oversight

Housing for the Elderly: Information on HUD's Section 202 and HOME Investment Partnerships Programs

Published by the Government Accountability Office on 1997-11-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Chairman, Subcommittee
                 on Housing Opportunity and Community
                 Development, Committee on Banking,
                 Housing, and Urban Affairs, U. S. Senate

November 1997
                 HOUSING FOR THE
                 ELDERLY
                 Information on HUD’s
                 Section 202 and HOME
                 Investment
                 Partnerships Programs




GAO/RCED-98-11
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   Resources, Community, and
                   Economic Development Division

                   B-277091

                   November 14, 1997

                   The Honorable Connie Mack
                   Chairman, Subcommittee on Housing
                     Opportunity and Community Development
                   Committee on Banking, Housing, and
                     Urban Affairs
                   United States Senate

                   Dear Mr. Chairman:

                   The Department of Housing and Urban Development (HUD) reported in
                   1996 that at least 1.4 million elderly individuals nationwide needed but did
                   not currently receive housing assistance. These individuals need housing
                   assistance because most have extremely low incomes, are paying more
                   than half of their incomes for rent, or often live in homes that are
                   physically inadequate. To alleviate these problems, the federal government
                   provides housing assistance through a variety of programs that benefit
                   low-income people, including the elderly. Two HUD programs—Section 202
                   Supportive Housing for the Elderly and HOME Investment Partnerships
                   (HOME)—are receiving federal funds each year to fully or partially support
                   the production of new multifamily rental housing for the elderly. However,
                   only the Section 202 program provides housing assistance exclusively for
                   the elderly.

                   As agreed with your office, this report describes similarities and
                   differences between the Section 202 program and the HOME program in
                   three areas: (1) the amount and types of new multifamily rental housing
                   that each program has provided for the elderly; (2) the sources of each
                   program’s funding for multifamily rental projects; and (3) the availability
                   of supportive services for elderly residents. In general, we have described
                   the programs at the national level and have illustrated some points with
                   examples drawn from our visits to selected projects in four states with
                   relatively high concentrations of low-income elderly residents and
                   numbers of Section 202 and HOME-funded projects—California, Florida,
                   North Carolina, and Ohio. (See app. I for pictures and descriptions of the
                   Section 202 and HOME projects that we visited.)


                   During fiscal years 1992 through 1996, the Section 202 program
Results in Brief   substantially exceeded the HOME program in providing multifamily rental
                   housing that was set aside almost exclusively for elderly households. Over




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1,400 Section 202 projects opened during this time, providing homes for
nearly 48,000 elderly residents. At the same time, the HOME program
provided housing assistance to 21,457 elderly households, including 675
elderly residents in 30 multifamily rental projects comparable to those
developed under the Section 202 program.1 The Section 202 program
produced new multifamily rental housing for low-income elderly
households through new construction, the rehabilitation of existing
buildings, and the acquisition of existing properties that the Federal
Deposit Insurance Corporation obtained through foreclosure. The HOME
program provided housing assistance to address the most pressing
housing needs that local communities and states identified among
low-income people of all ages. For the elderly, HOME assistance helped
rehabilitate the homes they already owned and in which they still lived. It
also provided tenant-based rental assistance; helped new homebuyers
make down payments and pay closing costs associated with purchasing a
home; and made funds available to acquire, construct, or rehabilitate
single-family and multifamily rental housing.

In the Section 202 program, the capital advance, which HUD provides to a
project’s sponsor, is the only significant source of funds for developing the
project. In general, a HOME project typically attracts significant levels of
additional public and private funding, such as a grant from a state or local
housing program, a conventional bank mortgage, and proceeds from the
syndication of low-income housing tax credits. HOME multifamily housing
that is similar to Section 202 projects is usually financed with a
combination of HOME funds and other federal and nonfederal funds.

HUD does not pay for supportive services, such as transportation or
subsidized meals programs, through the HOME program but does do so
under limited circumstances through the Section 202 program. The extent
to which the Section 202 and HOME projects that we visited provided these
services on-site for their residents usually depended on each project’s
ability to generate the operating income needed to pay for the services.
These projects often depended on and referred their residents to
community-based supportive services to supplement those they could
provide. None of the HOME projects that we visited had a staff person solely
responsible for identifying the services that some or all of the residents
needed and for coordinating with service providers to give the residents


1
 In commenting on a draft of this report, HUD said that the HOME program—which began in fiscal
year 1992—could not have produced as much multifamily rental housing as the Section 202 program
because constructing multifamily rental projects requires lead time for their planning, selection, and
construction. We agree and note that the number of such HOME-funded projects would have been
somewhat higher during this time period if the program had begun several years earlier.



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             access to the services, but five of the eight Section 202 projects we visited
             employed such a staff person or expected their on-site resident manager to
             coordinate services. In addition, all of the Section 202 projects and six of
             the eight HOME projects that we visited had common areas or activity
             rooms that service providers or residents could use for community-based
             services, group social or educational activities, and dining. The two HOME
             projects that did not have such common areas housed families and
             individuals as well as the elderly.


             In general, federal housing assistance is available only to people or
Background   households that have low incomes.2 Consequently, income, not age, is the
             single biggest factor in deciding on an elderly person’s need and eligibility
             for federal housing assistance. HUD also identifies problems that,
             regardless of age, exacerbate a person’s need for assisted housing. These
             problems include housing that costs more than 30 percent of a person’s
             income or is inadequate or substandard. Figure 1 shows the magnitude of
             the housing needs among low-income elderly households in each state.




             2
              HUD updates decennial Census data each year to estimate the median family income for metropolitan
             and nonmetropolitan areas and adjusts these estimates for higher-than-average housing costs. HUD
             defines eligibility for housing assistance in terms of the percentage of an area’s median family income
             that potential residents earn. “Low-income” means that a household’s income is no more than
             80 percent, and “very-low income” means that a household’s income is no more than 50 percent, of the
             area’s median family income.



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Figure 1: Low-Income Elderly Households With Housing Problems




                                                 Households (states)
                                                 250,000 to 566,000 (6)
                                                 100,000 to 250,000 (11)
                                                 4,000 to 100,000 (34)


                                        Note: An elderly household has one or two members and either the head of the household or the
                                        spouse must be at least 62 years of age. A household with housing problems pays more than
                                        30 percent of its income for rent or resides in a unit that (1) lacks a complete kitchen or complete
                                        plumbing or (2) has more than one person per room (overcrowded).

                                        Source: GAO’s analysis of HUD’s special tabulations of 1990 Census data.


                                        According to HUD, the need for housing assistance, for the elderly as for
                                        the general population, far outstrips the federal resources available to
                                        address that need. As a result, federal housing assistance, which is
                                        provided through a variety of programs, reaches just over one-third of the




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elderly households that need assistance.3 Furthermore, most of the
programs are maintaining, rather than increasing, the level of assistance
they provide. Only two of these programs—Section 202 and HOME—are
under HUD’s jurisdiction and are receiving annual appropriations for the
sole purpose of increasing housing assistance for elderly and other
households.4

Under the Section 202 program, HUD provides funding to private nonprofit
organizations to expand the supply of housing for the elderly by
constructing or rehabilitating buildings or by acquiring existing structures
from the Federal Deposit Insurance Corporation. Since it was first created
in 1959, the Section 202 program has provided over $10 billion to the
sponsors of 4,854 projects containing 266,270 housing units.5 At the same
time that HUD awards Section 202 funds, it enters into contracts with these
nonprofit organizations to provide them with project-based rental
assistance. This assistance subsidizes the rents that elderly residents with
very low incomes will pay when they move into the building. In addition to
having a very low income, each household in a Section 202 project must
have at least one resident who is at least 62 years old. Finally, sponsoring
organizations must identify how they will ensure that their residents have
access to appropriate supportive services, such as subsidized meals
programs or transportation to health care facilities.6 When HUD evaluates
sponsors’ applications, it awards more points to, and is thus more likely to
fund, applicants who have experience providing such services or have
shown that they will readily be able to do so.


3
 Programs under HUD’s jurisdiction include the HOME and Community Development Block Grant
programs, public housing, the Section 8 certificate and voucher programs, and private project-based
assistance programs. The Department of Agriculture’s Rural Housing Service also provides new
multifamily assisted housing in rural areas.
4
 The Low-Income Housing Tax Credit Program also helps produce new housing each year by providing
federal tax credits to investors in privately developed projects to offset the federal taxes they would
otherwise owe. However, this is not a HUD program and does not require an annual appropriation.
Moreover, data on the number of elderly households in properties receiving tax credits are generally
not available. The Internal Revenue Service and tax credit allocation agencies in each state administer
the program. The money private investors pay for tax credits is paid into housing projects for the
elderly and other low-income households as equity financing. For more information on the tax credit
program, see Tax Credits: Opportunities to Improve Oversight of the Low-Income Housing Program
(GAO/GGD/RCED-97-55, Mar. 28, 1997).
5
 Prior to fiscal year 1991, HUD provided Section 202 funding via direct loans to projects’ sponsors. The
sponsors, in turn, repay these loans using the operating revenue they derive from HUD’s Section 8
project-based rental assistance. Since fiscal year 1991, HUD has provided Section 202 funding via
capital advances that sponsors do not have to repay as long as they continue to meet HUD’s
requirements for keeping rents affordable.
6
 HUD pays up to $15 per unit per month to fund the costs of services for the frail elderly and for those
determined to be at risk of being institutionalized in projects funded after fiscal year 1990. Otherwise,
sponsors must arrange for the provision and financing of these services on their own.


