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Section 811 and Other HUD Housing Programs for Persons with Disabilities

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Order Code RL34728. Section 811 and Other HUD Housing Programs Programs for Persons with Disabilities November 3, 2008 Libby Perl Analyst in Housing Policy Domestic Social Policy Division March 31, 2009 Congressional Research Service 7-5700 www.crs.gov RL34728 CRS Report for Congress Prepared for Members and Committees of Congress . Section 811 and Other HUD Housing Programs for Persons with Disabilities Summary The ability of persons with disabilities to live independently in affordable, accessible housing became a prominent issue starting in 1999 as the result of a Supreme Court decision, Olmstead v. L.C. The court held that institutionalization of persons with mental disabilities in lieu of community-based care may constitute discrimination. Shortly after the Olmstead decision, on February 1, 2001, the President announced the New Freedom Initiative, an effort through multiple federal federal agencies to ensure full participation in society of persons with disabilities. Part of the New Freedom Initiative was Executive Order 13217, which implemented the Olmstead decision by ensuring (among other things) that all people with disabilities, not just those with mental illness, benefit from community-based treatment. In order to ensure that persons with disabilities may live in community settings rather than in institutions, affordable and accessible housing is necessary. The Department of Housing and Urban Development (HUD) operates a number of programs that provide housing for persons with disabilities in various ways. The Section 811 Supportive Housing for Persons with Disabilities program provides capital grants and project rental assistance to nonprofit developers of housing targeted specifically to persons with disabilities. Prior to creation of Section 811, persons with disabilities lived together with elderly residents (defined by HUD as households with one or more adults age 62 or older) in developments funded through the Section 202 Supportive Housing for the Elderly program. The project-based Section 8 and Public Housing programs give project owners the option of dedicating facilities to elderly residents, residents with disabilities, or both populations together. Both the Section 811 and Section 8 programs set aside housing vouchers for persons persons with disabilities. And two HUD block grant programsHOME and the Community Community Development Block Grantmay be used by states and communities to construct or rehabilitate housing for persons with disabilities. In addition to these HUD programs, the Low Income Housing Tax Credit (LIHTC), administered by the Internal Revenue Service, may be used by states to target housing to special needs populations, including persons with disabilities. The LIHTC may be used in conjunction with HUD grants, including capital grants through the Section 811 program. The Housing and Economic Recovery Act of 2008 (P.L. 110-289) made it possible for developers of Section 811 housing to qualify for a higher tax credit rate, which could potentially make these mixed financing financing developments more feasible. In the 110th Congress, 111th Congress, a bill to make changes to the Section 811 program, the Frank Melville Supportive Housing Investment Act (H.R. 5772), a bill that would make changes to the Section 811 program, was 1675), was introduced on March 23, 2009. In the 110th Congress, an identical bill, H.R. 5772, was approved by the House on September 17, 2008. Among its changes, the bill would turnthe changes proposed by H.R. 1675 are turning over funding of Section 811 vouchers to the Section 8 program and would create ; creating a demonstration program forin which Section 811 rental assistance to would be used in conjunction with other funding streams, including the LIHTC and HOME program. A version of the bill was also introduced in the Senate (S. 3593). This report will be updated as events warrant. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Housing for Persons with Disabilities and the Fair Housing Act . . . . . . . . . . . . . 3 Reasonable Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Reasonable Accommodations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 811 Supportive Housing for Persons with Disabilities Program . . . . . . . 5 Evolution of the Section 811 Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 202 Housing for the Elderly or Handicapped . . . . . . . . . . . . . . 6 Section 202 Set Aside for Non-elderly Handicapped Households . . . . 7 Creation of the Section 811 Program . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Definition of Person with Disabilities in HUD Housing Programs . . . . . . . 10 The Section 811 Program Definition . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Definition in Other HUD Programs . . . . . . . . . . . . . . . . . . . . . . . 12 Capital Grants and Project Rental Assistance . . . . . . . . . . . . . . . . . . . . . . . 13 Eligible Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Rental Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Supportive Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Tenant-Based Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 811 Mainstream Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Other HUD Housing Designated for Persons with Disabilities . . . . . . . . . . . . . . 18 Public Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Project-Based Section 8 Rental Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 8 Vouchers for Persons with Disabilities . . . . . . . . . . . . . . . . . . . . 21 Housing Financed by Low-Income Housing Tax Credits and HUD Block Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 The Low-Income Housing Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 The HOME Investment Partnerships Program . . . . . . . . . . . . . . . . . . . . . . 24 The Community Development Block Grant Program . . . . . . . . . . . . . . . . . 25 Issues and Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Using Section 811 Funds with Low-Income Housing Tax Credits . . . . . . . 26 Housing Need for Persons with Disabilities . . . . . . . . . . . . . . . . . . . . . . . . 29 Homeless Persons with Disabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The Frank Melville Supportive Housing Investment Act (H.R. 5772) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Appendix A. Definitions of Disability Applicable to HUD Housing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 List of Tables Table 1. Section 811 Funding Levels, FY2003 to FY2008 . . . . . . . . . . . . . . . . 18 Table A-1. Definitions of Disability Applicable to HUD Housing Programs . . . 35 Section 811 and Other HUD Housing Programs for Persons with Disabilities Introduction Persons with physical disabilities, developmental disabilities, or mental illnesses frequently face difficulty in finding suitable housing, together with supportive services (often referred to as person-directed or consumer-directed services), in which they can live as active members of their community. For those individuals with physical disabilities, it may be difficult to find rental units that are accessible, and some prospective residents with disabilities may face discrimination in their search for housing.1 Zoning laws may also prevent the construction of homes where persons with disabilities live together.2 In addition, the affordability of housing and services may be an issue. Individuals with disabilities may have low incomes due to the inability to work, the need for additional education and training to find suitable employment, or employer discrimination.3 Insufficient income can put the costs of in-home care and supportive services out of reach, and services are not always available in all states through programs such as Medicare and Medicaid.4 As a result of these limitations, among other causes, persons with disabilities may be institutionalized in nursing homes, psychiatric hospitals, or similar facilities rather than living independently.5 Those individuals not in such facilities may still live in group homes or small multifamily housing developments dedicated to persons with disabilities instead of on their own.6 1 See, for example, Margery Austin Turner, Carla Herbig, Deborah Kaye, Julie Fenderson, and Diane Levy, Discrimination Against Persons with Disabilities: Barriers at Every Step, U.S. Department of Housing and Urban Development, May 2005, pp. 2-4, available at [http://www.huduser.org/Publications/pdf/DDS_Barriers.pdf]. 2 Claudia Center et al., “The Garrett History Brief,” Journal of Disability Policy Studies 12, no. 2 (2001): 72-73 (hereafter “The Garrett History Brief”). 3 See, for example, O’Day, Bonnie, and Marcie Goldstein. “Advocacy Issues and Strategies for the 21st Century: Key Informant Interviews.” Journal of Disability Policy Studies 15, no. 4 (January 1, 2005): 244. 4 Laurie E. Powers, Jo-Ann Sowers, and George H. S. Singer, “A Cross-Disability Analysis of Person-Directed, Long-Term Services,” Journal of Disability Policy Studies 17, no. 2 (January 1, 2006): 72. 5 6 The Garrett History Brief, pp. 71-72. See, for example, Ann O’Hara, “HR 5772 — The Frank Melville Supportive Housing Investment Act of 2008 — Promotes Community Integration for People with Disabilities,” Opening Doors, a Publication of the Technical Assistance Collaborative and the Consortium for Citizens with Disabilities Housing Task Force, May 2008, available at (continued...) CRS-2 However, national recognition of the need for appropriate housing for persons with disabilities gained support after the 1999 Supreme Court decision in the case of Olmstead v. L.C. In that case, two women who had spent years in a psychiatric hospital argued that their institutionalization constituted discrimination under the Americans with Disabilities Act. The Supreme Court agreed, finding that “[s]tates are required to provide community-based treatment for persons with mental disabilities when the State’s treatment professionals determine that such placement is appropriate, and the placement can be reasonably accommodated...”7 Shortly after the ruling in Olmstead, on February 1, 2001, President Bush announced the “New Freedom Initiative,” an effort through multiple federal agencies, in cooperation with the states, to ensure full participation in society of persons with disabilities. Part of the New Freedom Initiative was an Executive Order implementing the Olmstead decision to ensure that all people with disabilities, not just those with mental illnesses, benefit from community-based treatment.8 However, for many states and communities, it may be difficult to achieve the goal of treatment in a community environment without the availability of accessible and affordable housing.9 The federal government makes available funds to finance subsidized rental housing for persons with disabilities primarily through the Department of Housing and Urban Development (HUD). The Section 811 Supportive Housing for Persons with Disabilities program is the only federal program that funds supportive housing exclusively for persons with disabilities. However, the Section 811 program is not the only source of funds to provide housing units for persons with disabilities. Over the years, a number of other HUD programs have been used to fund housing units dedicated to persons with disabilities, and many of those units are still in service. These programs include the Section 202 Supportive Housing for the Elderly program, Public Housing, the project-based Section 8 rental assistance program, and the Section 8 voucher program. In recent years, federal block grant programs — the Community Development Block Grant and HOME Investment Partnerships program — have been a source of funds used by states and local communities to develop and rehabilitate housing for persons with disabilities. Another source of funds is the Low Income Housing Tax Credit, administered by the Internal Revenue Service, through which state governments have the discretion to prioritize housing for persons with disabilities. This report describes how federal funds are used to develop housing designated for persons with disabilities. It also discusses current issues surrounding housing for persons with disabilities, including mixed financing arrangements, worst case 6 (...continued) [http://www.tacinc.org/Docs/HH/OpeningDoors/ODIssue31.pdf]. 