Government Assisted Housing

The Housing Act of 1937 did not fund housing assistance for older people. The first National Conference on Aging in 1950 recommended that Congress specifically address housing needs of the elderly, but nine years passed (1959) before enactment of a subsidized housing program known as Section 202.

The Department of Housing and Urban Development (HUD) was created by the Housing and Urban Development Act of 1965 as a cabinet-level agency. Although HUD administers all federal housing programs, the main thrust of its activities traditionally has consisted of urban development. This is reflected in HUD's budget, which in 2000 allocated only 10 percent for housing for the elderly.

The original Section 202 provided loans to nonprofit organizations at a rate of 3 percent to build housing for older low- and moderate-income persons and the disabled. The rate has changed several times due to market conditions. Between 1959 and 1969, approximately forty-five thousand units were constructed. By 1996 there were 7,547 Section 202 facilities housing more than 387,000 persons.

Congress created Section 8 in 1974 to provide subsidized housing assistance to households with incomes too low for them to obtain decent housing in the private market. Under this program, HUD entered into assistance contracts with owners of existing housing and developers of new or rehabilitated housing for a specified number of units to be leased to households meeting federal eligibility standards. Qualified families paid part of the rent and HUD paid the difference directly to owners of the units. In 1999, three million families benefited from Section 8 subsidies; 44 percent of these were older people.

Section 8 includes two forms of subsidy: tenant-based and project-based, each assisting approximately half of the Section 8 units. In the tenant-based programs, vouchers are given to residents, who can choose from the available housing market in the private sector. In the project-based programs, specific properties are subsidized, such as high-rise apartments for older people.

In 1975 HUD entered into twenty-year contracts with the owners of project-based units, resulting in increased owner opt-outs as the contracts expired. With the future of project-based programs threatened, HUD proposed a remedy in 1999, providing vouchers for residents of project-based programs to allow them to remain in the units. This effectively left the decision to accept or reject the vouchers in the hands of the owners, thus putting the future of affordable housing for many older Americans in jeopardy. Since 1996 more than thirty thousand subsidized units have left the Section 8 program. This trend continues; HUD estimates the termination of 900,000 project units by 2004.