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The purpose of the HOME program is to address the affordable housing
needs of individual communities. As a result, the day-to-day responsibility
for implementing the program rests not with HUD, but with over 570
participating jurisdictions. These participating jurisdictions can be states,
metropolitan cities, urban counties, or consortia made up of contiguous
units of general local government. HUD requires these jurisdictions to
develop consolidated plans in which they identify their communities’ most
pressing housing needs and describe how they plan to address these
needs.7 Each year, HUD allocates HOME program funds to these jurisdictions
and expects them to use the funds according to the needs they have
identified in their consolidated plans.8 The legislation that created the
HOME program allows—but does not require—those receiving its funds to
construct multifamily rental housing for the elderly.9

Although the legislation authorizing the HOME program directs that its
funds address the housing needs of low-income people, it allows local
communities to choose from a variety of ways of doing so. These include
the acquisition, construction, and rehabilitation of rental housing; the
rehabilitation of owner-occupied homes; the provision of homeownership
assistance; and the provision of rental assistance to lower-income tenants
who rent their homes from private landlords. Finally, the legislation
requires that communities target the rental assistance they choose to
provide. Specifically, jurisdictions must ensure that for each multifamily
rental project with at least five HOME-assisted units, at least 20 percent of
the residents in the HOME-assisted units have incomes at or below
50 percent of the area’s median income; the remaining residents may have
incomes up to 80 per cent of the area’s median.10




7
 The consolidated plans, which participating jurisdictions must submit every 3 to 5 years and update
annually with an action plan, must explain the jurisdictions’ plans to use the funds they receive
through HUD’s HOME, Community Development Block Grant, Emergency Shelter Grant, and Housing
Opportunities for Persons With AIDS programs.
8
 The states receive 40 percent of the HOME funds and the remaining jurisdictions receive 60 percent
(after limited set-asides for insular areas and other purposes). HUD’s allocation to each jurisdiction is
based on a formula that includes factors such as the number of families at or below the poverty level
and local housing production costs.
9
 The 1990 Cranston-Gonzalez National Affordable Housing Act, P.L. 101-625, created the HOME
program.
10
  HUD applies a second targeting requirement to the portion of the annual allocation of HOME funds
that each community devotes to rental units or tenant-based rental assistance. All of that money must
benefit individuals or families with incomes at or below 80 percent of the area’s median income
(low-income) and 90 percent of that money must benefit those with incomes at or below 60 percent of
the area’s median income.



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                         The Section 202 program, far more often than the HOME program, is the
Housing Assistance       source of funds for increasing the supply of multifamily rental housing for
for the Elderly          low-income elderly people. In comparison, through fiscal year 1996,
Reflects the             participating jurisdictions have seldom chosen to use HOME funds to
                         produce multifamily housing almost exclusively for the low-income
Programs’ Intent         elderly. This result is linked to differences in the purposes for which each
                         program was created and the persons each was intended to serve. The
                         Congress designed the Section 202 program to serve only low-income
                         elderly households. In creating the HOME program, however, the Congress
                         sought to give states and local communities the means and the flexibility
                         to identify their most pressing low-income housing needs and to decide
                         which needs to address through the HOME program. As is consistent with
                         each program’s intent, the Section 202 program focuses its benefits on the
                         elderly, while the HOME program benefits those whom local communities
                         choose to serve—regardless of age—through various kinds of housing
                         assistance.

                         From fiscal year 1992 through fiscal year 1996, over 1,400 Section 202 and
                         HOME program multifamily rental housing projects for the elderly opened
                         nationwide. These projects included

                     •   1,400 Section 202 projects with 51,838 rental units, providing homes for at
                         least 47,823 elderly individuals,11 and
                     •   30 comparable HOME projects with 681 rental units, providing homes for at
                         least 675 elderly individuals.12

                         On average, the Section 202 projects had 37 units, while the HOME projects
                         had 23 units. Figure 2 illustrates the proportion of the total number of
                         projects attributable to each program.




                         11
                           Prior to fiscal year 1991, projects that received Section 202 funding had to make at least 10 percent of
                         their units accessible to persons with a handicap and generally available for occupancy by persons at
                         least 18 years old with a handicap. Since that time, Section 202 projects must limit occupancy to
                         elderly households. Consequently, we derived a conservative estimate of the number of elderly
                         households in Section 202 projects by assuming that 90 percent of the units funded before fiscal year
                         1991 and 100 percent of the units funded afterwards were occupied by elderly households. We also
                         assumed that each household included at least one elderly person.
                         12
                           Many of the Section 202 projects that opened from fiscal year 1992 through fiscal year 1996 received
                         their funds before fiscal year 1992 and are thus subject to the requirement to make 10 percent of their
                         units accessible to and available for occupancy by nonelderly residents with a handicap. Therefore, we
                         defined comparable projects in the HOME program to include only the multifamily rental projects in
                         which at least 90 percent of the residents were elderly.



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Figure 2: Incremental Multifamily
Rental Projects in Which at Least 90
Percent of the Household Heads Are
Elderly, Fiscal Years 1992-96
                                                             •                         2%
                                                                                       30 HOME program projects (681
                                                                                       units)




                                                        98%
                                                          •



                                                                                       1,400 Section 202 program
                                                                                       projects (51,838 units)


                                       Source: GAO’s analysis of HUD’s program data.


                                       Although only a small portion of the HOME projects were comparable to
                                       Section 202 projects, participating jurisdictions used HOME funds to assist
                                       low-income elderly people in other ways. Most of the elderly households
                                       that obtained assistance from the HOME program—over 70 percent—used
                                       that assistance to rehabilitate the homes they already owned and in which
                                       they still lived. The remaining HOME assistance benefiting the elderly did so
                                       by providing tenant-based rental assistance; helping new homebuyers
                                       make down payments and pay the closing costs associated with
                                       purchasing homes; and acquiring, constructing, or rehabilitating
                                       single-family and multifamily rental housing. In total, the HOME program
                                       assisted 21,457 elderly households, approximately 40 percent as many as
                                       the Section 202 program assisted during the same 5-year period. Figure 3
                                       illustrates how the HOME program assisted the elderly during fiscal years
                                       1992 through 1996.




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Figure 3: HOME Program Assistance
Provided to Households With an
                                                                                               4%
Elderly Household Head, Fiscal Years                                                           New homebuyer assistance (759
1992-96                                                                                        units)

                                                                                               Tenant-based rental assistance
                                                                                               (2,252 units)


                                                            •    10% •                         2%
                                                                                               Single-family rental projects (364
                                                                                               units)a

                                                                        13%
                                                                          •



                                                  71%
                                                    •




                                                                                               Multifamily rental projects (2,863
                                                                                               units)b

                                                                                               Homeowner rehabilitation
                                                                                               assistance (15,219 units)



                                       a
                                        Single-family rental projects have between one and four units, at least one of which is occupied
                                       by an elderly household head.
                                       b
                                        Multifamily rental projects have five or more units, at least one of which is occupied by an elderly
                                       household head.

                                       Source: GAO’s analysis of HUD’s program data.




                                       In nearly all cases, Section 202 projects rely solely on HUD to pay the costs
Section 202 Projects                   of construction and subsidize the rents of the low-income elderly tenants
Rely on HUD Funding,                   who occupy the buildings. In contrast, HOME-assisted multifamily rental
but Most HOME                          housing projects rely on multiple sources of funding, including private
                                       financing, such as bank mortgages and equity from developers. At the
Projects Leverage                      HOME-funded projects we visited, the use of HOME funds reduced the
Private Financing and                  amount that the projects’ sponsors had to borrow for construction or
                                       made borrowing unnecessary. Reducing or eliminating the need to go into
Other Subsidies

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                            debt to build HOME projects enables the projects to be affordable to
                            households with lower incomes than would be the case otherwise.


Section 202 Funds           For the Section 202 projects that became occupied during fiscal years 1992
Generally Cover Projects’   though 1996, HUD provided over $2.9 billion in capital advances and direct
Costs, but Some Need        loans. The average cost of these projects was about $2.1 million. HUD
                            expects this assistance to be the only significant source of funds for the
Supplemental Funding        development of Section 202 projects. Furthermore, when HUD awards
                            Section 202 funds, it also enters into contracts with the sponsoring
                            organizations to provide project-based rental assistance to the tenants
                            who will occupy the buildings once they open. As a result, HUD expects
                            that successful sponsors will be able to develop and build multifamily
                            housing projects that will be affordable to low-income elderly households.

