1 Balances of selected resources are identified on the statement of financial condition. 80,000 25,000 3,260 1,156 80,000 26, 156 3,260 100,000 25,000 78, 053 -7,006 93,382 97,520 -10, 260 -14, 536 71,047 83, 122 82,984 99,951 97,976 97,529 -97,976 -97, 529 -87,476 REVENUE, EXPENSE, AND RETAINED EARNINGS (IN THOUSANDS OF DOLLARS) 1 The change in these items are reflected on the program and financing schedule. Mr. EVINS. We will look at the housing for the elderly direct loan program. A limitation on administrative expense of $1,282,000 is requested to carry out a program of $85 million in net loan reservations. This is to be financed primarily from the sale of participation certificates. This program level will provide for 45 net loan reservations and 6,900 units. Please place pages G-1 through G-5 of the justifications in the record. A limitation on administrative expenses of $1,282,000 to carry out a proposed program of $85 million in net loan reservations to be financed primarily from the sale of participation certificates. This program level will provide for 45 net loan reservations and 6,900 units. Summary of budget request The budget for fiscal year 1969 for the housing for the elderly or handicapped program proposes a program level of $85 million to provide net loan reservations for 45 projects, containing an estimated 6,900 dwellings which will house approximately 8,670 elderly or handicapped persons. This is to be financed by participation sales of $65 million, combined with unused balances of 1968 funds plus repayments and interest income. Sales of certificates of participations in pools of mortgages from this program as authorized by the Participation Sales Act of 1966 are estimated at $60 million in 1968 and $65 million in 1969. The 1969 sales will be made from a new sales authorization of $25 million being requested plus the unused balance of the $100 million sales authorization provided in the fiscal year 1968 Appropriation Act. A discussion of participation sales is found in book 2 of part 5 of the justifications (Federal National Mortgage Association). The requested limitation on administrative expenses of $1,282,000 is explained in section J of this part, after "Salaries and expenses." Purpose of the program Section 202 of the Housing Act of 1959, as amended, authorizes a program of direct loans for rental housing for the lower middle income elderly and the handicapped. The program provides financial assistance to private nonprofit corporations, consumer cooperatives, and certain public bodies for new construction, or rehabilitation and conversion of existing structures for occupancy by those elderly or handicapped persons whose incomes are above the level established for admittance to public housing, but below that needed to pay rental for adequate private housing. 92-792-68-pt. 3—19 Section 202 loans may extend for a period of 50 years and bear interest rates based on a statutory formula limited to the lower of either 3 percent or 0.25 percent above the average rate on all interest-bearing obligations forming part of the Federal debt. The current interest rate is 3 percent. Projects may include essential service facilities such as dining facilities, community rooms, and small treatment centers. The inclusion of related facilities is restricted to essential services, in order to keep rents within the range of the lower middle income group. Engineering standards of the Department establish minimum requirements for housing the elderly, while at the same time seeking to keep resulting construction costs as low as possible. No life-lease contracts or founders' fees are permitted. People served by program The 1960 census showed that large numbers of elderly persons were living in substandard housing or under conditions that did not contribute to their living satisfying and productive lives. At that time, there were 2.8 million "deficient" housing units occupied by households headed by persons 65 years of age or over which the Census Bureau classified as dilapidated, deteriorating, or sound, but lacking some or all facilities. These deficient units housed 30 percent of all households headed by persons 65 or over. Although old people constitute only about 10 percent of the population in the United States, they occupied 22 percent of all deficient housing. The vast majority, equal to a total of 2,240,000, or 80 percent of these 2.8 million elderly households had household incomes of less than $3,000 and half had incomes of under $1,000. In the income brackets between $2,000 to $4,999-essentially those served by the direct loan program-there were 626.000 such households, equal to almost 23 percent of the total. Included among the 2.8 million "deficient" units were 489,000 classified by the Census Bureau as dilapidated. This is housing, which according to the Census Bureau, "does not provide safe and adequate shelter and in its present condition, endangers the health, safety, or well-being of the occupants. The defects are either so critical or so widespread that the structure should be extensively repaired, rebuilt, or torn down." The bulk of these units-375,000 or over 75 percent-were occupied by households with incomes of less than $2,000. However, 86,000, or over 17 percent, were in the $2,000 to $4,999 range served by the direct loan program. In addition, there were over 2 million households occupied by persons 65 or over living with their children or relatives where the head of the household was under 60. Most of these elderly had incomes so low they had no choice but to live with their families and were not free to exercise their preference for independence. Over half a million, or about 25 percent, had no income. Nearly another million, or about 50 percent, had incomes of less than $1,000, and over 300,000 (16 percent) had incomes between $1,000 and $1,999. The remainder, or about 200,000, had incomes of $2,000 or more, about evenly divided between the $2,000 to $2,999 bracket (47 percent) and incomes of $3,000 and above (53 percent). Among the 6.5 million households in which the elderly live in standard homesowner or renter occupied-many may no longer be suitable for continued occupancy by older people because they may be unsafe, inefficient, expensive to maintain, or lack convenient access to services which older people need in everyday living. Two and a half million (38 percent) of these households had incomes of less than $2,000, including 1.2 million with incomes of less than $1,000. In the $2,000 to $4,999 bracket, were 1.6 million homeowner households and nearly 540,000 renter households, totaling almost 35 percent of the 6.5 million. Sponsors Applicants are screened to assure that they are eligible nonprofit borrowers supported by sponsoring groups or organizations with adequate resources to insure that effective services are provided for the project occupants. An applicant must be backed by a strong sponsoring organization which includes among its purposes the promotion of the welfare of older persons, including the provision of housing. Sponsors are encouraged to participate in the cost of the proposed project to the fullest extent possible. Project sponsors must provide all movable equipment necessary for the proper operation and maintenance of the project, and operating capital equal to 25 percent of the operating budget for the first year. If 75 percent or more of the dwelling units have been prerented, no deposit is required, providing the sponsor agrees to underwrite any operating deficits during the first 5 years. Sponsors must have the support of the community in which they are located and be willing and in a position to maintain continuing interest in the project and to participate in its affairs during the life of the loan. Such sponsors include fraternal, civic, religious, and charitable organizations. The following table shows the cumulative breakdown by type of sponsor since inception of the program through December 31, 1967: The 1969 budget anticipates $85 million in net loan reservations to finance housing for the elderly or handicapped. It is estimated that this level will provide for 45 projects including 6,900 dwelling units. Accomplishments Approximately 16,500 elderly persons occupied 13,937 dwelling units as of June 30, 1967. Other accomplishments of this program from its inception through June 30, 1967, and the estimated accomplishments for the current and budget years are shown in the following table. Some results of the program from its inception through December 31, 1967, are summarized in the following table (thousands in dollars): |