7 Olmstead v. L.C., 527 U.S. 581, 607 (1999). 8 Executive Order 13217, “Community-Based Alternatives for Individuals with Disabilities,” Federal Register, vol. 66, no. 120, June 21, 2001, p. 33155. 9 See, for example, Linda Velgouse and Molly Dworken, Olmstead Update, Presentation for the American Association of Homes and Services for the Aging Annual Meeting, October 2002. CRS-3 housing needs, persons with disabilities who are homeless, and legislation in the 110th Congress. Housing for Persons with Disabilities and the Fair Housing Act This report discusses federal programs that provide funds to develop affordable rental housing units specifically for persons with disabilities. Individuals with disabilities may also live in housing that has not been specifically designed for their needs, however. The Fair Housing Act (FHA), enacted as part of the Civil Rights Act of 1968, contains provisions that are meant to ensure that persons with disabilities may obtain accessible rental housing even in facilities not specifically designed for them. The FHA was created to prevent discrimination in the provision of housing based on “race, color, religion, and national origin.”10 In 1988, the Fair Housing Amendments Act (P.L. 100-430) amended the FHA to prevent discrimination based on “handicap.” The Fair Housing Act defines a “handicap” as (1) having a physical or mental impairment that substantially limits one or more major life activities, (2) having a record of such impairment, or (3) being perceived as having such impairment.11 In addition to prohibiting discrimination against persons based on handicap, the FHA imposes affirmative duties on housing providers. Under the Fair Housing Amendments Act of 1988, if a landlord fails to follow certain requirements to make housing accessible to persons with disabilities, it is considered discrimination. In the area of new construction, beginning 30 months after implementation of P.L. 100-430 (in 1988), it became unlawful for multifamily housing developers to design and construct housing of four or more units that fails to: (1) have common areas that are accessible and useable by persons with disabilities, (2) have doors wide enough to accommodate wheelchairs, and (3) include units with accessible routes through the unit; bathrooms and kitchens that are wheelchair accessible; electrical outlets, light switches and thermostats that are accessible; bathrooms with reinforcements where grab bars may be installed; and kitchens and baths that may be maneuvered through with a wheelchair.12 For units in older facilities, or in units not covered by the FHA, the Fair Housing Amendments Act recognized that modifications to units may be necessary to make them accessible to persons with disabilities. Under the law, it is discriminatory for landlords to refuse to allow tenants to make physical changes to the premises — referred to as “reasonable modifications” — where changes are necessary to afford 10 The Fair Housing Act is codified at Title 42, Chapter 45 of the United States Code. See sections 3601-3619. For more information about the Fair Housing Act, see CRS Report 95710, The Fair Housing Act: A Legal Overview, by David H. Carpenter. 11 42 U.S.C. §3602(h). 12 42 U.S.C. §3604(f)(3)(C). CRS-4 tenants full enjoyment of the premises.13 In addition, the law gives tenants the right to ask their landlords for “reasonable accommodations” in the rules, policies, practices, or services that ordinarily apply to tenants living in rental property. It is considered discrimination under the FHA for a landlord to refuse to make a reasonable accommodation where it is necessary to give residents with disabilities an equal opportunity to use and enjoy their dwelling unit.14 Reasonable modifications and reasonable accommodations are described below. Reasonable Modifications. While the FHA may require landlords to permit tenants to make reasonable modifications to the rental premises, the statute neither defines the term “reasonable modification,” nor the circumstances under which modifications might be required to ensure a tenant’s enjoyment of the premises. However, HUD and the Department of Justice (DOJ) have published joint guidance describing reasonable modifications.15 They may include changes to a rental unit such as widening doorways, installing a ramp or grab bars, or lowering cabinets.16 The HUD/DOJ guidance requires that there be an identifiable relationship between the tenant’s disability and the modification; if there is not, a landlord may refuse to allow the alteration.17 Landlords are not required to pay for modifications, and, if the modifications would prevent a future tenant’s enjoyment of the premises, the landlord may require tenants to restore the unit to its original state when moving out. In order to ensure that this occurs, a landlord may require tenants to deposit funds into an escrow account to pay for restoration.18 However, landlords cannot require tenants to pay a higher security deposit because of modifications to the property. While no federal program exists specifically to help tenants with disabilities pay for home modifications, funding may be available at the state or local level. For example, some states make funds available through their Medicaid waiver programs to allow persons with disabilities to make modifications.19 States may also set up grant or loan programs using state, local, or federal funds to assist with home modifications. Sources of federal funds that could be used for this purpose include the HOME Investment Partnerships block grant and the Community Development Block Grant (these programs are described later in this report). 13 42 U.S.C. §3604(f)(3)(A). 14 42 U.S.C. §3604(f)(3)(B). 15 Examples of reasonable modifications are also in regulation. See 24 C.F.R. §100.203. 16 See Reasonable Modifications Under the Fair Housing Act, Joint Statement of The Department of Housing and Urban Development and the Department of Justice, March 5, 2008, p. 4, available at [http://www.hud.gov/offices/fheo/disabilities/reasonable_ modifications_mar08.pdf]. 17 Ibid., p. 3. 18 24 CFR §100.203(a). 19 Terry Moore and Beth O’Connell, Compendium of Home Modification and Assistive Technology Policy and Practice Across the States, Abt Associates, prepared for the U.S. Department of Health and Human Services, October 27, 2006, available at [http://www.hcbs.org/files/138/6854/assistive_tech_final_report.pdf]. CRS-5 Reasonable Accommodations. In addition to permitting tenants to make reasonable modifications to their units under the FHA, landlords may be required to make “reasonable accommodations” to ensure that tenants with disabilities may use and enjoy their dwelling. Reasonable accommodations may involve altering or making an exception to rules, policies, practices, or services that would otherwise apply to tenants, but when applied to an individual with a disability may prevent them from maintaining their tenancy or fully enjoying use of the facility.20 As with reasonable modifications, there must be a relationship between the disability and the requested accommodation. However, unlike reasonable modifications, a tenant may request an accommodation that will involve a cost to the housing provider, although the requested accommodation cannot pose an undue financial or administrative burden, and cannot fundamentally alter the provider’s operations.21 If the requested accommodation is reasonable, tenants cannot be charged an extra fee or be required to make a deposit into an escrow account. Examples of reasonable accommodations include changing the manner of rental payment for a tenant with a mental illness so that he or she need not leave the apartment or allowing assistance animals in a building that does not otherwise allow pets. Section 811 Supportive Housing for Persons with Disabilities Program The Section 811 Supportive Housing for Persons with Disabilities program is administered by HUD and funds permanent supportive housing for very low-income persons with disabilities (those with household income at or below 50% of area median income). The program primarily provides capital grants and project rental assistance to nonprofit housing developers. Section 811 capital grants can be used for construction, rehabilitation, or acquisition of buildings to be used as housing for persons with disabilities.22 Nonprofit developers need not repay the capital grants as long as the housing is available and affordable for at least 40 years to very lowincome persons with disabilities. The Section 811 program also distributes tenantbased vouchers — sometimes referred to as “mainstream vouchers” — that can be used by eligible tenants to rent housing in the private market. Evolution of the Section 811 Program The Section 811 Supportive Housing for Persons with Disabilities program was created as part of the Cranston-Gonzalez Affordable Housing Act of 1990 (P.L. 101625). Until enactment of Cranston-Gonzalez, HUD had funded housing units for persons with disabilities largely through the Section 202 Supportive Housing for the Elderly program, created in 1959. Over the years, the individuals with disabilities who were eligible for Section 202 housing expanded from persons with physical 20 See Reasonable Accommodations Under the Fair Housing Act, Joint Statement of the Department of Housing and Urban Development and the Department of Justice, May 17, 2004, available at [http://www.nhl.gov/offices/fheo/library/huddojstatement.pdf]. 21 Ibid., pp. 8-9. 