                            The nonprofit sponsors of two of the eight Section 202 projects we visited
                            said that the Section 202 funds were not sufficient to cover all of the costs
                            associated with building their projects. HUD officials told us that this is
                            usually the case when a sponsor (1) includes amenities in a project, such
                            as balconies, for which HUD does not allow the use of Section 202 funds;
                            (2) incurs costs not associated with the site on which the project is being
                            built, such as costs to make the site more accessible to public
                            transportation; or (3) incurs costs that exceed the amount HUD will allow,
                            which can happen when a sponsor pays more for land than HUD
                            subsequently determines the land is worth. Consequently, in some cases,
                            sponsors of the projects we visited sought funding from other sources to
                            make up for the shortfall. Those that found HUD’s funding insufficient
                            primarily cited the high cost of land in their area or factors unique to the
                            site on which they planned to build as the reason for the higher costs. For
                            example, one sponsor in California said that the Section 202 funding was
                            not sufficient to cover the high cost of land and of designing a project that
                            was compatible with local design preferences.

                            Several of the Section 202 projects we visited received additional financial
                            support from their nonprofit sponsors or in-kind contributions from local
                            governments (such as zoning waivers or infrastructure improvements).
                            However, this added support was typically a very small portion of a
                            project’s total costs. For example, the Section 202 funding for the
                            construction of a project in Cleveland was nearly $3 million. However,
                            Cleveland used $150,000 of its Community Development Block Grant
                            (CDBG) funds to help the sponsor defray costs incurred in acquiring the
                            land on which the project was built. Another nonprofit sponsor in



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                        California estimated that the development fee waivers and other
                        concessions the city government made for its project were worth over
                        $160,000. The total cost for this project was over $4 million.

                        However, attempts to use other funds have not always been successful.
                        For example, one of the Section 202 projects we visited obtained HOME and
                        CDBG funds from the local county government, but officials from the HUD
                        regional office subsequently reduced the final amount of the project’s
                        capital advance to offset most of these funds. The project’s nonprofit
                        sponsor had sought additional funding because the costs of land exceeded
                        the appraised value that HUD had determined (and would thus agree to
                        pay) and because the sponsor incurred additional costs to extend utility
                        service onto the property where the project was being built. According to
                        the sponsor, HUD reduced the project’s Section 202 capital advance
                        because the sponsor was using other federal funds to meet expenses for
                        which HUD had granted the Section 202 funding.


                        The HOME program is not meant be a participating jurisdiction’s sole
HOME Multifamily        source of funds for the development of affordable housing. By statute, the
Rental Projects         local or state government must contribute funds to match at least
Usually Have Multiple   25 percent of the HOME funds the jurisdiction uses to provide affordable
                        housing each year. Additionally, one of the purposes of the HOME program
Funding Sources         is to encourage public-private partnerships by providing incentives for
                        state and local governments to work with private and nonprofit developers
                        to produce affordable housing. As a result, HOME projects typically attract
                        significant levels of additional public and private funding from sources
                        such as other federal programs, state or local housing initiatives,
                        low-income housing tax credit proceeds, and donations or equity
                        contributions from nonprofit groups.

                        While a participating jurisdiction could conceivably develop new
                        multifamily rental housing using only its allocation of HOME funds, HUD
                        officials questioned why any jurisdiction might choose to do so.
                        Multifamily rental housing is costly to build, and one such project could
                        easily consume a community’s entire allocation of HOME funds in a given
                        year if no other funding were used. Furthermore, using HOME funds to
                        leverage other funds can not only significantly increase the total funding
                        available for housing assistance but also allow communities to offer more
                        types of housing assistance than if they devoted their entire HOME
                        allocation to a single multifamily rental project.




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                                          Overall, with its current funding of $1.4 billion (for fiscal year 1997), the
                                          HOME program is a significant source of federal housing assistance.
                                          However, it has not been a major source of funds for new multifamily
                                          rental housing designed primarily or exclusively to serve the low-income
                                          elderly. From fiscal year 1992 through fiscal year 1996, such projects
                                          received a small percentage of the total HOME funds allocated to
                                          participating jurisdictions. During these 5 years, the jurisdictions built or
                                          provided financial support for 30 multifamily rental projects with 681
                                          units, of which the elderly occupied at least 90 percent. These projects
                                          were financed with over $12 million in HOME funds. According to HUD’s
                                          data, these funds leveraged an additional $65 million in other public and
                                          private financing. Figure 4 illustrates the multiple funding sources used for
                                          these HOME projects.


Figure 4: Sources of Financing for HOME Multifamily Projects Serving Elderly Households




             HOME fundsa      Other public funds                Private funds                     Low-income housing
               16.6%                20.3%                           35.1%                           tax credit funds
                                                                                                         28.0%

                                          Note: Includes projects with 90 percent of their units occupied during fiscal years 1992 through
                                          1996 by elderly heads of household.
                                          a
                                          Includes HOME program income.

                                          Source: GAO’s analysis of HUD’s HOME program data.




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                             Six of the eight HOME projects we visited had received funding from
                             multiple public and private financing sources, reflecting the national
                             pattern at the local level. These projects’ developers and/or sponsors told
                             us that using HOME funds in conjunction with other funding sources
                             enabled them to reduce the amount of debt service on their projects (or
                             eliminate the need for borrowing altogether) so that they could charge
                             lower rents and be affordable to more people with lower incomes. Two of
                             the projects we visited were quite unlike the other projects we visited
                             because they did not use the federal Low-Income Housing Tax Credit
                             program and did not have a conventional mortgage or other bank
                             financing. The same participating jurisdiction developed both projects
                             using only public resources, including HOME and CDBG funds, donations of
                             city-owned land, and interior and exterior labor provided by the city’s
                             work force.


                             HUD  does not pay for supportive services through the HOME program but
Availability of              does, under limited circumstances, do so through the Section 202 program.
Supportive Services at       Information on the provision of services is generally not available because
Section 202 and              neither program collects nationwide data on the availability of such
                             services at the projects each has funded. For most of the Section 202 and
HOME Projects                HOME projects we visited, some supportive services, such as group social
                             activities or subsidized meals programs, were available to the residents
                             on-site, but usually only to the extent that the projects could generate
                             operating income to pay for them. Rather than provide such services
                             themselves, the projects tapped into and availed themselves of various
                             supportive, educational, social, or recreational services in their
                             communities. Furthermore, most of the projects that we visited included
                             common areas and activity rooms that gave the residents places to
                             socialize and provided space for hosting community-based and other
                             services.


Availability of Supportive   All eight of the Section 202 and seven of the HOME projects we visited
Services at Most Projects    ensured that their residents had access to supportive services. The range
Depended on Having           and nature of the services depended on the amount of operating income
                             that was available to pay for the services and/or the proximity of
Sufficient Rent Revenue      community-based services to the projects. In addition, one of the Section




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202 projects had a grant from HUD to hire a part-time service coordinator;13
the remaining Section 202 projects paid for a service coordinator from the
project’s operating revenues, expected their on-site resident managers to
serve as service coordinators, or provided services at nearby facilities.
None of the HOME projects received outside support through grants from
HUD and/or project-based rental assistance to pay for supportive services.


Six of the eight HOME projects and all but one of the Section 202 projects
that we visited expected an on-site manager to coordinate the provision of
supportive services to elderly residents or relied on rent revenue to pay for
a service coordinator. The costs of having on-site managers, like the costs
of providing most of the service coordinators, were covered by the
projects’ operating incomes. One of the Section 202 projects that relied on
rent revenue provided few services on-site, but its residents had access to
a wide variety of services, including a subsidized meals program, at
another nearby Section 202 project developed by the same sponsor. In
another case, the nonprofit sponsor of the Section 202 project consulted a
nonprofit affiliate that has developed services for various housing projects
developed by the sponsor. In addition to keeping up to date with the needs
of their residents, the sponsors or management companies of the Section
202 projects we visited expected their service coordinators or resident
managers to refer residents to community-based services as needed or to
bring community-based services to their facilities on a regular or
occasional basis.

One of the Section 202 projects we visited had hired a part-time service
coordinator using a grant from HUD’s Service Coordinator Program.
According to HUD, resident managers cannot always provide supportive
services because they may lack the resources to do so and/or the
experience needed to provide such services. As a result, the Congress
began funding the Service Coordinator Program in 1992 to help meet the
increasing needs of elderly and disabled residents in HUD-assisted housing
and to bridge the gap between these needs and resident managers’




13
 A service coordinator’s job is to coordinate the provision of supportive services to the elderly to
prevent their premature institutionalization and to promote independent living. Examples of
supportive services that elderly residents might need include transportation to community-based
health care providers; subsidized meals programs (provided either at the project or in the community);
or case management through which the coordinator assesses an elderly person’s needs and identifies
social services in the community for which that person is eligible (such as Medicaid or food stamps).



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                           resources and experience.14 The program awarded 5-year grants to
                           selected housing projects to pay for the salaries of their service
                           coordinators and related expenses. The managers of this Section 202
                           project doubted that their operating revenues would be sufficient to
                           continue paying for the coordinator when their HUD grant expires.

                           One Section 202 project that we visited was unique in that it did not have a
                           service coordinator, but the project’s management company had
                           structured the duties of the resident manager to include activities that a
                           service coordinator performs. The project’s management company could
                           do so because it manages over 40 Section 202 projects nationwide and
                           handles nearly all financial, administrative, and recordkeeping duties in
                           one central location so that its resident managers have time to become
                           more involved with their residents.

