Obama’s 2013 Budget Provides $475 Million to Housing for the Elderly

President Obama’s 2013 federal budget appropriates $475 million of funding for the Section 202 Housing for the Elderly program, which will remain available until Sept. 30, 2016, with several provisions.

The total obligations estimated for 2013, at $549 million, decreased substantially from the previous year’s $1.16 billion, and are broken down into five parts:

  • $59 million for construction and expansion
  • $285 million for Project Rental Assistance Contracts
  • $89 million for Service Coordinators/Congregate Services
  • $16 million for Senior Preservation Rental Assistance Contracts
  • $100 million for State Housing Project Rental Assistance

Last year, the budget provided just under $375 million for the program. This year’s appropriations transferred $2 million to other accounts, reducing 2013’s discretionary appropriations to $473 million, with estimated net outlays for next fiscal year totaling $1.005 billion.


The budget mentions the Administration’s “efforts to improve the efficiency and efficacy of the Section 202 program” through the Section 202 Supportive Housing for the Elderly Act of 2010, which amended the original Act of 1959 and gave the Department of Housing and Urban Development new authorities, including new flexibilities to ensure that existing properties in the program aren’t lost as affordable housing stock when owners opt out of their responsibilities through pre-payment.

Other reform efforts include allowing HUD to provide Section 202 operating assistance directly to states, and are expected to result in cost savings for both state and federal healthcare budgets.

“These reforms will create and sustain significantly more affordable units at a lower initial cost than under the status quo, streamline and modernize the program to reduce administrative processing, increase the likelihood of successful completion within a shorter timeframe, and ensure that Section 202 units serve as a platform for elderly persons to live independently and age in place,” says the report.


Health Care and Nursing Homes & Health Care Refinance

The budget shows negative credit subsidy rates for HUD’s healthcare refinance and nursing home programs, thanks to mortgage insurance premium increases.

“Credit subsidy rates for 2013 reflect mortgage insurance premium increases for newly insured market rate multifamily housing and healthcare facility loans,” says the budget, which proposes 15 basis points on all types of healthcare and multifamily loans besides Section 221(d)(4) loans (20 basis points), and Section 223(a)(7) refinances (5 basis points).

However, these premium increases won’t apply to affordable housing projects, such as those which receive Federal rental subsidies or low-income housing tax credits.

The guaranteed loan subsidies for Health Care and Nursing Homes is projected to go from an estimated -1.34% in 2012 to an estimated -2.51% in 2013, even better than 2011’s -0.71%. Health Care Refinances are expected to have an estimated guaranteed loan subsidy of -4.45% 2013, compared to 2012’s estimate of -1.96% and 2011’s actual of -1.53%.

The two programs are expected to generate an estimated $219 million for the budget in 2013, with $13 million from Health Care and Nursing Homes and $206 million from Health Care Refinances. This is significantly higher than what’s expected to be generated in 2012, an estimated $145 million from both programs, and is much more than 2011’s actual of $54 million.

Guaranteed loan subsidy outlays for Health Care and Nursing Homes is an estimated -$12 million in 2013, compared to -$8 million in 2012. Guaranteed loan subsidy outlays for Health Care Refinances is an estimated -$188 million, more than 2012’s estimated -$114 million.

Suspension & Continuation of Senior Care-Related Programs

In other news, the 2013 budget assumes HUD’s suspension of issuance of new insurance on Section 223(d) operating loss loans to multifamily housing projects with a primary FHA mortgage, as they currently require a positive credit subsidy. In 2009, this program insured mortgages for two operating loss loans for a nursing home and an assisted living facility.

However, the budget continues “Section 223(d) operating loss loans to health care facilities with a primary Section 232 mortgage and Section 241(a) supplemental loans to FHA-financed multifamily housing, but beginning in 2013 these loans will be reported under the budget risk category of the primary FHA mortgage.”

Written by Alyssa Gerace

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