22 42 U.S.C. §8013(b). CRS-6 disabilities to those with developmental disabilities and eventually to individuals with chronic mental illnesses. Over time, Congress also began to implement a split between housing for elderly residents23 and those with disabilities, ultimately resulting in creation of the Section 811 program. However, units for persons with disabilities that were created as part of the Section 202 program continue to be financed through that program and governed by its rules, so the history of their development continues to be important.24 Section 202 Housing for the Elderly or Handicapped. The Section 202 program was created as part of the Housing Act of 1959 (P.L. 86-372) and provided low-interest loans to non-profit developers to construct multifamily housing for families where one or more person is age 62 or older. Section 202 did not initially provide housing for persons with disabilities. Five years after the creation of the Section 202 program, the Housing Act of 1964 (P.L. 88-560) added non-elderly “handicapped” individuals and families to the definition of “elderly families” under the Section 202 program. At the time, “handicapped” was defined by P.L. 88-560 as a physical impairment (1) expected to be of long-continued or indefinite duration, (2) that substantially impedes the ability to live independently, and (3) is of such a nature that the ability to live independently could be improved by more suitable housing conditions. A mental or developmental disability was not included in the definition. The Housing Act of 1964 also changed the name of the Section 202 program to “Housing for the Elderly or Handicapped.” However, the law did not require that a certain number of units be set aside for tenants with disabilities or direct that units be made accessible. Very few tenants who were considered non-elderly handicapped participated in the Section 202 program between 1964 and 1974. Although data were not collected, HUD estimated that through 1977, less than 1% of Section 202 tenants were non-elderly handicapped,25 and that “the vast majority of Section 202 projects [were] not designed to serve the handicapped...”26 The Housing and Community Development Act of 1974 (P.L. 93-383) removed the word “physical” from the term “physical impairment” in the definition of handicap and also expanded the definition of handicap to include developmental disabilities.27 The removal of the word “physical” was meant to make persons with 23 Although other terms may be preferred, this report uses the term “elderly” to refer to those individuals eligible for HUD-assisted housing for persons age 62 or older because it is the term used by HUD. 24 For more information about the Section 202 program, see CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents, by Libby Perl. 25 U.S. Department of Housing and Urban Development, Housing for the Elderly and Handicapped: The Experience of the Section 202 Program from 1959 to 1977, January 1979, p. 36 (hereafter Housing for the Elderly and Handicapped). 26 27 Ibid., p. 67. See Section 210 of P.L. 93-383. “A person shall also be considered handicapped if such person is a developmentally disabled individual as defined in section 102(5) of the Developmental Disabilities Services and Facilities Construction Amendments of 1950.” CRS-7 mental illnesses eligible for Section 202 housing.28 However, the development of housing for this population did not occur immediately. In 1978, in the Conference Report accompanying the Housing and Community Development Amendments (P.L. 95-557), Congress acknowledged that “there has been some confusion over whether chronically mentally ill persons are eligible for section 202 housing,” and that it was “never the intent of Congress to exclude chronically mentally ill persons from participating in the section 202 program.”29 The report went on to direct HUD to develop criteria and standards for providing housing for this population. In 1978, HUD undertook a demonstration program together with the Department of Health and Human Services (then the Department of Health, Education, and Welfare), “to better understand the housing needs of the mentally ill.”30 In FY1982, the Section 202 program funded housing for chronically mentally ill individuals for the first time, making funds available for group homes and independent living facilities.31 Section 202 Set Aside for Non-elderly Handicapped Households. In 1978, the Housing and Community Development Amendments (P.L. 95-557) required that, beginning in FY1979, at least $50 million of the amounts available for loans under the Section 202 program be devoted to housing for non-elderly “handicapped” individuals.32 The new requirement was meant to “meet special needs [of the handicapped] which have not been adequately addressed in Section 202 projects.”33 Until enactment of the Housing and Community Development Amendments of 1978, a small number of accessible units in larger Section 202 developments designed primarily for elderly residents had been dedicated to persons with disabilities (about 1% of units). These Section 202 developments tended to be large multifamily rental buildings — the average number of units in Section 202 developments built prior to enactment of the Housing and Community Development Act of 1974 was 135.34 HUD suggested that one of the reasons for the low number of units designed for persons with disabilities through the Section 202 program was 28 See discussion in U.S. Department of Housing and Urban Development, Standards and Criteria for Housing for the Chronically Mentally Ill in the Section 202/8 Direct Loan Program, April 1983, pp. 1-3 (hereafter Standards and Criteria for Housing for the Chronically Mentally Ill). 29 Conference Report to accompany S. 3084, The Housing and Community Development Amendments of 1978, 95th Cong., 2nd sess., H.Rept. 95-1792. 30 Standards and Criteria for Housing for the Chronically Mentally Ill, p. 2. 31 See U.S. Department of Housing and Urban Development, “Section 202 Loans for Housing for the Elderly or Handicapped; Announcement of Fund Availability, FY1982,” Federal Register, vol. 47, no. 76, April 20, 1982, pp. 16892-16894. 32 Housing provided for persons with disabilities through the Section 202 program is sometimes referred to as “Section 202(h)” housing, referring to the subparagraph that was added to the Section 202 statute by P.L. 95-557. 33 See Senate Committee on Banking, Housing, and Urban Affairs, S.Rept. 95-871, Senate report to accompany S. 3084, the Housing and Community Development Act of 1977, 95th Cong., 2nd sess., May 15, 1978. The Senate bill became the Housing and Community Development Amendments of 1978 (P.L. 95-557). 34 Housing for the Elderly and Handicapped, pp. 16-17. CRS-8 the additional cost of making units accessible, putting project sponsors at a disadvantage in applying for funds.35 The set-aside was meant to address this issue. In addition, P.L. 95-557 specified that non-profit sponsors of Section 202 housing were expected to develop innovative ways of providing housing for persons with disabilities, including group homes and independent living complexes integrated into the surrounding community, together with supportive services tailored to resident needs.36 After enactment of the Housing and Community Development Amendments of 1978 with its set-aside for housing for persons with disabilities, the number of developments built specifically for these households (versus elderly households) increased.37 HUD estimates that by the end of the 1980s, approximately 10% of units funded through the Section 202 program were in facilities designed for persons with disabilities.38 Nearly ten years after enactment of the Housing and Community Development Amendments, another law made changes to the way in which persons with disabilities were served under the Section 202 program. The Housing and Community Development Act of 1987 (P.L. 100-242) amended the law to require that 15% of the total amount available for Section 202 loans be set aside for persons with disabilities rather than the $50 million established in the 1978 Act (P.L. 95557). In appropriations acts from FY1988 through FY1991, Congress went beyond the statutory set aside, however, and required that 25% of Section 202 loan authority be used for housing for persons with disabilities.39 Another change made by P.L. 100-242 involved rental subsidies for those Section 202 units for persons with disabilities. Since the enactment of the Housing and Community Development Act of 1974, Section 202 units for both elderly and disabled residents had been subsidized through the project-based Section 8 rental assistance program. However, there was a growing acknowledgment that Section 8 rental assistance was not sufficient to support units for persons with disabilities because it did not take account of the higher cost of providing housing in smaller 35 U.S. Department of Housing and Urban Development, FY1980 Budget Justifications, p. K-3. 36 See H.Rept. 95-1161, House Committee on Banking, Finance, and Urban Affairs Report to accompany H.R. 12433, The Housing and Community Development Amendments of 1978, 95th Cong., 2nd sess. Portions of H.R. 12433 were inserted in the Senate version of the Housing and Community Development Amendments (S. 3084) which was enacted as P.L. 95-557. 37 House Committee on Aging, Subcommittee on Housing and Consumer Interests, The 1988 National Survey of Section 202 Housing for the Elderly and Handicapped, 101st Cong., 1st sess., December 1, 1989, p. 99. 38 U.S. Department of Housing and Urban Development, Evaluation of Supportive Housing Programs for Persons with Disabilities, July 1995, p. 8, available at [http://www.huduser.org/Publications/pdf/suphous1.pdf]. 39 See H.Rept. 100-498, Conference Report to accompany H.J.Res. 395, a joint resolution making continuing appropriations for FY1988; P.L. 100-404, the FY1989 HUD Appropriations Act; P.L. 101-144, the FY1990 HUD Appropriations Act; and P.L. 101-507, the FY1991 HUD Appropriations Act. CRS-9 developments such as group homes.40 P.L. 100-242 specified that rental assistance in projects for persons with disabilities should be provided through a separate subsidy program based on the “total actual and necessary reasonable costs of developing and operating the project,” not including, however, the costs of supportive services.41 The FY1989 HUD Appropriations Act (P.L. 100-404) provided rental assistance funds for housing for persons with disabilities separately from those for elderly residents. This separate rental assistance was the means of subsidizing Section 202 units for persons with disabilities until the creation of the Section 811 program.42 Creation of the Section 811 Program. The incremental separation of housing for persons with disabilities from housing for elderly residents that began in 1978 with a set aside in the Section 202 program and continued with separate rental assistance in 1987 was made permanent in the Cranston-Gonzalez National Affordable Housing Act of 1990 (P.L. 101-625). Congress completely separated housing for persons with disabilities from the Section 202 program by creating the Section 811 Supportive Housing for Persons with Disabilities program. Not only did P.L. 101-625 separate the housing for persons with disabilities program from the housing for the elderly program, it also changed the way in which units would be financed under both the Section 202 and Section 811 programs. Until the enactment of P.L. 101-625, units created through the Section 202 program had been financed with a combination of loans and project-based Section 8 rental assistance contracts. P.L. 101-625 instituted a method of financing in which Section 202 and Section 811 developments would be financed through capital grants rather than loans. As long as units remain affordable to very low-income residents for at least 40 years, project owners need not repay the capital grants. The law also created a new form of rental assistance similar to Section 8, called PRAC, or project rental assistance contracts. In addition, the law instituted a new way of determining development cost limitations for both Section 202 and Section 811 facilities. The new method was to take account of special design features for persons with disabilities and congregate space for supportive services, among other factors. The provisions creating the Section 811 program originated in the Senate version of the bill (S. 566) that would become the Cranston-Gonzalez National Affordable Housing Act. The Senate Banking Committee, in its report regarding the bill, described the reasons behind creating a program separate from Section 202: The Committee believes that separation of the programs for elderly and persons with disabilities would further the goal of developing a program that meets the housing and related needs of nonelderly persons with disabilities. A separate 40 House Committee on Banking, Finance, and Urban Affairs, H.Rept. 100-122, to accompany H.R. 4, the Housing, Community Development, and Homeless Prevention Act of 1987, 110th Cong., 1st sess., June 2, 1987. 