                           The two HOME projects we visited that had neither a service coordinator
                           nor an expectation that a resident manager would fill this role were the
                           two projects that housed both the low-income elderly and families. At one
                           of these projects, a nearby city adult center offered numerous
                           opportunities for supportive services similar to those other projects
                           provided on-site. At the second project, a social worker from the city
                           visited the project on a part-time basis to provide information about and
                           referrals to community-based services.


Projects for the Elderly   All of the Section 202 projects we visited had common or congregate areas
Usually Included           for group activities, socializing, and supportive services. Six of the eight
                           HOME projects we visited had similar common areas. At both the Section
Congregate Areas
                           202 and the HOME projects, these common areas were often the places in
                           which residents could take advantage of the supportive services the
                           project’s manager or service coordinator had provided directly or, in the
                           case of community-based services, had arranged to come to the project on
                           a regular or occasional basis.

                           The only projects that did not have common or congregate areas were the
                           two HOME projects that housed a mixture of low-income families and
                           elderly residents. One was a traditional multifamily apartment building in
                           which 19 of the 29 units were set aside for the elderly. Although this

                           14
                             The 1990 Cranston-Gonzalez National Affordable Housing Act authorized grants under the Service
                           Coordinator Program to projects developed under HUD’s Section 202 direct loan program (pre-fiscal
                           year 1991). Projects receiving Section 202 capital advances are not eligible for these grants but can
                           fund the costs of a service coordinator and 15 percent of the costs (up to $15 per unit per month) of
                           the services for frail elderly residents with operating funds they derive from their rental assistance
                           contract with HUD.



                           Page 15                                                   GAO/RCED-98-11 Housing for the Elderly
                  B-277091




                  project had no congregate space, it was near one of the city’s adult centers
                  that provides adult education, recreational classes, and other services for
                  seniors and others from the community.15 The second was a
                  single-room-occupancy project in which about 20 percent of the tenants
                  were elderly, although the project did not set aside a specific number or
                  percentage of the units for the elderly. This project had more limited
                  common areas, parts of which were devoted to kitchen facilities on each
                  floor because single-room-occupancy units do not have full kitchens
                  themselves.


                  We provided a draft of this report to HUD for its review and comment. HUD
Agency Comments   generally agreed with the information presented in this report but said that
                  the report (1) understates the contributions of the HOME program in
                  providing assistance to the elderly and (2) assumes that the Section 202
                  model is the preferred way of providing housing for the elderly, without
                  giving sufficient recognition to the other kinds of assistance the elderly
                  receive from the HOME program.

                  In discussing the relative contributions of the HOME and the Section 202
                  programs, HUD said that comparable production of multifamily rental
                  projects for the elderly could not have occurred in the first few years of
                  the HOME program (which was first funded in fiscal year 1992) because of
                  the lead time necessary for planning, selecting, and constructing projects.
                  HUD also questioned whether our data included all HOME projects that
                  might be comparable to Section 202 projects by taking into account the
                  (1) projects developed through the substantial rehabilitation of existing
                  buildings (as opposed to new construction), (2) projects in which vacant
                  units might later be occupied by the elderly in sufficient numbers to
                  achieve comparability with Section 202 projects, (3) projects in which
                  50 percent or more of the residents were elderly, and (4) projects that
                  were under way but had not been completed at the close of fiscal year
                  1996.

                  We agree that our review probably would have identified more
                  comparable HOME projects if the program had been funded before fiscal
                  year 1992, and we have added language to this effect in the report. Our
                  analysis and the data we present include projects from the Section 202 and
                  HOME programs that were substantial rehabilitations of existing buildings.
                  We agree that filling vacant units with elderly residents could increase the


                  15
                    In fact, this adult center occupies the ground floor of a HOME apartment project this community
                  recently built to house only the elderly.



                  Page 16                                                 GAO/RCED-98-11 Housing for the Elderly
B-277091




number of comparable HOME projects in the future, but any such units in
our analysis were vacant as of the close of fiscal year 1996, and our report
discusses each program’s activity only through that date. Data on the HOME
projects in which 50 percent or more of the residents were elderly are
reflected in figure 3 of this report, which illustrates the different types of
HOME assistance the elderly received. We did not compare these data with
Section 202 data because, as we note, comparable HOME projects are those
in which 90 percent or more of the households have one elderly resident.
We agree that some HOME projects that were under way but had not been
completed at the close of fiscal year 1996 might in the future be
comparable to Section 202 projects, but we note that the number of
comparable Section 202 projects would also be greater because projects
funded by the Section 202 program were also under way but had not
opened as of this date.

In stating its belief that this report assumes the Section 202 model is the
preferred way of providing housing for the elderly, HUD expressed concern
that we did not give sufficient recognition to the assistance the HOME
program provides the elderly by other means. HUD noted, for example, that
the HOME program provides a viable alternative to multifamily rental
housing by offering assistance to the elderly to rehabilitate the homes they
own with special features that allow them to continue to live
independently. HUD also noted that smaller rental projects than those we
compared with the Section 202 program (projects with 1-4 units) also
present a viable alternative to multifamily rental housing, provided
adequate supportive services are available if needed.

We disagree with HUD’s comment that this report assumes the Section 202
model is the preferred way of providing housing assistance for the elderly.
In this report, we have described the operations of the two programs and
presented data on the assistance each has provided nationally and at
selected projects. We have not evaluated the manner in which either
program provides assistance, and we have not expressed a preference for
either approach to delivering housing assistance to elderly households. We
have added statements to this effect to the report to address HUD’s
concern. We acknowledge that the HOME program provides housing
assistance to the elderly in several ways other than through the production
of new multifamily rental housing that is set aside almost exclusively for
the elderly. However, because this report describes comparable Section
202 and HOME-funded housing assistance and because the Section 202
program provides only one kind of housing assistance, we focused on the
multifamily rental projects funded by the HOME program that are



Page 17                                    GAO/RCED-98-11 Housing for the Elderly
              B-277091




              comparable to those funded by the Section 202 program. To address HUD’s
              concerns and to provide further recognition of the HOME program’s other
              types of housing assistance, we have revised the sections of the report
              cited by HUD to more prominently reflect the complete range of
              HOME-funded activities benefiting the elderly.


              HUD also provided several technical and editorial corrections to the report,
              which we have incorporated as appropriate. HUD’s comments are
              reproduced in appendix II of this report.


              The information we present in this report describes the need for assisted
Scope and     housing, discusses the operations of the Section 202 and HOME programs,
Methodology   and presents data on the assistance each program has provided. We did
              not evaluate the manner in which either program provides assistance, and
              we did not express a preference in the report for either one of the
              approaches to delivering assistance to elderly households.

              To determine the amount and types of new assisted housing that the
              Section 202 and HOME programs have provided for the elderly, we obtained
              and analyzed data from HUD headquarters on the Section 202 and HOME
              projects completed from fiscal year 1992 through fiscal year 1996. Fiscal
              year 1992 was the first year in which the HOME program received funding,
              and fiscal year 1996 was the most recently completed fiscal year for which
              data from the programs were available when we began our review. Our
              analysis of the HOME data also provided information on the amount and
              sources of funding for multifamily projects developed under the HOME
              program. The Section 202 data did not include information on any other
              federal or nonfederal funding these projects may have received because a
              Section 202 allocation is intended to cover 100 percent of a project’s
              development costs. In addition to using these data, we analyzed special
              HUD tabulations of Census data to identify the level of need among the
              elderly for housing assistance in each state.

              We examined HUD’s data on the HOME program to identify all types of
              housing assistance that the program has provided for elderly households,
              but we also analyzed these data by the type of assistance in order to obtain
              information on the HOME projects that are comparable to Section 202
              projects. To do so, we focused our analysis on the HOME multifamily
              projects in which 90 percent or more of the residents are elderly because,
              at a minimum, 90 percent of the residents of Section 202 projects must be




              Page 18                                   GAO/RCED-98-11 Housing for the Elderly
B-277091




elderly (before 1991, 10 percent could be persons at least 18 years old with
a handicap).

Throughout our review, we also discussed housing assistance for the
elderly with officials from HUD’s Section 202 and HOME programs, HUD’s
Office of Policy Development and Research, and the Bureau of the Census.
In addition, we reviewed relevant documents from each program and prior
HUD and Census reports on housing needs of the elderly.


We supplemented this national information on each program by visiting a
total of 16 projects to obtain more detailed data than HUD collects centrally
on the use of other federal and nonfederal funding and the presence or
availability of supportive services for elderly residents. Using Section 202
and HOME program data, we judgmentally selected two Section 202 and two
HOME projects in each of four states—California, Florida, North Carolina,
and Ohio. We selected these states because they have relatively high
concentrations of low-income elderly residents and numbers of Section
202 and HOME-funded projects. In each state, we selected individual
Section 202 and HOME projects that were in the same vicinity and were
roughly comparable in size. Nearly all of these projects were reserved
exclusively for the elderly or had a portion of their units set aside for the
elderly. In one case, about 20 percent of a HOME-funded project’s residents
were elderly, although neither the project nor any portion of its units was
explicitly reserved for elderly residents.

At each project we visited, we discussed the project’s history and
financing and the availability of supportive services with the sponsor or
developer and relevant local and HUD officials. The observations we make
about the individual projects we visited are not generalizable to all Section
202 or HOME-funded projects because we judgmentally selected these
projects and did not visit a sufficient number from each program to draw
conclusions about the universe of such projects.

