With such a high need for affordable housing, it is critical that we preserve existing affordable housing as we also work to expand its supply.
That’s particularly true for the Department of Housing and Urban Development’s (HUD’s) Sec. 202 Supportive Housing for the Elderly homes, a program that serves older adults with average incomes of $13,300. In fact, in some cases, such as homes built as part of the Sec. 202 program with Project Rental Assistance Contracts (PRAC), preservation has become a near form of art.
Across the United States, just over 130,000 older adults live in Sec. 202 housing built using HUD’s PRAC subsidies, which became available in 1990. As of 2017, there are 125,141 PRAC-subsidized apartments in use, according to HUD.
For Selfhelp Community Services, Volunteers of America, National Church Residences, and other nonprofit operators of PRAC-subsidized Sec. 202 communities, the challenges of preservation became apparent due to the impact of daily wear and tear. “We have aging properties in need of repair work—everything from replacing original building systems to redecorating community rooms,” explains Pete Desjardins, vice president, asset management, Volunteers of America, which operates 4,300 PRAC-subsidized homes in 112 buildings across 40 states, the District of Columbia, and Puerto Rico.
Good news arrived in late March for PRAC-subsidized Sec. 202 property owners, who, until then, had limited options to pay for capital improvements to their buildings. In contrast to non-PRAC operators, who may be able to finance large-scale fixes like a new roof or HVAC system by taking out a loan or refinancing an existing mortgage, organizations with PRAC-subsidized homes cannot secure capital for repair and rehabilitation needs beyond annual funding from Congress or fundraising from private sources.
Without the ability to recapitalize using low-income housing tax credits (LIHTCs) or other traditional types of financing, “we had no long-term preservation strategy,” says Megan Kelley, vice president of public policy and government relations at National Church Residences, one of the largest owners and operators of PRAC-subsidized Sec. 202 residences in the nation, with just over 5,000 owned and/or managed PRAC apartments around the country.
Now, with the fiscal 2018 omnibus spending bill enacted March 23, HUD has the authority to include PRAC-supported properties in its Rental Assistance Demonstration (RAD) program—a legislative victory that caps years of focused, persistent, and heartfelt advocacy by LeadingAge, our members, and others.
Selfhelp, National Church Residences, Volunteers of America, and other PRAC-subsidized housing owners and operators can apply to HUD for approval to convert their PRAC contracts to other types of housing subsidy contracts, project-based vouchers, or project-based rental assistance. The benefit of those options: the possibility of securing financing through LIHTC, debt, or other “soft funding” sources.
“This isn’t a cure-all, but it gives us hope,” VOA’s Desjardins said.
“I’m excited at the opportunity RAD could offer our PRAC/202 housing portfolio,” says Samantha Pearce, director of housing and sustainability for Selfhelp. “Funding through RAD allows us to maintain affordability to our seniors and still operate our property. The idea of RAD would allow us the possibility of continuing to operate our buildings affordably.”
Adds Kelley of National Church Residences: “A lot of education and advocacy was required to get lawmakers’ attention for what might be viewed as an obscure initiative. A couple of thousand properties may not seem like a lot in the scheme of the federal budget, which is in the trillions of dollars. But these apartments are home to our residents, people who do not have other resources. Preserving our existing affordable housing stock is a necessary first step in the bigger process of increasing our woefully inadequate supply of affordable housing for low-income older Americans.”
Preservation of affordable housing for older adults is crucial. Now, with RAD for PRAC, it is possible.
Linda Couch is vice president, housing policy, at LeadingAge, a Washington, D.C.–based trade association for nonprofit providers of aging services.