41 42 See Section 162 of P.L. 100-242. The Section 202 units funded with this new rental assistance are sometimes called “Section 202/162 PACs,” referring to the section of the Housing and Community Development Act of 1987, as well as the new “project assistance contracts” created by P.L. 100-242. CRS-10 program would spur the development of a bureaucracy knowledgeable about and sensitive to the special needs of tenants with disabilities, needs which can differ from those of many elderly residents. ... A separate program would also create an institutional voice for housing concerns that are particular to this constituency.43 The report also stressed the importance of changing the terminology used to refer to persons served through the Section 811 program, replacing “handicapped persons” with “persons with disabilities.”44 Community integration was another important goal of the new Section 811 program. In the years leading up to the enactment of P.L. 101-625, group homes and other facilities dedicated only to those persons with disabilities had been the focus of housing funded through the Section 202 set aside. Under the Section 811 program, however, the HUD Secretary was to look to a variety of housing options, including scattered units in multifamily housing developments, condominiums, and cooperative housing. Cranston-Gonzalez authorized capital grants for the new Section 811 program at $271 million for FY1992 and project rental assistance at $246 million. In FY1992, Congress funded the new Section 811 program by appropriating $103 million for capital grants and $100 million for new project rental assistance contracts (P.L. 102139). The Section 811 program was last authorized from FY2001 through FY2003 at “such sums as necessary” as part of the American Homeownership and Economic Opportunity Act of 2000 (P.L. 106-569). (For recent Section 811 funding levels, see Table 1 at the end of this section.) Definition of Person with Disabilities in HUD Housing Programs Resident eligibility for Section 811 housing is based on both income and disability status. The population served by the program, according to the statute, are very low-income persons with disabilities (those with incomes at or below 50% of area median income). Families of persons with disabilities are included in the definition, so that households composed of one or more persons, at least one of whom is an adult with a disability, may be served by the program.45 The way in which the Section 811 program defines “person with disabilities” differs in some ways from the way HUD defines “person with disabilities” in other programs. This section describes the definition in the Section 811 program, the Section 8 and Public Housing programs, and the Section 202 program. For a table comparing the definitions, see Appendix A. The Section 811 Program Definition. Under the Section 811 statute, a person with disabilities is defined as an individual having a physical, mental, or 43 S.Rept. 101-316, Report of the Senate Committee on Banking, Housing, and Urban Affairs, to accompany S. 566, the National Affordable Housing Act, 101st Cong., 2nd sess., June 8, 1990, p. 148. 44 Ibid. 45 42 U.S.C. §8013(k)(2). CRS-11 emotional impairment: (1) that is expected to be of long-continued and indefinite duration, (2) that substantially impedes his or her ability to live independently, and (3) is of such a nature that the ability to live independently could be improved by more suitable housing conditions.46 In addition, under the Section 811 statute, persons with developmental disabilities as defined under the Developmental Disabilities and Bill of Rights Act (P.L. 106-402) qualify for Section 811 housing.47 The regulations governing Section 811 elaborate further on the definition of “person with disabilities.”48 First, the regulation details what it means to be “developmentally disabled” (described in the section below) and specifies that a person with a “chronic mental illness” that seriously limits his or her ability to live independently and whose impairment could be improved by suitable housing meets the Section 811 definition of person with disabilities. The regulation goes on to state that persons with acquired immunodeficiency virus (HIV), alcoholism, or drug addiction may be considered disabled if they also have a disability as defined by the Section 811 statute. According to the regulation, “a person whose sole impairment is a diagnosis of HIV positive or alcoholism or drug addiction (i.e., does not meet the qualifying criteria in [the statute]) will not be eligible for occupancy in a section 811 project.”49 Developmental Disability. According to Section 811 regulations — which mirror the Developmental Disabilities and Bill of Rights Act — a person has a developmental disability if he or she has a severe, chronic disability that (1) is attributable to a physical or mental impairment (or combination of physical and mental impairments); (2) manifests before age 22; (3) is likely to continue indefinitely, and (4) results in substantial functional limitations in at least three major life activities. Life activities are defined as ! ! ! ! ! ! ! self care; receptive and expressive language; learning; mobility; self direction; capacity for independent living; and economic self-sufficiency. A fifth component of the definition is that the developmental disability reflects the need for individually planned and coordinated care, treatment, or other services for a lifetime or an extended duration. 46 Ibid. 47 42 U.S.C. §15002(8). 48 24 C.F.R. §891.305. 49 HUD funds housing specifically for persons living with HIV/AIDS through the Housing Opportunities for Persons with AIDS (HOPWA) program. For more information about HOPWA, see CRS Report RL34318, Housing Opportunities for Persons with AIDS (HOPWA), by Libby Perl. CRS-12 The Definition in Other HUD Programs. The definition of the term “person with disabilities” in the Section 811 program differs somewhat from the definition for both the Section 8 and Public Housing programs, which are defined together in the same statute and regulation,50 and properties developed under the Section 202 loan program, which is found in regulation.51 While the Section 8/Public Housing definition of person with disabilities includes the Section 811 statutory definition — a physical, mental, or emotional impairment and developmental disabilities — it also adds to the definition persons who are considered disabled under Title II of the Social Security Act.52 Neither the Section 811 statute nor the regulations governing the program include the Social Security definition of disability. Under the Social Security definition, a person is considered disabled if he or she is unable to work (“engage in any substantial gainful activity”) due to a medically determinable physical or mental impairment that is expected to last at least 12 months or to result in death. A person may also be considered disabled under the Social Security Act definition if he or she is age 55 or older, is blind, and is unable to engage in substantial gainful activity.53 The statute governing disability under Section 8 and Public Housing further specifies that the term person with disabilities “shall not exclude” those living with acquired immunodeficiency syndrome (AIDS) or conditions arising from its etiologic agent. Unlike the Section 811 regulation, the Section 8/Public Housing definition does not exclude persons whose only diagnosis is that of HIV positive. However, the Section 8/Public Housing regulation is similar to the Section 811 regulation in stating that an individual shall not be considered a person with disabilities based solely on drug or alcohol dependence. The term “handicapped person or individual” for purposes of facilities developed with Section 202 loans54 — which contain units for persons with disabilities — is defined in regulation. The Section 202 program definition is very similar to the Section 811 definition, and differs only in the way in which it describes a person who is infected with HIV/AIDS. According to the regulation, those who are infected with HIV, and who are disabled as a result of the infection, are eligible for housing built through the Section 202 loan program. The type of housing for which those individuals would be eligible, according to the regulation, depends upon the nature of the person’s disability — i.e. housing that is designed for persons with physical disabilities, developmental disabilities, or chronic mental illnesses. Finally, like the law and regulations governing Section 811, Section 8, and Public Housing, 50 The definition of person with disabilities for the Section 8 and Public Housing programs is at 42 U.S.C. §1437a(b)(3) and 24 C.F.R. §5.403. 51 24 C.F.R. §891.505. 52 See 42 U.S.C. §423(d). 53 For a more detailed discussion of the Social Security Act definition of “disability” see CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), by Scott Szymendera. 54 Non-elderly persons with disabilities do not reside in Section 202 developments funded through capital grants. CRS-13 Section 202 regulations make ineligible any person whose “sole impairment” is alcoholism or drug addiction. Capital Grants and Project Rental Assistance Most Section 811 funding is distributed as capital grants and project rental assistance to nonprofit housing sponsors (the program also funds tenant-based vouchers, described in the next section). With the capital grants, nonprofit grantees build or rehabilitate housing to be used for persons with disabilities and their families. HUD distributes the Section 811 capital grants through a two-step process. First, a formula is used to allocate available funds to the 51 local HUD offices based on the number of non-institutionalized persons within the jurisdiction of the local office who are between 16 and 64 years of age and have a disability.55 Each of the 51 jurisdictions is ensured funding sufficient to support a minimum of ten Section 811 units. HUD then awards Section 811 grants through a competitive process in which nonprofit organizations submit applications, and awards are limited by the amount allocated to the local office. Grantees need not pay back the capital grants as long as the property remains affordable to very low-income tenants with disabilities (those with incomes at or below 50% of area median income) for at least 40 years.56 The project sponsors also receive rental assistance from HUD to make up the difference between the rent paid by residents and the costs of operating the housing development. In addition, project sponsors must ensure that residents in Section 811 housing receive appropriate supportive services. As of 2007, HUD reported that a total of 26,656 units had been built with Section 811 capital grants and were receiving rental assistance.57 This section of the report describes these components of the Section 811 program. Eligible Facilities. The Section 811 statute governs the type of housing that may be provided through the program, but in some cases, the statutory definitions have been further refined through HUD regulation and policy. The physical design of Section 811 housing may take on several forms:58 ! Group Home: The Section 811 statute defines a group home as a single-family residence designed for occupancy by not more than eight individuals with disabilities. However, HUD’s annual Notice of Funding Availability (NOFA) that guides applicants for Section 55 U.S. Department of Housing and Urban Development, “FY2008 SuperNOFA for HUD’s Discretionary Programs,” Federal Register, vol. 73, no. 92, May 12, 2008, p. 27320. The NOFA is available on the HUD website with different pagination at [http://www.hud.gov/offices/adm/grants/nofa08/811sec.pdf] (hereafter “FY2008 HUD NOFA”). 