We did not assess the reliability of the data we obtained and analyzed from
HUD’s Section 202 and HOME program databases. However, throughout our
review we consulted with the appropriate HUD officials to ensure we were
analyzing the relevant data elements for the purposes of this report.
Furthermore, the information we obtained from these databases was
generally consistent with our observations during our site visits to the
projects we selected using these databases.




Page 19                                    GAO/RCED-98-11 Housing for the Elderly
B-277091




We conducted our work from April through October 1997 in accordance
with generally accepted government auditing standards.


We are sending copies of this report to the appropriate congressional
committees, the Secretary of Housing and Urban Development, and the
Director of the Office of Management and Budget. We will make copies
available to others on request.

Please call me at (202) 512-7631 if you or your staff have any questions
about the material in this report. Major contributors to this report are
listed in appendix III.

Sincerely yours,




Stanley J. Czerwinski
Associate Director, Housing and
  Community Development Issues




Page 20                                   GAO/RCED-98-11 Housing for the Elderly
Page 21   GAO/RCED-98-11 Housing for the Elderly
Contents



Letter                                                                                               1


Appendix I                                                                                          24

Selected Section 202
and HOME
Investment
Partnerships Projects
Appendix II                                                                                         60

Comments From the
Department of
Housing and Urban
Development
Appendix III                                                                                        62

Major Contributors to
This Report
Figures                 Figure 1: Low-income Elderly Households With Housing                         4
                          Problems
                        Figure 2: Incremental Multifamily Rental Projects in Which at                8
                          Least 90 Percent of the Household Heads Are Elderly, Fiscal
                          Years 1992-96
                        Figure 3: HOME Program Assistance Provided to Households                     9
                          With an Elderly Household Head, Fiscal Years 1992-96
                        Figure 4: Sources of Financing for HOME Multifamily Projects                12
                          Serving Elderly Households
                        Figure I.1: Lytton Courtyard Section 202 Project, Palo Alto,                26
                          California
                        Figure I.2: Oceana Terrace Section 202 Project, Pacifica,                   28
                          California
                        Figure I.3: Federation Gardens II Section 202 Project, Miami,               30
                          Florida
                        Figure I.4: Coral Bay Terrace Section 202 Project, Miami, Florida           32
                        Figure I.5: Granville Plaza Section 202 Project, Winston-Salem,             34
                          North Carolina




                        Page 22                                  GAO/RCED-98-11 Housing for the Elderly
Contents




Figure I.6: Assembly Terrace Section 202 Project, Winston-Salem,            36
  North Carolina
Figure I.7: Abyssinia Towers Section 202 Project, Cleveland, Ohio           38
Figure I.8: Robert L. Bender Senior Apartments Section 202                  40
  Project, Massillon, Ohio
Figure I.9: The Carroll Inn HOME Project, Sunnyvale, California             42
Figure I.10: Pinole Grove Senior Housing HOME Project, Pinole,              44
  California
Figure I.11: 20 West 6th Street HOME Project, Hialeah, Florida              46
Figure I.12: 51 East 9th Street HOME Project, Hialeah, Florida              48
Figure I.13: Rockwood Cottages HOME Project, Durham, North                  50
  Carolina
Figure I.14: Mountain Springs Apartments HOME Project,                      52
  Asheville, North Carolina
Figure I.15: Ascension Village Apartments HOME Project,                     55
  Cleveland, Ohio
Figure I.16: 59 Duncan Place HOME Project, Massillon, Ohio                  57




Abbreviations

CDBG       Community Development Block Grant
HOME       HOME Investment Partnerships
HUD        Department of Housing and Urban Development


Page 23                                  GAO/RCED-98-11 Housing for the Elderly
Appendix I

Selected Section 202 and HOME Investment
Partnerships Projects

              As part of our review, we visited 16 low-income, multifamily rental
              projects—4 each in California, Florida, North Carolina, and Ohio—to
              obtain information that the Department of Housing and Urban
              Development (HUD) does not collect centrally and to discuss with program
              participants their experience in applying for, developing, and operating
              these projects. In each state, two of the projects we visited were funded by
              the Section 202 program and two received funds from the HOME Investment
              Partnership (HOME) program. As we noted in the Scope and Methodology
              section of this report, we judgmentally selected these states because,
              compared with other states, they had relatively high concentrations of
              low-income elderly residents and numbers of Section 202 and HOME-funded
              projects. We selected individual Section 202 and HOME projects that were
              in the same vicinity and were roughly comparable in size.

              During each site visit, we discussed the history, financing, and availability
              of supportive services with the sponsor or developer of the project. We
              also discussed these issues with on-site management agents, local officials
              administering the HOME program, and HUD Section 202 and HOME field office
              officials. At each project, we walked through the grounds, selected
              residential units, and any common areas available to the residents for
              group activities.

              Typically, the Section 202 projects we visited were high- or mid-rise
              apartment buildings with elevators, laundry facilities, and one or more
              community rooms in which residents participated in group activities and,
              in some cases, meals programs. In one project, which consisted of more
              traditional garden apartments on a single level, each apartment had its
              own outdoor entrance and front porch. Ranging in size from 42 to 155
              units, most of the projects (5 of 8) had a resident manager. Current Section
              202 regulations require that all residents of these projects have very low
              incomes—that is, the must earn less than 50 percent of the median income
              for their area.

              The HOME projects we visited, ranging in size from 20 to 120 units, were
              more varied than the Section 202 projects. Several were high- or mid-rise
              buildings, although one of these was a single-room-occupancy hotel. In the
              single-room-occupancy hotel, the units were smaller than in a typical
              apartment building and much of the common space consisted of kitchen
              facilities, which were not included in the units themselves. At another
              project, the ground floor of the building housed a city-operated adult
              center offering a variety of educational and recreational programs. Other
              HOME projects we visited were multi-unit cottages or detached structures,




              Page 24                                    GAO/RCED-98-11 Housing for the Elderly
Appendix I
Selected Section 202 and HOME Investment
Partnerships Projects




each of whose units had its own outdoor entrance; one such project
consisted of buildings scattered over three different sites. Unlike the
Section 202 projects, two of the HOME projects housed both families and
the elderly.

As we noted earlier in this report, at a minimum, in each multifamily rental
project with at least five HOME-assisted units, at least 20 percent of the
residents in the HOME-assisted units must have very low incomes (at or
below 50 percent of the area’s median income); the remaining units may
be occupied by households with low-incomes (up to 80 percent of the
area’s median income). At the HOME projects we visited, half designated all
of their units as HOME-assisted, meaning that the HOME program’s
regulations about tenants’ incomes applied to those units; the other half
designated some but not all of their units as HOME-assisted, meaning that
the remaining units in these projects were subject either to the rules
associated with other sources of funding or to those established by the
local jurisdiction.

The following pages include photographs and other pertinent information
about the various Section 202 and HOME projects we visited.




Page 25                                    GAO/RCED-98-11 Housing for the Elderly
                                           Appendix I
                                           Selected Section 202 and HOME Investment
                                           Partnerships Projects




Figure I.1: Lytton Courtyard Section
202 Project, Palo Alto, California




                                           Exterior

                                       •   50-unit mid-rise independent living facility
                                       •   One of four projects for the elderly that make up the Lytton Gardens
                                           complex1
                                       •   Located about 4 blocks from the main campus, where the other three
                                           facilities are located

                                           Interior

                                       •   Access to units by stairs and an elevator
                                       •   Appliances such as ranges and refrigerators in units
                                       •   Laundry facilities on each floor
                                       •   Little congregate space on-site, but group facilities—large community
                                           room, separate dining room, and resident-owned thrift shop—available at
                                           the main campus


                                           1
                                            The other three projects, located on the main campus, are (1) a 220-unit Section 202 project, (2) a
                                           100-unit multifamily project that includes 50 assisted living units, and (3) a 145-bed nursing home that
                                           offers rehabilitation services as well as subacute and long-term care.



