Commission delivered final report to Congress on June 28, 2002
Return to
Home Page
News Archive


Executive Director of the Michigan State Housing Development Authority
Presented before the
Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century

September 24, 2001

Good morning members of the Commission. Thank you for the opportunity to testify before you on how housing and services policies for seniors can be shaped in the 21st century.

I am Jim Logue and I am the Executive Director of the Michigan State Housing Development Authority (MSHDA), a state housing finance agency (HFA). I have also served as Deputy Assistant Secretary for Multifamily Housing Programs at the U.S. Department of Housing and Urban Development (HUD). Our mission is to provide financial and technical assistance through public and private partnerships to create decent, affordable housing for low and moderate-income Michigan residents. Just about every state has an HFA like MSHDA. HFA's are represented by the National Council of State Housing Agencies (NCSHA). NCSHA is a national, nonprofit organization that assist HFAs in increasing housing opportunities for lower income and underserved people through the financing, development, and preservation of affordable housing.

In Michigan, there are 783,481 senior households with more than 30 percent experiencing housing need. Although seniors make up 21 percent of all households, they comprise almost 28 percent of all households in need. MSHDA works with HUD, USDA/Rural Development, other state agencies, local governments, developers, and nonprofit organizations to develop affordable senior housing programs. As a result, we have financed more than 16,000 units for seniors with lower incomes. Our extensive experience with developing and managing a large senior housing portfolio has given us great insight into the housing needs of our senior population.

You have asked us to comment on the public financing aspects of housing and services for the senior population and make specific recommendations for improvement. You have also asked us to identify barriers to providing housing with services and specific suggestions on how to remove them. In this regard, I offer the following recommendations for consideration by the Commission:

  • Couple affordable housing subsidies with senior services subsidies
  • Increase the number of Medicaid waivers available nationally
  • Restructure the Section 202 program as a block grant to states
  • Develop or rehab affordable senior housing that is designed to accommodate aging-in-place
  • Resist additional licensure requirements
  • Restore fairness in the Mortgage Revenue Bond and Housing Credit Programs

Before I talk to you about these specific recommendations, I want to impress upon you the importance of choice. Seniors differ in their housing needs. As policy makers we have a responsibility to provide housing opportunities that allow seniors to choose the housing option that best meets their needs. To provide choice, the housing delivery system must be flexible. The federal government has a demonstrated inability to be flexible in its housing and related programs. In the past, only when Congress authorized programs that gave states the responsibility to administer federal housing resources, did flexibility become a reality. Flexibility is essential for creativity, innovation and experimentation. To be flexible, federal housing programs of every kind need to be devolved from the federal government to the states.


In recent years, the aging population that requires services has become a demographic bulge, challenging housing subsidies and health care systems to a point where coupling them has become a market demand. Historically our affordable housing subsidies and affordable health care subsidies have, for the most part, evolved independently. The housing subsidization programs have addressed shelter needs following real estate and mortgage models. Service and health care has followed medical and insurance models. Higher income seniors are successfully being provided with both housing and service needs by various forms of assisted living at prices they can afford. But this need is going largely unmet for the lower income seniors where a combination of both housing and health care are required to properly serve them. It is incumbent upon policy makers and program designers on both the housing and health care sides of the isle to come together with subsidy systems for these combined lower income elderly needs.

Various individual state and local systems have sprung up to meet this challenge. In the simplest sense, any programs that combine the deepest housing subsidies with the deepest health care subsidies are what work to reach the lower income senior market. State and national efforts are needed to legitimize and acknowledge the success stories that can be identified so more production of affordable assisted living can be forthcoming. For example, such efforts would allow more routine combining of tax-exempt bonds, Housing Credits, HOME dollars, Risk Sharing, HUD mortgage insurance, Section 8 vouchers, and other housing programs with Medicaid waivers and Medicare wherever possible.

Analysis of some of the current regulatory barriers that exist for this coupling to more easily occur should be carried out in a national forum that would allow easier implementation at the state and local levels. A set of best-practice programs that are replicable should be identified. A joint effort between HUD and the U.S Department of Health and Human Services (HHS) is recommended. The benefit of meeting and solving this challenge is higher quality senior care and the creation of efficiencies that would produce overall economic savings, enabling our state and national resources to go further.


Among the most pressing issues in the field of elderly housing and health services is the need for elderly health services in residential settings. The most sought after delivery mechanism is the Medicaid waiver system, which can prevent seniors from having to move to more institutional and expensive nursing home settings prior to their need to do so. Several states have piloted and successfully implemented residential waiver systems, including guarding against the so-called 'woodworking effect' wherein too many people could become eligible. National budgetary efforts should be made to increase the supply of the waiver using best-practice systems that are resulting from successful program efforts.

In addition to Medicaid waivers, a cafeteria voucher system for assistance with activities of daily living would be beneficial. The cafeteria voucher system would allow individuals who do not meet the Medicaid waiver threshold to age-in-place. According to the study completed by the Area Agency on Aging Office 1B in Oakland County, Michigan, most people in MSHDA-financed developments need assistance with daily living, but do not meet the threshold requirement for a Medicaid waiver.