56 42 U.S.C. §8013(e)(1). 57 U.S. Department of Housing and Urban Development, FY2007 Performance and Accountability Report, November 15, 2007, p. 439, available at [http://www.hud.gov/ offices/cfo/reports/2007/2007par.pdf]. 58 42 U.S.C. §8013(c)(1). CRS-14 811 funds specifies that no more than six individuals with disabilities may live in a group home.59 Bedrooms may be single or double occupancy, but in the latter case, only when requested by the residents.60 There must be at least one bathroom for every four residents,61 and an additional bedroom may be provided for a staff person.62 Project sponsors may not place more than one group home on a single site or on a site adjacent to another group home.63 ! Independent Living Facility: According to the Section 811 statute, an independent living facility has individual dwelling units with separate bedrooms, kitchens, and baths for each resident, with a maximum occupancy of 24 persons with disabilities per development (higher numbers may be allowed with approval from HUD).64 However, the Section 811 NOFA further restricts the maximum number of persons in an independent living facility to 14 with some exceptions allowed.65 The independent living units may be located on scattered sites, and a unit may be provided for a staff person.66 ! Condominium Projects: Condominium units are similar to independent living facilities, with separate bedrooms, baths and kitchens for each resident. Standards for condominium units under the Section 811 program are not provided in statute or regulation, but are outlined in the annual HUD NOFA. The maximum number of units allowed on a site or scattered sites is the greater of 14 units or 10% of units in a development, not to exceed 24 units.67 Unlike independent living facilities, a unit may not be used by a staff person. Project sponsors may choose to serve residents that fall within one of three major disability categories — physical disability, developmental disability, and chronic mental illness — or any combination of the three.68 In addition, with HUD approval, project sponsors may further restrict residency to a subcategory of disability that falls within one of these three categories. For example, a group house dedicated 59 FY2008 HUD NOFA, p. 27325. 60 Ibid. 61 24 C.F.R. §891.310. 62 FY2008 HUD NOFA, p. 27325. 63 42 U.S.C. §8013(k)(1). 64 42 U.S.C. §8013(k)(4). 65 FY2008 HUD NOFA p. 27325. Project sponsors may request an exception to the project size limitation if they can show site control. 66 Ibid. 67 Ibid., pp. 27325-27326. 68 Ibid., p. 27319. CRS-15 to individuals with developmental disabilities could choose specifically to serve those persons with autism (with HUD’s consent). However, if HUD approves the restriction, a project sponsor cannot deny occupancy to an otherwise qualified applicant who meets the definition of the broader disability category.69 For example, in the case of a group home for persons with autism, the owners could not deny a qualified application from a person with another developmental disability, but could deny a qualified application from a person with a physical disability. In order to qualify to restrict residency by categories of disability, applicants for Section 811 funds must explain why it is necessary to restrict residency, and why it is not possible to serve residents in a more integrated setting.70 Rental Assistance. Nonprofit organizations that are awarded capital grants to build or rehabilitate Section 811 housing facilities also enter into contracts with HUD to receive project rental assistance (referred to as PRAC). The rental assistance is paid to project sponsors by HUD in order to make up the difference between the rent paid by tenants and the cost of operating the Section 811 housing facility.71 Residents in Section 811 housing must be “very low income” (with income at or below 50% of area median income),72 and they pay the higher of 30% of their adjusted income or 10% of their gross income toward rent.73 The initial term of PRAC contracts is three years, and they are renewable on an annual basis subject to appropriations. Supportive Services. Housing developed through Section 811 capital grants must be supportive housing, that is, owners must make supportive services available to residents to help them live independently. Supportive housing is a model used to assist a variety of populations for whom it might be difficult to maintain housing, not just persons with disabilities. These groups include elderly residents, families with young children whose parents are making the transition to work, formerly homeless individuals, and those living with HIV/AIDS. Services are to be tailored to the individual needs of residents and so depend upon the population being served. Specifically, the Section 811 statute requires property owners to ensure the availability of supportive services to address the health (including mental health), and other individual needs of residents.74 However, Section 811 funds cannot themselves be used to fund supportive services for residents.75 Owners may provide supportive services directly to residents, or may coordinate the availability of services through outside agencies or service providers. Services may include assistance with activities of daily living; counseling for mental health issues, drug, or alcohol addictions; case management; and employment assistance. 69 Ibid. 70 Ibid., p. 27332. 71 42 U.S.C. §8013(d)(2). 72 42 U.S.C. §8013(d). 73 42 U.S.C. §8013(d)(3). 74 42 U.S.C. §8013(k)(3). 75 FY2008 HUD NOFA, p. 27334. CRS-16 When organizations apply to HUD for Section 811 capital grants, they must submit a supportive services plan that has been certified by the appropriate state or local agency responsible for overseeing services to persons with disabilities as being well-designed to serve the needs of the prospective residents.76 The supportive services plans must include the following information (among other requirements): (1) a detailed description of the service needs of the population that will be served; (2) a list of community service providers that will provide services, and letters of intent from those providers; (3) the experience of the proposed service providers; (4) a description of how state and local agencies will be involved in the project; and (5) the applicant’s commitment to provide services for residents.77 While project sponsors are required to ensure that supportive services are available, they cannot require residents to accept them. Tenant-Based Vouchers Tenant-based rental assistance allows individuals and families to find rental housing on the private market rather than in specific housing developments. The rental assistance goes with the tenant rather than being tied to a specific housing unit. Rental assistance is provided in the form of a voucher, through which HUD pays a portion of a tenant’s rent to landlords who are willing to accept the voucher (federal law does not require landlords to accept vouchers). The Section 8 voucher program is the primary way in which HUD provides tenant-based rental assistance, although tenant-based assistance is available through other programs, including Section 811.78 In both programs, tenants with vouchers pay between 30% and 40% of their income toward rent and HUD pays the difference between the family’s contribution and the rent for the unit, subject to certain limits. This section of the report describes Section 811 vouchers for persons with disabilities; Section 8 vouchers for persons with disabilities are described later in the report. (For more information about the Section 8 program, see CRS Report RL32284, An Overview of the Section 8 Housing Programs, by Maggie McCarty.) Section 811 Mainstream Vouchers. The Housing and Community Development Act of 1992 (P.L. 102-550) made tenant-based rental assistance part of the Section 811 program by authorizing the use of vouchers for eligible households.79 The vouchers, sometimes referred to as “mainstream vouchers,” are administered using the same rules that govern the Section 8 voucher program. Unlike Section 8 vouchers, however, these vouchers are funded through the Section 811 account for initial five-year terms (Section 8 vouchers are funded on an annual basis). The first year in which Congress set aside funding for mainstream vouchers 76 Ibid. 77 FY2008 HUD NOFA, pp. 27332-27333. 78 For example, HUD’s Shelter Plus Care and Supportive Housing Programs make tenantbased rental assistance available for homeless individuals. For more information about these programs see CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds, by Libby Perl. 79 42 U.S.C. §8103(d)(4). CRS-17 was FY1997. The HUD Appropriations Act for that year (P.L. 104-204) specified that HUD could use up to 25% of the amount appropriated for the Section 811 program for five-year vouchers. In the first two years that the Section 811 vouchers were distributed, only public housing authorities (PHAs) could administer the vouchers, but beginning in FY1999, private nonprofit organizations were eligible to apply to administer them.80 HUD makes vouchers available through an annual Notice of Funding Availability (NOFA) process through which PHAs and private nonprofit organizations interested in administering the vouchers apply to HUD. Applicants are scored based on a number of factors, which include the number of persons with disabilities at or below poverty in the area to be served by the applicant as well as the existence of agreements with organizations that will provide supportive services to voucher holders.81 Since 2005, HUD has required voucher administrators (PHAs and private nonprofit organizations) to help persons with disabilities who have Section 811 vouchers to obtain supportive services if they request them, as well as to provide technical assistance to landlords in making reasonable accommodations or reasonable modifications.82 The NOFAs issued by HUD in FY1997-FY1999 specified that the Section 811 vouchers should remain available to disabled families during the initial funding term of the voucher (five years), but were silent on who could use the voucher if the original family left the program (either voluntarily or due to eviction or other nonvoluntary reason) after the initial funding period was over. Advocates for persons with disabilities have pointed out that these vouchers may have been provided to non-disabled households after the original tenant left the program.83 However, in annual appropriations acts since FY2005, Congress has required that Section 811 vouchers be made available to disabled families upon turnover.84 Further, in 2004, HUD began to require that PHAs track the disability status of families using Section 80 U.S. Department of Housing and Urban Development, “Mainstream Housing Opportunities for Persons with Disabilities FY1999 Funding Availability,” Federal Register, vol. 64, no. 44, March 8, 1999, p. 11303. 81 For more information on criteria used to select applicants, see, for example, U.S. Department of Housing and Urban Development, “Notice of Funding Availability for FY2005 Mainstream Housing Opportunities for Persons with Disabilities Program,” Federal Register, vol. 70, no. 211, November 2, 2005, pp. 66730-66732. 