                                           Page 26                                                   GAO/RCED-98-11 Housing for the Elderly
    Appendix I
    Selected Section 202 and HOME Investment
    Partnerships Projects




    Supportive Services

•   Transportation
•   Social services
•   Subsidized meals
•   Exercise programs
•   Service coordinator position at the larger Section 202 project (220 units)
    terminated after a grant from HUD’s Service Coordinator Program expired

    Development and Financing

•   Developed by Community Housing, Inc., a nonprofit organization formed
    by two churches
•   $5,700,000 in a capital advance from HUD for construction

    Special Features

•   Provides health as well as supportive services to allow elderly residents to
    continue living in the community
•   Is part of a complex that is located on more than one site




    Page 27                                    GAO/RCED-98-11 Housing for the Elderly
                                             Appendix I
                                             Selected Section 202 and HOME Investment
                                             Partnerships Projects




Figure I.2: Oceana Terrace Section 202
Project, Pacifica, California




                                             Exterior

                                         •   42-unit three-story apartment building opened in September 1995
                                         •   Overlooks the Pacific Ocean, just south of San Francisco
                                         •   Land for the project previously owned by the Church of the Good
                                             Shepherd, adjacent to the property

                                             Interior

                                         •   41 one-bedroom units
                                         •   One 2-bedroom unit reserved for a resident manager
                                         •   All units accessible to the handicapped; one unit adapted for the sight- or
                                             hearing-impaired
                                         •   Emergency pull cords in units
                                         •   Access to units by stairs and an elevator
                                         •   Appliances such as ranges and refrigerators in units
                                         •   Laundry facilities on the second floor
                                         •   One large community room

                                             Supportive Services




                                             Page 28                                    GAO/RCED-98-11 Housing for the Elderly
    Appendix I
    Selected Section 202 and HOME Investment
    Partnerships Projects




•   Access to an adult day care center that offers social, educational,
    recreational, and therapeutic activities
•   Subsidized meals program available at the city of Pacifica’s senior centers
•   Assistance in arranging transportation provided by the sponsor, service
    coordinator, or volunteers from the nearby parish
•   Part-time service coordinator to initially assess residents’ needs for
    services and monitor ongoing needs as well as provide counseling or
    prepare recovery plans

    Development and Financing

•   Developed by Mercy Charities Housing of California
•   Land for the project previously owned by the Church of the Good
    Shepherd
•   $4,053,024 in total funding for development, including

        $3,362,000 in a Section 202 capital advance from HUD for construction2

      $160,000 in Community Development Block Grant (CDBG) funds from
    San Mateo County for predevelopment expenses

      $460,000 in HOME funds from San Mateo County for expenses related to
    the site’s improvement, predevelopment, and construction

        $71,024 in an equity contribution from the sponsor

    Special Features

•   Economies of scale and wide access to community professional and
    volunteer services through Mercy Services—a nonprofit subsidiary of the
    sponsor—that provides services to residents in this and several other
    Section 202 projects sponsored by the archdiocese
•   Ready access to volunteer services created by the project’s proximity to
    the church
•   Unusual number of funding sources for the development of a Section 202
    project




    2
     The Section 202 capital advance is $430,000 lower than the advance HUD originally approved because
    the Section 202 program’s rules preclude the use of other federal assistance, such as the HOME and
    CDBG funds this project received, for most of the purposes for which the sponsor sought the the
    funds.



    Page 29                                                GAO/RCED-98-11 Housing for the Elderly
                                          Appendix I
                                          Selected Section 202 and HOME Investment
                                          Partnerships Projects




Figure I.3: Federation Gardens II
Section 202 Project, Miami, Florida




                                          Exterior

                                      •   50-unit four-story apartment building opened in late 1990
                                      •   Adjacent to Federation Gardens I, a 110-unit Section 202 project opened in
                                          1982 by the same developer

                                          Interior

                                      •   37 one-bedroom units, 13 efficiency units
                                      •   All but one unit reserved for the elderly; one unit reserved for the resident
                                          manager
                                      •   Emergency pull cords in units
                                      •   Basic appliances in units
                                      •   Laundry facilities on the second floor
                                      •   All units carpeted

                                          Supportive Services

                                      •   Large multipurpose community room with kitchen facilities and other
                                          common spaces in Federation Gardens I
                                      •   Meals on Wheels program sponsored by the Jewish Vocational Services
                                      •   Case management and referral services
                                      •   Educational sessions on consumer issues, health, and nutrition
                                      •   Volunteer programs



                                          Page 30                                    GAO/RCED-98-11 Housing for the Elderly
    Appendix I
    Selected Section 202 and HOME Investment
    Partnerships Projects




•   Access to programs for all ages at the neighboring Jewish Community
    Center
•   Full-time tenant services director who works out of Federation Gardens I
    and makes services available to residents of both projects

    Development and Financing

•   Developed by Jewish Federation Housing, Inc., a subsidiary of the Greater
    Miami Jewish Federation
•   $2,135,400 in a direct loan from HUD for construction

    Special Features

•   Opportunities for intergenerational interaction afforded by proximity to
    the Jewish Community Center




    Page 31                                    GAO/RCED-98-11 Housing for the Elderly
                                            Appendix I
                                            Selected Section 202 and HOME Investment
                                            Partnerships Projects




Figure I.4: Coral Bay Terrace Section
202 Project, Miami, Florida




                                            Exterior

                                        •   155-unit three-story apartment building opened in October 1993

                                            Interior

                                        •   115 one-bedroom and 39 efficiency units; 1 resident manager’s unit
                                        •   16 units accessible to the handicapped; 1 one-bedroom unit reserved for a
                                            resident manager; all other units reserved for the elderly
                                        •   Emergency pull cords in units
                                        •   Access to units by stairs and an elevator
                                        •   Basic appliances in units
                                        •   Laundry facilities on each floor
                                        •   All units carpeted

                                            Supportive Services

                                        •   County bus service to nearby meals programs and medical facilities
                                        •   English-as-a-second-language classes held on-site through a partnership
                                            established with a nearby school
                                        •   Role of a service coordinator filled by the on-site resident manager, who is
                                            responsible not only for performing property management tasks, such as
                                            overseeing routine and periodic maintenance, but also for being involved
                                            in the community, soliciting support from county or charitable service



                                            Page 32                                    GAO/RCED-98-11 Housing for the Elderly
    Appendix I
    Selected Section 202 and HOME Investment
    Partnerships Projects




    organizations, interacting with and becoming familiar with the needs of
    the residents, and helping to find alternative living arrangements for
    residents who become too frail to live independently

    Development and Financing

•   Developed by Christian Senior Housing, Inc., a nonprofit developer of
    housing projects for the elderly as well as intermediate- and extended-care
    facilities
•   $7,556,500 in two separate capital advances from HUD for construction

    Special Features

•   Two separately approved capital advances for two projects on the same
    property (approved over 2 years) combined to fund a single project;
    combination feasible because the first project, for 55 units, was still in the
    early stages when the second project, for 100 units, was approved




    Page 33                                     GAO/RCED-98-11 Housing for the Elderly
                                              Appendix I
                                              Selected Section 202 and HOME Investment
                                              Partnerships Projects




Figure I.5: Granville Plaza Section 202
Project, Winston-Salem, North
Carolina




                                              Exterior

                                          •   42-unit mid-rise apartment building opened early in 1995
                                          •   Situated on a site formerly occupied by an elementary school
                                          •   Built adjacent to an existing Section 202 property

                                              Interior

                                          •   All one-bedroom units
                                          •   All units reserved for the elderly
                                          •   Four units accessible to the handicapped
                                          •   All units on a single level
                                          •   Two emergency pull cords in each unit that trigger an audio signal in the
                                              hallway
                                          •   Basic appliances and window treatments in units
                                          •   Laundry facilities on the ground floor
                                          •   Congregate space—including a library and a large community room with
                                              kitchen facilities—for residents’ activities
                                          •   Storage space for each resident on the first floor




                                              Page 34                                    GAO/RCED-98-11 Housing for the Elderly
    Appendix I
    Selected Section 202 and HOME Investment
    Partnerships Projects




    Supportive Services

•   Home health care
•   Assistance in establishing eligibility and applying for participation in the
    Medicaid and Food Stamp programs
•   Public and private transportation to medical appointments, grocery stores,
    drug stores, and banks
•   Monthly on-site blood pressure screening clinic
•   Quarterly on-site podiatry clinic
•   Social activities, including a garden club, birthday and major holiday
    celebrations, and monthly covered-dish dinners for all residents
•   Full-time service coordinator position shared with the adjoining Section
    202 property and supported through project-based rental assistance
    contracts

    Development and Financing

•   Developed by the Winston-Salem Housing Foundation, Inc., a nonprofit
    organization that also helped to develop the Assembly Terrace project
•   $2,218,400 in a capital advance from HUD for construction

    Special Features

•   Developer, the oldest nonprofit developer of assisted housing in the
    Winston-Salem area, involved in six other Section 202 projects




    Page 35                                    GAO/RCED-98-11 Housing for the Elderly
                                           Appendix I
                                           Selected Section 202 and HOME Investment
                                           Partnerships Projects




Figure I.6: Assembly Terrace Section
202 Project, Winston-Salem, North
Carolina




                                           Exterior

                                       •   60-unit low-rise apartment building opened late in 1994
                                       •   Located in a single-family neighborhood on a site adjacent to the First
                                           Assembly of God Church, one of the project’s nonprofit cosponsors
                                       •   Site about 1/2 mile from medical facilities and grocery, drug, and other
                                           retail stores

                                           Interior

                                       •   All units reserved for elderly persons capable of living independently and
                                           taking care of themselves
                                       •   Five units accessible to the handicapped
                                       •   All units on one level
                                       •   Two emergency pull cords in each unit that trigger a visual and audio
                                           signal in the hallway
                                       •   Basic appliances, such as ranges and refrigerators, in units
                                       •   Laundry facilities on the ground floor
                                       •   Congregate space for residents’ activities, including a library and a large
                                           community room with kitchen facilities




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    Supportive Services

•   Arrange for services to be provided through existing community resources
•   Home health care
•   Assistance with financial planning and with Medicare/Medicaid paperwork
•   Social activities such as potluck dinners, parties, and outings
•   Mental health counseling
•   Part-time service coordinator position supported through a project-based
    rental assistance contract