The Section 202 program has been a relatively successful model for the development of senior housing at very affordable levels. By combining deep rental subsidy with development funding or financing, it has produced decent housing for the lowest income seniors. However, the time has come to change it from a national competition administered by HUD to a block grant run by the states. States, through state HFAs, are the predominate providers of housing assistance, whether federal or other public financing. HFAs know best the needs of seniors locally, and have demonstrated an extraordinary ability to bring together a wide range of partners in developing solutions to meet the needs of the senior population. HFAs have demonstrated an ability to develop innovative housing solutions. Block granting the Section 202 program will provide an opportunity for states to leverage the program with other funding and financing resources.

Additionally a growing number of older Section 202 developments are in danger of foreclosure, particularly in the inner city. These projects have two scarce benefits: Section 8 project subsidies and local property tax relief that make these units among the most affordable housing resources available. Many of the projects are in need of physical rehabilitation, upgrading, and refinancing. Some of this inventory can be transformed again into viable, affordable housing and services for the elderly. The alternative is the loss of the Section 8 subsidies and property tax benefits, and the displacement of seniors. Practitioners agree that a well-thought-out Section 202 redevelopment program initiative is needed, one that is made available to reconstituted owners that are willing and able to turn these developments around. This would include a proactive HUD initiative to preserve certain of these projects through mechanisms such as provision of mortgage insurance for new mortgages associated with project reconfiguration. The benefit would be the revitalization and preservation of a major affordable housing resource.


HFA financing of housing for seniors has evolved from housing designed for independent elderly to include the addition of programs that can facilitate full service dining and congregate services. In recent years, HFAs have become involved with housing that provides enhanced care and services for various levels of Activities of Daily Living (ADL) service needs. As tenants age-in-place, often the most elementary needs for personal care services cannot be met. Frequently a senior must move to alternative, more expensive housing and lose the shelter subsidy from which they benefited. Too often the only alternative move is to a nursing home. A more practical approach is to encompass design features into new developments that facilitate the use of third-party care providers so initial levels of ADL delivery can be accommodated. While some design options require additional financing, many options can be achieved via better, smarter use of construction dollars. MSHDA, for example, has recently developed a "Congregate Plus" program that implements these principles. In addition to serving people as they age-in-place, the market for this type of project is broader because these developments are not 100 percent assisted living and do not rely on the necessity of serving only an assisted living market. This type of design also may accommodate any type of current or future, private or public, subsidy program for care services as these programs evolve, including Medicaid waivers.

With regard to existing subsidized senior housing, the tenants have a financial need to preserve their on-going housing subsidy as they age-in-place. New ways must be developed to adapt buildings, common space, and units to facilitate the delivery of services. Some experiments with adaptation are underway. In many cases pre-existing affordable housing may be modified to provide design and management amenities whereby residents who develop a need for services can remain in place with an affordable rent structure and receive necessary services. Programs and funding should be made available to adapt older, existing housing to facilitate service provision as the residents age. Public and private service providers would be more encouraged to consider developments that have made appropriate adaptations, and where their delivery efforts are matched with ease-of-operation and economy-of-scale.


Industry studies have shown that licensure requirements vary significantly among the states. These variations have resulted in a multitude of individual characteristics, safety codes, and service regulations. There is often discussion of standardizing licensure requirements at the federal level, or requiring most forms of service delivery to be licensed at the state level. However, movement in this direction would add even more layers to regulations that are currently adequate. The open market has demanded products to fill the gap between nursing homes and independent senior living through assisted living solutions. The industry has responded with a large variety of assisted living products that coexist with state variations in licensure. This has allowed for a tremendous amount of successful creativity, innovation, and product delivery. The federal government and the states should be cognizant that additional layering of licensure requirements can weigh against producing a higher volume of affordable assisted living as these requirements begin to increase the costs of construction beyond feasible rent levels.


The growth of the elderly population needing services contains a very low-income segment with few financial resources. When the seniors in this population begin to have ADL needs, they are often destined for a nursing home setting. This is an expensive, publicly financed option. This population can be housed and served in residential settings that do not have the full nursing home complement of services. Financial need circumstances are such that these seniors need maximum rental and service subsidies. Industry leaders are expressing a demand for a coupled Section 8 voucher and Medicaid waiver to respond to this need. Federal and state government should be encouraged to implement this particular program combination, and to remove impediments toward more pilot programs.


Three obsolete provisions prevent many people qualified to receive housing help under these programs from getting it. Eliminating the Ten-Year-Rule, creating an easier way of establishing income limits in the MRB program, and reforming Housing Credit income and rent rules in rural areas will allow more people, including seniors, with lower incomes to receive housing assistance. HR 951 and S 677 have been introduced to make these changes. I recommend that the Commission endorse the passage of these important housing reforms.

All of these recommendations provide choice to seniors with lower incomes. But the recommendations will require a flexible delivery system.

Thank you for this opportunity to testify.

The page was last modified on October 2, 2001