82 See Department of Housing and Urban Development Notice PIH-2005-5, “New Freedom Initiative, Executive Order 13217: ‘Community-Based Alternatives for Individuals with Disabilities,’ and the Housing Choice Voucher Program,” February 1, 2005, available at [http://www.hud.gov/offices/adm/hudclips/notices/pih/files/05-5PIHN.doc] (hereafter, “HUD Notice PIH-2005-5”). PIH-2005-5 was extended indefinitely by PIH Letter L-200701, available at [http://www.hud.gov/offices/adm/hudclips/letters/07-1PIHL.doc]. 83 See, for example, the Consortium for Citizens with Disabilities, Letter to Josh B. Bolton, Director of the Office of Management and Budget, January 14, 2005. “[T]he CCD Housing Task Force believes there is a high likelihood that at least some of these precious 811 tenant based funds are being used to support non-disabled households.” 84 The first appropriations act to have this requirement was the FY2005 Consolidated Appropriations Act, P.L. 108-447. CRS-18 811 vouchers and provide the records to HUD.85 Prior to 2004, HUD did not collect this information. As of 2007, HUD reported that a total of 14,836 Section 811 vouchers were funded through the Section 811 account.86 Table 1. Section 811 Funding Levels, FY2003 to FY2008 (dollars in thousands) Section 811 Capital Grants and PRACa Section 811 Vouchersb Total for Section 811c 2003 166,787 81,851 248,886 2004 173,721 74,904 249,092 2005 149,455 88,179 238,080 2006 152,603 78,269 231,268 2007 158,697 77,517 236,610 2008 161,655 74,745 237,000 Fiscal Year Source: Department of Housing and Urban Development Budget Justifications FY2005 through FY2009. a. PRAC refers to “project-based rental assistance contracts.” Amounts for PRAC include renewals of existing contracts as well as rental assistance for new units. b. Amounts for Section 811 vouchers include funds to renew existing vouchers. c. The total may be slightly greater than the sum of funds allocated for capital grants, PRAC, and vouchers due to funds appropriated for the working capital fund that are included in the total. Other HUD Housing Designated for Persons with Disabilities While the Section 811 program is dedicated solely to persons with disabilities, HUD also funds housing for persons with disabilities through programs that serve all tenant populations, but that also give project owners the ability to designate buildings to special populations, including elderly persons and persons with disabilities.87 In addition to housing historically provided through the Section 202 program (described in the “Evolution of Section 811” section of this report), property owners that participate in the project-based Section 8 rental assistance program and Public Housing Authorities (PHAs) that administer the Public Housing program may choose to designate buildings specifically for elderly residents and residents with disabilities together (sometimes referred to as “mixed population” developments) or for residents 85 In a notice dated August 5, 2004, HUD noted that mainstream vouchers would be tracked in its data set. See Notice PIH-2004-13, “Codes for Special Programs Reported on the Family Report,” available at [http://www.hud.gov/offices/adm/hudclips/notices/pih/files/ 04-13PIHN.doc]. 86 87 HUD FY2007 Performance and Accountability Report, p. 439. Tenants with disabilities may also live in assisted housing units that are not specifically designated for their use. CRS-19 with disabilities alone. In addition, the Section 8 voucher program sets aside housing vouchers specifically for persons with disabilities. Public Housing Public housing is the original federally assisted housing program for lowincome families, created as part of the Housing Act of 1937 (P.L. 75-412). The program provides housing for very low-income households (those with incomes at or below 50% of area median income) and requires tenants to pay 30% of their income toward rent. The Housing Act of 1956 (P.L. 84-1020) authorized the Public Housing Administration (a predecessor to HUD) to provide units specifically for lowincome elderly individuals.88 The first elderly-only public housing development was built by 1960.89 Beginning in 1961, the HUD definition of “elderly family” was amended to include individuals with disabilities of any age.90 Since then, persons with disabilities have lived in public housing facilities designated for elderly residents (defined as households where one or more person is age 62 or older). Public housing developments designated for elderly residents, and where a mixed population of elderly residents and residents with disabilities live together, have been controversial. During the early years of public housing for elderly persons, disabled residents made up only a small proportion of residents. The number of residents with disabilities living in public housing for the elderly began to increase in the 1980s and early 1990s for at least two reasons. First, individuals with mental illnesses were less likely to be institutionalized as a result of the availability of outpatient mental health care, and were therefore in need of affordable housing.91 A second factor was passage of the 1988 Fair Housing Act Amendments (P.L. 100430). The amendments added persons with a “handicap” to the class of individuals protected from discrimination in the provision of housing. The definition of “handicap” included individuals with alcohol and drug addictions.92 Following these changes, Public Housing experienced an increase in the number of younger residents with disabilities, often with mental illnesses and addictions. Along with the increase, 88 Prior to this, HUD’s definition of elderly families did not include single individuals. 89 Frances Merchant Carp, A Future for the Aged, Victoria Plaza and Its Residents (Austin: University of Texas Press, 1966). 90 The Housing Act of 1961 (P.L. 87-70) made all households in which an adult member has a disability eligible for public housing. Prior to this, in the Housing Act of 1959 (P.L. 86372), near-elderly households with an adult member with a disability were made eligible. Near-elderly households are those with an adult member age 50 and older. 91 See General Accounting Office (now the Government Accountability Office), Housing Persons with Mental Disabilities with the Elderly, GAO/RCED-92-81, August 1992, pp. 1011, available at [http://archive.gao.gov/d33t10/147294.pdf]. 92 According to the House Judiciary Committee Report accompanying H.R. 1158, the Fair Housing Act Amendments of 1988, enacted as P.L. 100-430, the bill used the same definitions and concepts from the Rehabilitation Act of 1973 (P.L. 93-112), which included drug addiction and alcoholism as physical or mental impairments (see 28 CFR §41.31). However, under P.L. 100-430, handicap does not include “current, illegal use of or addiction to a controlled substance.” CRS-20 Public Housing Authorities reported a greater number of incidents of disruptive behavior, and some elderly residents reported feeling unsafe.93 Due to tension between elderly residents and residents with disabilities, in the Housing and Community Development Act of 1992 (P.L. 102-550) Congress allowed PHAs to designate buildings as elderly only, disabled only, or as mixed population facilities.94 In 1996, The Public Housing Opportunity Extension Act of 1996 (P.L. 104-120) streamlined the process for designating public housing projects. If a PHA wants to change the composition of a building to elderly residents only or to residents with disabilities, it must submit a plan to HUD to ask for approval. If the plan is approved, PHAs cannot evict non-eligible residents. For example, if a PHA designates a building with a mix of elderly residents and residents with disabilities as elderly only, tenants with disabilities may not be evicted. If tenants want to move, however, PHAs may help them relocate. According to HUD data, of the 180 Public Housing projects that are designated for elderly tenants, tenants with disabilities, or both populations together, 25 projects set aside units for tenants with disabilities.95 Project-Based Section 8 Rental Assistance Between 1974 and 1983, the Section 8 new construction and substantial rehabilitation program made rental assistance available to developers that were creating new and rehabilitated rental housing for low-income families.96 From the inception of the program, owners were able to develop properties designated for use by elderly residents together with tenants with disabilities. The Housing and Community Development Act of 1992 (P.L. 102-550) gave owners of properties designed primarily for occupancy by mixed populations — elderly families together with tenants with disabilities — the ability to establish a preference for elderly families when selecting tenants.97 However, unlike Public Housing, most Section 8 properties may not completely exclude residents with disabilities. The statute requires owners that choose to create a preference for elderly residents to continue to reserve some units for households where an adult member has a disability and where the household is not considered elderly or near elderly (defined as at least 50 years old but below the age of 6298). Specifically, owners are required to set aside 93 Housing Persons with Mental Disabilities with the Elderly, p. 17. See, also, remarks of Representative Peter Blute, Congressional Record, daily edition, vol. 142 (February 27, 1996), p. H1274. 94 The provisions are codified at 42 U.S.C. §1437e; the regulations are at 24 CFR §§945.101-945.303. 95 HUD Designated Housing Status Report, available at [http://www.hud.gov/offices/pih/ programs/ph/dhp/designated.cfm]. 96 The new construction and substantial rehabilitation program was created in P.L. 93-383; authority to enter into new contracts was suspended in P.L. 98-181. For more information on Section 8 housing, see CRS Report RL32284, An Overview of the Section 8 Program, by Maggie McCarty. 97 The provisions are codified at 42 U.S.C. §§13611-13620. 98 42 U.S.C. §1437a(b)(3). CRS-21 the lower of the number of units occupied by disabled families in 199299 or 10% of units. If owners are unable to rent the units reserved for elderly residents to eligible families, they may give a preference to near elderly families with an adult member who has a disability.100 If owners are unable to rent units designated for non-elderly and non-near elderly persons with disabilities, they may rent them to near elderly persons with disabilities. Section 8 Vouchers for Persons with Disabilities In addition to housing vouchers made available through the Section 811 program (described earlier in this report), HUD has set aside Section 8 vouchers for families with an adult member who has a disability. The voucher portion of the Section 8 program was created in 1983 as part of the Supplemental Appropriations Act of 1984 (P.L. 98-181). Unlike project-based Section 8 rental assistance, which is tied to specific rental units, tenants may use Section 8 vouchers to rent any eligible housing unit. To be eligible, a unit must meet minimum housing quality standards and a family’s portion of the rent cannot exceed 40% of their income.101 In addition, a landlord must agree to accept the voucher.102 Congress appropriated funds for Section 8 vouchers for persons with disabilities, sometimes referred to as “designated housing vouchers,” in response to enactment of the Housing and Community Development Act of 1992 (P.L. 102-550). As discussed earlier, provisions in P.L. 102-550 permitted owners of Public Housing and project-based Section 8 developments where elderly residents and residents with disabilities lived together to either designate buildings as elderly only or to prioritize elderly tenants.103 Section 8 owners were given the authority to create a preference for elderly families in these designated buildings, though they could not exclude disabled families altogether. PHAs were given the authority to designate entire buildings as elderly only. Although PHAs cannot evict tenants with disabilities if a building is designated as elderly only, with attrition, eventually a building may have only elderly residents. These policy changes affected the ability of tenants with disabilities to live in these facilities. 