    Development and Financing

•   Developed by the First Assembly of God Church and the Winston-Salem
    Housing Foundation, Inc., a nonprofit organization that also helped to
    develop the Granville Plaza project
•   $3,367,400 in a capital advance from HUD for construction

    Special Features

•   Project jointly developed by a church, with a history of service to and
    volunteer activities in the community, and a foundation that is the oldest
    nonprofit developer of assisted housing in the area and has been involved
    in the development of six other Section 202 projects




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Figure I.7: Abyssinia Towers Section
202 Project, Cleveland, Ohio




                                           Exterior

                                       •   70-unit high-rise apartment building opened in mid-1987
                                       •   Constructed on a formerly vacant, deteriorated site

                                           Interior

                                       •   50 one-bedroom units, 19 efficiencies, and 1 two-bedroom resident
                                           custodian’s unit
                                       •   90 percent of the units reserved for the elderly and 10 percent available for
                                           the nonelderly handicapped
                                       •   Emergency pull cords in units
                                       •   Access to units by stairs and an elevator
                                       •   Appliances such as ranges and refrigerators in units
                                       •   Laundry facilities on the second and fourth floors
                                       •   A library and one large community room with kitchen facilities available
                                           for groups
                                       •   Arts and crafts room




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    Supportive Services

•   Group shopping trips arranged
•   Free transportation arranged to services in the community
•   Community-based services, such as Meals-on-Wheels, provided on-site
•   Home care services arranged for those who need help with housekeeping
•   Help in obtaining assisted living arrangements provided as necessary to
    residents and their families
•   Part-time service coordinator position supported by a multiyear grant from
    HUD’s Service Coordinator Program


    Development and Financing

•   Development initiated by the Greater Abyssinia Baptist Church
•   $150,000 provided by the city of Cleveland to acquire land
•   $2,683,500 in a direct loan from HUD for construction

    Special Features

•   Some units available for nonelderly tenants because the project received
    its Section 202 direct loan before 1991
•   Project developed to revitalize the community as well as provide housing
    for the elderly; was initiated by a church that wanted to stabilize and
    develop the neighborhood and received some funds from the city, which
    supported the church’s goals




    Page 39                                    GAO/RCED-98-11 Housing for the Elderly
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Figure I.8: Robert L. Bender Senior
Apartments Section 202 Project,
Massillon, Ohio




                                          Exterior

                                      •   50-unit complex opened in mid-1992
                                      •   Consists of small, attached, cottage-style buildings, each containing six to
                                          eight units that residents enter from the outside
                                      •   Buildings wrapped around a cul-de-sac, encircling an additional building in
                                          the center of the property

                                          Interior

                                      •   All one-bedroom units
                                      •   One unit reserved for the resident manager; all other units reserved for the
                                          elderly
                                      •   Resident manager’s unit, large community room with kitchen facilities,
                                          and coin-operated laundry facilities located in the central building
                                      •   Emergency pull cords in units
                                      •   Basic appliances in units
                                      •   All units carpeted




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    Supportive Services

•   Dinner, for which residents pay a voluntary donation, served in the
    community room 5 days a week by a Meals on Wheels program based in
    Canton, Ohio
•   Access to a variety of community-based services, such as programs
    sponsored by the area’s Agency on Aging
•   Some transit service provided by the community
•   On-site services, such as periodic visits from a podiatrist
•   Residents’ social club that plans trips and other events

    Development and Financing

•   Developed by a nonprofit group that sponsors and develops affordable
    housing using a variety of federal and nonfederal programs
•   Work to extend utilities to the site donated by the city
•   $2,346,800 in a direct loan from HUD for construction

    Special Features

•   Layout of the project gives each unit space in which residents can do
    limited landscaping




    Page 41                                    GAO/RCED-98-11 Housing for the Elderly
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                                       Partnerships Projects




Figure I.9: The Carroll Inn HOME
Project, Sunnyvale, California




                                       Exterior

                                   •   120-unit single-room-occupancy project opened late in 1994; one additional
                                       unit for a resident manager
                                   •   Constructed on a site originally purchased by the city for use as a parking
                                       lot
                                   •   Includes a landscaped interior courtyard and a children’s play area

                                       Interior

                                   •   No fixed number or percentage of units reserved for the elderly
                                   •   Most units occupied by one person (though single parents with one child
                                       also accepted as tenants)
                                   •   Kitchen facilities available for all residents in the common space on each
                                       floor
                                   •   Televisions, exercise equipment, and laundry facilities also provided in the
                                       common space




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    Supportive Services

•   Counseling and referral to appropriate community-based services
    provided to residents by a part-time social worker from the city of
    Sunnyvale

    Development and Financing

•   Jointly developed and financed by the city of Sunnyvale and the
    Mid-Peninsula Housing Coalition, a nonprofit organization that develops
    and manages different kinds of affordable housing for low- and
    moderate-income families, senior citizens, and the disabled throughout the
    Bay Area
•   $6,716,911 in total funding for the project, including

      $3,831,238 in net proceeds from the sale of tax credits

      $150,000 contributed by the general partner, the Mid-Peninsula Housing
    Coalition

      $1,446,415 in grant funds from a state rental housing construction
    program

      $964,750 in HOME funds from the city of Sunnyvale

      $200,008 in HOME funds from Santa Clara County

      $124,500 in grant funds from a private foundation

    Special Features

•   Affordability of all units to low-income tenants (with incomes at or below
    40 percent of the area’s median income) required for at least 55 years
•   About 20 percent of the units occupied by elderly tenants at the time of
    our visit




    Page 43                                    GAO/RCED-98-11 Housing for the Elderly
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                                       Selected Section 202 and HOME Investment
                                       Partnerships Projects




Figure I.10: Pinole Grove Senior
Housing HOME Project, Pinole,
California




                                       Exterior

                                   •   70-unit low-rise mix of one-, two-, and three-level Spanish-mission style
                                       buildings opened in late 1994
                                   •   A balcony with storage space and a carport provided for each unit
                                   •   Project located on the site of a former elementary school
                                   •   A garden, a hair salon, and a crafts room on-site

                                       Interior

                                   •   56 one-bedroom and 14 two-bedroom apartments
                                   •   All units on a single level
                                   •   Emergency pull cords in units
                                   •   Various appliances, including dishwashers, in units
                                   •   A community room and laundry facilities on-site

                                       Supportive Services

                                   •   Project located within walking distance of a city senior center that
                                       provides some meals and group activities for the elderly




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•   Off-site coordinator for some services, such as visiting nurses and
    nutrition counseling

    Development and Financing

•   Jointly developed and financed by the city of Pinole, the Community
    Development Department of Contra Costa County, and Bridge Housing
    Corporation, a nonprofit developer of assisted housing
•   $6,846,833 in total funding for the project, including

      $3,739,008 in proceeds from the sale of tax credits

      $1,450,000 in a bank loan/mortgage

      $900,000 in a loan from the city’s redevelopment agency

      $357,825 in an equity contribution from Bridge Housing Corporation

      $200,000 in CDBG funds from Contra Costa County provided in the form
    of a fully deferred, forgivable loan

      $200,000 in Contra Costa County HOME funds provided in the form of a
    fully deferred loan

    Special Features

•   55-year period of affordability for low-income households required under
    the terms of the tax credit award and the city’s and county’s loan terms
•   1995 “Gold Nugget” Award for best Senior Development from the Pacific
    Coast Builders’ Conference




    Page 45                                    GAO/RCED-98-11 Housing for the Elderly
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                                           Partnerships Projects




Figure I.11: 20 West 6th Street HOME
Project, Hialeah, Florida




                                           Exterior

                                       •   57-unit four-story housing project opened in March 1997
                                       •   Built on a parcel of land directly across from city hall

                                           Interior

                                       •   Mix of one-bedroom and efficiency units
                                       •   All units reserved for the elderly
                                       •   20 units accessible to the handicapped
                                       •   Entire ground floor and two open-air courtyards in the center of the
                                           building used for an adult center
                                       •   Access to units by stairs or elevators that lead to breezeways surrounding
                                           the two courtyards
                                       •   Basic variety of kitchen appliances in units
                                       •   Coin-operated laundry facilities on each floor




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    Supportive Services

•   Supportive, educational, and recreational services available to resident
    and nonresident senior citizens at the adult center
•   Subsidized meals available at the center for senior citizens
•   Assistance in applying for benefits provided at the center to potentially
    eligible senior citizens by representatives from social services programs,
    such as Medicare or Social Security
•   Adult education classes (e.g., painting, ceramics, or English as a second
    language) offered to elderly and nonelderly residents of Hialeah

    Development and Financing

•   Developed by the city of Hialeah on city-owned land
•   $4,300,000 in total funding for the project, including

      $2,262,000 in HOME funds for the residential portion of the building

      $800,000 in CDBG funds for the adult center

       $1,238,000 in the value of contracting services and labor provided by the
    city

    Special Features

•   Construction costs minimized by designating the city as the general
    contractor for the project and using its work force wherever possible (e.g.,
    for landscaping, irrigation, and cabinetry work)




    Page 47                                    GAO/RCED-98-11 Housing for the Elderly
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Figure I.12: 51 East 9th Street HOME
Project, Hialeah, Florida




