exceed 90 percent of the estimated replacement cost
for new construction or 90 percent of the estimated cost of the repair and
the estimated value of the property before the repair for substantial
rehabilitation.

Section 234(c) Mortgage This program insures loans for terms of up to 30
years for the purchase of a Insurance-Purchase of unit in a condominium
building. The building must contain at least four Units in Condominiums
dwelling units and can be detached or semidetached, a rowhouse or

walk-up, or an elevator structure. The insurance covers loans made by
lending institutions such as mortgage companies, banks, and savings and
loan associations.

Section 811 Supportive Housing for Persons with Disabilities

This program is designed to allow very low-income adults with disabilities
to live independently in the community by funding the development of
rental housing with appropriate supportive services. HUD provides
interest-free capital advances to nonprofit sponsors to help finance the
development of supportive housing. The advance does not have to be repaid
as long as the housing remains available for very low-income persons with
disabilities for at least 40 years. The program also provides project
rental assistance, which covers the difference between the operating costs
of the development as approved by HUD and the tenants' contribution toward
rent (usually 30 percent of adjusted income). Each project must have a
supportive services plan. The services offered may vary with the target
population but could include case management, training in independent
living skills, and assistance in obtaining employment.

                    Appendix IV Additional Housing Programs

Title I (Property This program facilitates the financing of improvements
to homes and other Improvement Loan existing structures and the building
of new nonresidential structures. The Insurance for Improving All maximum
loan amount is $25,000 for improving a single family home or for

improving or building a nonresidential structure. For improving aExisting
Structures and multifamily structure, the maximum loan amount is $12,000
per family unit,Building of New not to exceed a total of $60,000 for the
structure. HUD insures private Nonresidential Structures) lenders against
losses of up to 90 percent of any single loan.

Department of Veterans Affairs

VA Homeless Providers This program provides funding to community agencies
providing services Grant and Per Diem to homeless veterans. The program's
purpose is to help homeless veterans Program achieve residential
stability, increase their skill levels and income, and

obtain greater self-determination by promoting the development of housing
with supportive services. Only programs with supportive housing or service
centers are eligible for the two levels of funding: grants and per diem.

VA Home Loans 	This program helps veterans, certain service personnel, and
certain unmarried surviving spouses of veterans obtain credit for the
purchase, construction, or improvement of homes on more liberal terms than
are generally available to nonveterans. Lenders, such as mortgage
companies, savings and loan associations, or banks, make the loans and VA
provides the guarantee. The amount guaranteed varies with the amount of
the loan and previous use of the program. With the current maximum
guarantee, a veteran who has not previously used the benefit may be able
to obtain a loan up to $240,000, depending on the borrower's income level
and the appraised value of the property.

                    Appendix IV Additional Housing Programs

Federal Home Loan Banks

Affordable Housing This program subsidizes the purchase, construction,
rehabilitation, or

Program	refinancing of (1) owner-occupied housing for very low-to
moderateincome households, and (2) rental housing in which very-low-income
households can afford and will occupy at least 20 percent of the units.
The Federal Home Loan Banks offer both grants and loans with below-cost
interest rates.

Community Investment Program

This program provides a favorably priced source of wholesale funds for any
member involved in lending for community and economic development. The
funds can be used for development of commercial projects, infrastructure
improvements, or business that creates jobs. The funds are available to
finance home purchases by families whose income does not exceed
moderate-income levels, for purchase or rehabilitation of housing for
occupancy by families whose income does not exceed moderateincome levels,
or for commercial and economic development activities that benefit low-and
moderate-income families or neighborhoods.

Internal Revenue Service (IRS)

Low-Income Housing Tax Credit

This tax credit program, which IRS and the states administer jointly, is
the principal federal program designed to support the development and
rehabilitation of housing for low-income households. Under this program,
states are authorized to allocate federal tax credits as an incentive to
the private sector to develop low-income rental housing. In their
guidelines for the distribution of tax credits, some states have
established preferences for properties intended for the elderly, but such
a preference is not a federal requirement. Annually, IRS allocates tax
credits to each state. For 2005, the credit is equal to $1.85 per state
resident. Investors that provided financing may take the tax credits
annually for 10 years to offset federal taxes. At a minimum, the owner
must agree to make (1) 20 percent of the property

Appendix IV Additional Housing Programs

units affordable to households with incomes at or below 50 percent of the
area median income or (2) 40 percent of the units affordable to households
with incomes at or below 60 percent of the area median.

Appendix V

Comments from the Department of Housing and Urban Development

Appendix V
Comments from the Department of Housing
and Urban Development

Appendix VI

                     GAO Contacts and Staff Acknowledgments

GAO Contacts	David Wood, (202) 512-8678, [email protected] Paul Schmidt, (312)
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Staff 	In addition to those named above, Emily Chalmers, Natasha Ewing,
Alison Martin, John McGrail, Marc Molino, Lisa Moore, John Mingus, and
Julianne

Acknowledgments Stephens made key contributions to this report.

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