99 Specifically, the statute refers to the higher of the number of units occupied by individuals or families with disabilities on either October 28, 1992 or January 1, 1992. 42 U.S.C. §13612(b). 100 42 U.S.C. §13613. 101 This 40% cap on a tenant’s contribution is in effect only for the first year. After the first year, if rent increases and the family wishes to continue to live in the unit, then the family can choose to contribute more than 40% of its income toward rent. 102 For more information about the Section 8 program, see CRS Report RL32284, An Overview of the Section 8 Housing Programs, by Maggie McCarty. 103 See Title VI, Subtitle B of P.L. 102-550 for Public Housing and Title VI, Subtitle D for Section 8. The law also gave authority to owners of Section 202, Section 221(d)(3), and Section 236 properties to continue to restrict occupancy to elderly families according to the rules in place at the time the projects were developed (see Section 658). CRS-22 From FY1997 through FY2002, Congress appropriated funds for Section 8 vouchers in order to assist tenants with disabilities who would have been eligible to reside in those Section 8 and Public Housing developments prior to their designation as elderly only or elderly preference. PHAs applied for these designated housing vouchers, which they then provided to eligible tenants. In FY2008, for the first time since FY2002, Congress appropriated additional funds for designated housing vouchers.104 The FY2008 Consolidated Appropriations Act (P.L. 110-161) provided $30 million for Section 8 vouchers for tenants with disabilities affected by the designation or restriction of tenant populations to elderly only. Unlike Section 811 mainstream vouchers, Section 8 designated housing vouchers for persons with disabilities shall remain available to other disabled households upon turnover “to the extent practicable [emphasis added].”105 (Section 811 vouchers must be made available only to families where an adult member has a disability.) HUD defines the term “to the extent practicable” to mean that before a voucher can be provided to a non-disabled household, every eligible non-elderly disabled family on a PHA’s waiting list must have received a voucher, and that outreach must not have resulted in finding an eligible family.106 As with Section 811 vouchers, PHAs must assist tenants who request help in finding supportive services, and provide technical assistance to landlords in providing reasonable accommodations and modifications. Housing Financed by Low-Income Housing Tax Credits and HUD Block Grants Beginning in the 1980s, the federal government took a less direct role in the development of affordable housing. At the same time, the production and rehabilitation of housing at the state and local level began to increase.107 This occurred, in part, due to the enactment of the Low-Income Housing Tax Credit (LIHTC) and the HOME Investment Partnerships program. These programs distribute funds to states and localities for the production of affordable housing. States and localities may, in turn, decide to target a portion of the funds from these programs to develop affordable housing for persons with disabilities. This section of the report describes the LIHTC and the HOME program, as well as the 104 Amounts appropriated from FY1997 through FY2002 were $50 million in FY1997 (P.L. 104-204) and $40 million in each of FY1998 (P.L. 105-65), FY1999 (P.L. 105-276), FY2000 (P.L. 106-74), FY2001 (P.L. 106-377), and FY2002 (P.L. 107-73). 105 The phrase “to the extent practicable” appeared in appropriations laws beginning in FY2003 (P.L. 108-7) through FY2006 (P.L. 109-115). The FY2007 House-passed HUD appropriations bill (H.R. 5576) also contained this phrase, but a year-long continuing resolution was enacted in lieu of separate appropriations laws. The FY2008 HUD Appropriations Act did not contain this phrase. 106 107 HUD Notice PIH-2005-5. For more background on the evolution of federal housing assistance policy, see CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by Maggie McCarty, Libby Perl, Bruce Foote, and Meredith Peterson. CRS-23 Community Development Block Grant (CDBG), a program created in 1974 to assist states and localities with economic development, including housing activities that benefit low- and moderate-income households. The Low-Income Housing Tax Credit The Low-Income Housing Tax Credit (LIHTC) was enacted as part of the Tax Reform Act of 1986 (P.L. 99-514). The program provides incentives for the development of affordable rental housing through federal tax credits administered by the Internal Revenue Service (IRS). The IRS allocates tax credits to states based on population, and states award the credits to developers to use as a source of financing for the development of affordable rental housing.108 The states, generally through their state housing finance agencies (HFAs), award the tax credits to housing developers through a competitive process that is based on state priorities as set out annually in their Qualified Allocation Plan (QAP). Developers may either retain the credits themselves or sell them in exchange for equity to fund a housing development. Developers of LIHTC-financed housing must ensure that at least 40% of the units are affordable to households with incomes at or below 60% of the area median income, or that at least 20% of units are affordable to households with incomes at or below 50% of the area median income.109 The projects must remain affordable for at least 15 years, although there are incentives in place to encourage developers to maintain affordability for 30 years. Rent charged for the rent-restricted units in a development may not exceed 30% of an imputed income limitation — calculated based on area median incomes. In their Qualified Allocation Plans, states set forth the criteria they will use in selecting projects to receive the tax credits.110 By statute, states must prioritize LIHTC projects that serve the lowest income tenants for the longest period of time in their QAPs. In addition, the LIHTC statute requires states to consider certain criteria in determining how they will set housing priorities in the QAP. One of the ten criteria that states must consider is tenant populations with special needs.111 Tenant populations with special needs may include persons with disabilities (others with special needs include individuals and families who are homeless, elderly individuals, or other populations in need of housing with supportive services).112 108 For more information on the LIHTC, see CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit, by Mark P. Keightley. 109 26 U.S.C. §42(g). 110 26 U.S.C. §42(m)(1)(B). 111 Until enactment of P.L. 110-289, the Housing and Economic Recovery Act of 2008, the LIHTC statute contained eight selection criteria. P.L. 110-289 added two more. See 26 U.S.C. §42(m)(1)(C). 112 See Joseph Guggenheim, Tax Credits for Low Income Housing (Glen Echo, MD: Simon Publications, 1996) p. 33. CRS-24 States may choose to make housing units for populations with special needs one of the priorities in the competition for tax credits in a number of ways.113 These methods include: ! requiring developers to set aside a portion of units for special needs populations — for example, North Carolina requires that the greater of five units or 10% of units in each tax credit development be devoted to persons with disabilities or those who are homeless;114 ! setting aside a certain dollar value or percentage of available tax credits for a specified population — for example, Illinois sets aside $2 million of the total available tax credits for developments where at least 50% of units serve persons with special needs;115 ! developing a scoring system in the competition for tax credits that awards additional points for proposals that take account of certain special needs populations — for example, New Mexico awards 15 points in the tax credit competition to developers that propose to build housing in which at least 25% of units are dedicated to persons with special needs.116 The HOME Investment Partnerships Program The HOME Investment Partnerships program (referred to as the HOME program) is a block grant to states and local jurisdictions — referred to as “participating jurisdictions” — distributed via a formula for the purpose of developing both affordable rental housing and affordable housing for homeowners.117 The factors used to distribute HOME funds to eligible states and jurisdictions include population, the number of rental units occupied by households in poverty, housing overcrowding, the number of units with incomplete kitchens or plumbing, and the age of housing.118 HOME funds can be used to build or rehabilitate housing, to provide tenant-based rental assistance, and to provide assistance to homeowners and homebuyers. Assistance must go to low-income households (at least 90% of funds 113 For more information about how state QAPs promote housing for populations with special needs, see James Tassos, Housing Credit Policies in 2007 That Promote Supportive Housing, The Corporation for Supportive Housing and Enterprise Community Partners, available at [http://www.practitionerresources.org/cache/documents/657/65721.pdf]. The report was updated with an addendum for 2008. That report is available at [http://documents.csh.org/documents/pubs/QAPStudy2008Update.pdf]. 114 Housing Credit Policies in 2007 That Promote Supportive Housing, p. 9. 115 Ibid., p. 10. 116 Ibid., p. 13. 117 The HOME program is codified at 42 U.S.C. §§12741-12756. 118 24 C.F.R. §92.50(c). In general, in order to be considered a “participating jurisdiction” eligible for HOME funds, a locality must qualify for at least $750,000 under the HOME formula. 42 U.S.C. §12746. All states receive allocations under the HOME formula. 42 U.S.C. §12747(b)(2). CRS-25 must assist those with incomes at or below 60% of area median income), and any housing provided must be affordable. Like funds provided to states through the LIHTC, states and localities that receive HOME funds have discretion in choosing the populations they wish to serve. Also like the LIHTC, jurisdictions that receive HOME funds develop a plan regarding how they will distribute funds. This is done through HUD’s Consolidated Plan process. Jurisdictions applying for funds from four HUD formula grant programs, including HOME,119 submit a single Consolidated Plan to HUD. The plan includes an assessment of community needs and a proposal to address those needs, using both federal funds and community resources. State and local plans must also contain a housing needs assessment, including the need for housing for persons with disabilities.120 In developing the plan, states and communities must adopt a citizen participation plan, through which they are encouraged to consult with citizens with disabilities.121 States are further required to consult with organizations that provide services (including fair housing services) to persons with disabilities when preparing their consolidated plan.122 After taking into consideration the needs of persons with disabilities, HOME recipient jurisdictions may choose to prioritize housing for persons with disabilities as part of their Consolidated Plans.123 In the tenant-based rental assistance portion of the program, the HOME regulations specify that recipient jurisdictions may choose to establish a preference for tenants with special needs, including persons with disabilities.124 Further, recipients of HOME funds may choose to target tenant-based rental assistance to individuals with a specific disability. In terms of new or rehabilitated rental housing that may be developed with HOME funds, communities can choose to develop not only multifamily rental housing and single family homes, but also transitional housing, single room occupancy projects, and group homes.125 Some jurisdictions may find that these types of housing developments are well suited for tenants with disabilities. The Community Development Block Grant Program The Community Development Block Grant (CDBG) program was enacted as part of the Housing Act of 1974 (P.L. 93-383) with the purpose of developing viable urban communities by funding housing, community, and economic development 119 The other three programs are the Community Development Block Grant, Housing Opportunities for Persons with AIDS, and the Emergency Shelter Grants. 