                                           Exterior

                                       •   29-unit multifamily apartment complex opened in mid-1995
                                       •   Includes two adjacent mid-rise buildings

                                           Interior

                                       •   Mixture of one- and two-bedroom apartments
                                       •   19 units reserved for the elderly
                                       •   Access to units by stairs and elevators
                                       •   Basic variety of kitchen appliances in units
                                       •   Coin-operated laundry facilities on the ground floor of each building
                                       •   No community or other multipurpose room

                                           Supportive Services

                                       •   Free transportation provided by the city, under a contract with the local
                                           housing authority, to and from sites (including the HOME housing project




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    for the elderly on West 6th Street) where other social service agencies
    operate subsidized meals programs for the elderly
•   Other supportive, social, educational, and recreational activities provided
    at the West 6th Street project’s adult center

    Development and Financing

•   Developed by the city of Hialeah
•   $1,534,795 in total funding for the project, including

      $338,669 in CDBG funds for land acquisition

      $1,089,700 in HOME funds for construction

      $106,426 in funds generated locally by city-owned housing projects, also
    for construction

    Special Features

•   Only public funds used to develop and finance this project




    Page 49                                    GAO/RCED-98-11 Housing for the Elderly
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                                          Partnerships Projects




Figure I.13: Rockwood Cottages HOME
Project, Durham, North Carolina




                                          Exterior

                                      •   20-unit complex opened early in 1996
                                      •   Consists of five newly constructed buildings that form a semicircle around
                                          a cul-de-sac
                                      •   A front porch and a rear deck on each building
                                      •   Access to the units in each building through the front porch
                                      •   Use of the rear deck shared by the first-floor residents of each building

                                          Interior

                                      •   15 one-bedroom and 5 two-bedroom apartments—3 one-bedroom units
                                          and 1 two-bedroom unit in each building
                                      •   All units on a single-level, but the two-bedroom units include a stairway to
                                          the second floor on which they are located
                                      •   Basic variety of appliances (but no dishwasher) in each unit
                                      •   Laundry facilities in the basement of one building available for all
                                          residents
                                      •   One room in the basement of one of the buildings set aside for group
                                          activities and socializing




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    Supportive Services

•   No service coordinator
•   On-site resident manager

    Development and Financing

•   Developed by a private developer of low-income housing properties
•   $1,427,304 in total funding for the project, including

      $691,000 in HOME funds contributed by the city of Durham

      $466,260 in tax credit proceeds

      $260,000 in City Housing Bond funds loaned to the developer at no
    interest with no payments required until a balloon payment comes due at
    the end of a 30-year term

    Special Features

•   Single-family appearance of individual buildings consistent with the
    architecture of the neighborhood




    Page 51                                    GAO/RCED-98-11 Housing for the Elderly
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                                           Partnerships Projects




Figure I.14: Mountain Springs Apartments HOME Project, Asheville, North Carolina




                                           Exterior

                                       •   44-unit development opened in late 1995
                                       •   Consists of six buildings in three locations (four buildings in one of the
                                           locations)
                                       •   One one-story building with 12 units
                                       •   Four one-story buildings, each with two units
                                       •   One two-story building with 24 units
                                       •   All units with a porch, patio, or balcony




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    Interior

•   All one-bedroom units on a single level
•   Four units accessible to the handicapped (one each at the first two
    locations and two at the third location)
•   Basic appliances (but no dishwasher) in each unit
•   Laundry facilities in the 12-unit and 24-unit buildings
•   Community room in the two-story building for group activities and
    socializing

    Supportive Services

•   Coordination with local organizations provided by the resident manager to
    obtain services such as
•   Transportation to medical appointments, shopping, and a senior center
•   Health care
•   Blood pressure screening
•   Meals on Wheels
•   Educational lectures

    Development and Financing

•   Developed by Douglas Company, Inc., a private developer of low-income
    housing properties in multiple states
•   $2,543,300 in total funding for the project, including

      $1,084,300 in tax exempt bond proceeds

      $843,556 in HOME funds ($686,213 from the state of North Carolina and
    $157,343 from the Asheville Regional Consortium, consisting of local
    governments in Buncombe, Henderson, Madison, and Transylvania
    counties)

      $300,000 in a bank loan/mortgage

      $119,744 in private grants

      $102,000 in proceeds from the sale of tax exempt bonds contributed by
    the North Carolina State Housing Finance Agency

      $42,657 in matching local funds

    Special Features


    Page 53                                    GAO/RCED-98-11 Housing for the Elderly
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•   Units in three separate locations that are close to one another
•   Funding from a wide variety of federal, state, local, and private sources




    Page 54                                    GAO/RCED-98-11 Housing for the Elderly
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                                          Selected Section 202 and HOME Investment
                                          Partnerships Projects




Figure I.15: Ascension Village
Apartments HOME Project, Cleveland,
Ohio




                                          Exterior

                                      •   60-unit mid-rise (three-floor) apartment building for people age 55 and
                                          over; opened in 1994
                                      •   Located next to a church that leases the land and supported the
                                          development of this project

                                          Interior

                                      •   Mixture of one- and two-bedroom units
                                      •   Access to units via stairs and an elevator
                                      •   Basic kitchen appliances (but no dishwasher) in each unit
                                      •   Emergency pull cords in all units
                                      •   Carpeting in all units
                                      •   Coin-operated laundry facilities on each floor
                                      •   Multipurpose community rooms and lounge areas on the ground floor

                                          Supportive Services

                                      •   Resident council active in arranging services
                                      •   Access to volunteers and activities for senior citizens through the
                                          neighboring church




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•   No service coordinator

    Development and Financing

•   Developed by Catholic Charities in the Diocese of Cleveland, through a
    nonprofit subsidiary established to create affordable housing for the
    elderly
•   Land leased from Ascension Catholic Church
•   $3,056,928 in total funding for the project, including

      $1,664,000 in tax credit proceeds

      $828,400 in a bank loan/mortgage

      $363,000 in HOME funds contributed by the city of Cleveland

      $141,528 in a Federal Home Loan Bank Board Affordable Housing
    Program grant

      $60,000 in a state grant

    Special Features

•   Development initiated in response to an annual request from the city for
    proposals to develop affordable housing using its allocation of HOME and
    CDBG funds
•   Award of HOME funds from the city a catalyst for other funding




    Page 56                                    GAO/RCED-98-11 Housing for the Elderly
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                                    Partnerships Projects




Figure I.16: 59 Duncan Place HOME
Project, Massillon, Ohio




                                    Page 57                                    GAO/RCED-98-11 Housing for the Elderly
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    Partnerships Projects




    Exterior

•   66-unit nine-story apartment building opened in mid-1994
•   Located in downtown Massillon in renovated commercial space that had
    been vacant for 10 years

    Interior

•   Office space for the project management company and additional
    commercial space available for lease on the ground floor
•   Residential units on the remaining eight floors
•   All residential units reserved for the elderly
•   Access to units by stairs and an elevator
•   Emergency pull cords in units
•   Basic kitchen appliances in each unit
•   Carpeting in all units
•   Coin-operated laundry facilities on each floor
•   Community rooms dedicated to different purposes (e.g., library, exercise
    room) on several floors
•   Large multipurpose community room with kitchen facilities and a large
    observation deck with picnic tables off of the seventh floor

    Supportive Services

•   Access to subsidized meals and other services at a nearby city senior
    center arranged by on-site management staff
•   Recreational opportunities available in community rooms (e.g., reading,
    television viewing, stationary bicycling, and other exercise equipment)
•   Educational and/or social activities (e.g., periodic on-site health and
    wellness seminars and community outings) coordinated by on-site
    management staff
•   No service coordinator

    Development and Financing

•   Jointly developed and financed by the city of Massillon, the state of Ohio, a
    private developer of low-income housing tax credit projects, and a nearby
    nonprofit group specializing in assisted housing and economic
    development




    Page 58                                    GAO/RCED-98-11 Housing for the Elderly
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    Partnerships Projects




•   $4,057,102 in total funding for the project, including

      $2,267,102 in proceeds from the syndication of tax credits allocated by
    Ohio’s Housing Finance Agency

      $1,300,000 in a bond-financed permanent loan from the city

      $415,000 in HOME funds loaned by the state’s Department of
    Development to the nonprofit housing and economic development group,
    which invested the loan funds in the project

    Special Features

•   Community revitalization as well as affordable housing goals served by
    project; vacant space in a prominent location converted to desirable uses
•   City’s loan a catalyst for other funding




    Page 59                                    GAO/RCED-98-11 Housing for the Elderly
Appendix II

Comments From the Department of Housing
and Urban Development




              Page 60       GAO/RCED-98-11 Housing for the Elderly
Appendix II
Comments From the Department of Housing
and Urban Development




Page 61                                   GAO/RCED-98-11 Housing for the Elderly
Appendix III

Major Contributors to This Report


                        Judy A. England-Joseph,
Resources,              Nancy Simmons,
Community, and          Alice Feldesman,
Economic                Bill MacBlane
                        William Sparling
Development             Robert Dolson
Division, Washington,   Elizabeth R. Eisenstadt
D.C.
                        Gwenetta Blackwell
Chicago/Detroit Field
Office




(385681)                Page 62                   GAO/RCED-98-11 Housing for the Elderly
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