120 24 C.F.R. §91.205 and §91.305. 121 24 C.F.R. §91.105 and §91.115. 122 24 C.F.R. §91.110. 123 24 C.F.R. §91.215 and §92.209. 124 24 C.F.R. §92.209(c)(2). 125 24 C.F.R.§92.2. CRS-26 activities that principally benefit low- and moderate-income households.126 The CDBG program distributes 70% of total funds through formula grants to entitlement communities — central cities of metropolitan areas, cities with populations of 50,000 or more, and urban counties — and the remaining 30% goes to states for use in small, non-entitlement communities.127 The allocation of CDBG funds is determined through a formula that targets an area’s need for community development using a variety of factors including population, poverty, overcrowded housing, age of housing, and the lag in community growth.128 The CDBG program is subject to the same Consolidated Plan requirements as the HOME program (described previously) in which the needs of persons with disabilities must be taken into consideration. In addition, in response to the Bush Administration’s New Freedom Initiative, HUD issued guidance to assist CDBG recipients with “identifying the needs of persons with disabilities and targeting CDBG resources to meet those needs during the development of the jurisdictions’ consolidated plans.”129 While many of the purposes of CDBG funds involve the improvement of neighborhoods, the creation of public facilities, or the promotion of economic opportunity, funds may also be used to rehabilitate housing, including making housing accessible for persons with disabilities. CDBG funds may also be used to make public facilities accessible to persons with disabilities.130 In addition, communities may use CDBG funds for “public services,” which include such services as employment counseling. According to HUD, promoting economic opportunities for persons with disabilities through job training and employment counseling are valid uses of CDBG funds.131 Issues and Trends Using Section 811 Funds with Low-Income Housing Tax Credits Financing affordable housing, including housing for persons with disabilities, may require multiple streams of funding in order to support the design, construction, and ongoing operating costs of a project. In addition to federal funds provided through HUD programs, affordable housing developers may use mortgage revenue bonds, tax credits, and local housing trust fund resources, among other sources, to develop housing for low-income and special needs populations. While HUD funds 126 42 U.S.C. §5301(c). 127 42 U.S.C. §5306. 128 Ibid. 129 HUD Notice CPD-050-03, “Implementing the New Freedom Initiative and Involving Persons with Disabilities in the Preparation of the Consolidated Plan through Citizen Participation,” June 6, 2005, available at [http://www.hud.gov/offices/adm/hudclips/notices/ cpd/05-3c.doc]. 130 42 U.S.C. §5305(a)(5). 131 HUD Notice CPD-050-03. CRS-27 once might have been sufficient on their own to develop an affordable housing project, that is rarely the case today. This is true for Section 811 developers, who often must bring together multiple sources of funding to develop a project. In 2000, in order to help Section 811 (and Section 202) developers bring together multiple financing sources, Congress enacted a law that makes the interaction of Section 811 funds and the Low-Income Housing Tax Credits (LIHTCs) more feasible by changing the definition of “private nonprofit organization” in the Section 811 statute. This change, and its implication for Section 811 developers, is described below. The value of LIHTCs are determined, in part, based on the cost of developing a property — referred to as the qualified basis.132 The costs of constructing, acquiring, and rehabilitating a property (among other costs133) are included in calculating the qualified basis, but the amount must then be reduced by any federal grants received by the developer, which in turn reduces the value of the tax credits. Therefore, if a nonprofit developer were to receive a Section 811 capital grant, its value would be subtracted in calculating the qualified basis which could result in minimal LIHTCs. The Homeownership and Economic Opportunity Act (P.L. 106-569), enacted in 2000, allowed for-profit limited partnerships, where a nonprofit organization is the sole general partner, to be eligible Section 811 owners. The changed law allows a nonprofit Section 811 grantee to loan the Section 811 capital grant to the limited partnership. Under this arrangement, the Section 811 funds are no longer a “federal grant” to be subtracted in calculating the qualified basis, potentially increasing the value of LIHTCs. The change in the law to allow for-profit limited partnerships to own Section 811 housing developments has not immediately made mixed financing arrangements common, however. The transactions are complicated and may require extensive expertise in housing finance to make them work. HUD acknowledges that “most developers seek to avoid the use of federal grant financing in most LIHTC projects.”134 In addition, the treatment of Section 811 PRAC in tax credit transactions has been unclear. Although the IRS has created exceptions to the rule 132 Specifically, a property’s qualified basis is determined as follows: (1) the cost of constructing, acquiring, or rehabilitating the property is calculated, (2) this amount is reduced by federal grants received by the developer, and (3) the resulting value is then multiplied by the percentage of space in the housing development that is devoted to lowincome use. This percentage is the lower of either the “unit fraction” — the ratio of low-income units to all units in the building — or the “floor space fraction” — the ratio of square footage in low-income units to total square footage. 26 U.S.C. §42(c). The qualified basis is then multiplied by the value of the tax credits — these are roughly either 9% or 4% — to determine the total annual value of the tax credits. 133 In addition to the costs of materials, construction, and/or rehabilitation, among the costs included in determining qualified basis are: contractor fees, developer fees, engineering fees and the cost of drawing up architectural specifications. Among the costs that are not included are the cost of land and fees associated with long-term financing. See Joseph Guggenheim, Tax Credits for Low Income Housing (Glen Echo, MD: Simon Publications, 1996) p. 37. 134 See HUD website, “Calculating the Qualified Basis,” available at [http://www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/calculating/qualifi edbasis.cfm]. CRS-28 that federal grants do not count toward the qualified basis of a property for certain categories of rental assistance, Section 811 PRAC has not been among the exceptions. The programs that have been exempted from the requirement include Section 8 project-based rental assistance payments and public housing capital and operating funds,135 the Native American Housing Block Grant Program,136 Rent Supplement and Rental Assistance Payments programs,137 and the Shelter Plus Care and Single Room Occupancy programs.138 Despite language in the Homeownership and Economic Opportunity Act of 2000 indicating that Congress intended Section 811 (and Section 202) assistance to be included in calculating qualified basis (rather than subtracted from it), the IRS has not issued a ruling that would be necessary to make this possible.139 Another possible limitation in developing mixed finance projects using federal grants such as Section 811 together with the LIHTC was removed with passage of the Housing and Economic Recovery Act of 2008 (P.L. 110-289). Under LIHTC law, developers may qualify for tax credits worth roughly 9% or 4%.140 Under previous LIHTC law, the higher 9% credit was available for new construction that was not federally subsidized, while the 4% credit was available for either federally subsidized new construction or existing buildings. The statutory definition of “federally subsidized” included below market federal loans (the structure used by limited partnerships to loan Section 811 capital grants).141 The fact that developers of federally subsidized buildings did not qualify for the higher tax credit made financing projects with the LIHTC less lucrative. Developers either had to accept the lower, 4% credit, or to set up a system through which federal grants were loaned to the project at a market rate of interest.142 135 26 C.F.R. §1.42-16. 136 Rev. Rul. 2008-6. 137 Rev. Rul. 2002-65. 138 Rev. Rul. 98-49. 139 P.L. 106-569 amended the Section 811 statute to state that “[n]otwithstanding any other provision of law, assistance amounts provided under this section may be treated as amounts not derived from a Federal grant.” See Section 842. On September 17, 2003, the IRS issued a letter stating that it was reviewing the applicability of the LIHTC section of federal grants to PRAC under the Section 202 program. The letter is available at [http://www.irs.gov/ pub/irs-wd/04-0061.pdf]. 140 These credit rates are not set exactly at 9% and 4% — they vary depending on the current interest rate used in the Department of the Treasury credit rate formula. For more information about this issue, see CRS Report RS22917, The Low-Income Housing Tax Credit Program: The Fixed Subsidy and Variable Rate, by Mark P. Keightley. 141 The statute also specifically exempted funds received under CDBG, HOME, and Native American Housing and Self Determination Act programs from the definition of federally subsidized, so those projects have been eligible for the 9% credit all along. 142 See U.S. Department of Housing and Urban Development, “Mixed Finance Development for Supportive Housing for the Elderly or Persons with Disabilities: Final Rule,” Federal Register vol. 70, no. 176, September 13, 2005, p. 54202. CRS-29 However, P.L. 110-289 removed the phrase “below market federal loans” from the definition of federal subsidy in the LIHTC statute. This makes all federally subsidized new construction placed in service after the effective date of P.L. 110-289 eligible for 9% tax credits. The 9% credits are very competitive,143 however, and it may still be difficult for Section 811 developers to obtain them. Housing Need for Persons with Disabilities According to both advocates for persons with disabilities and HUD, persons with disabilities have a need for affordable housing. Since 1991, HUD has regularly released reports (ten to date) on the worst case needs for affordable housing in the United States.144 HUD defines households with worst case housing needs as very low-income renter households (those households with incomes at or below 50% of area median income) that do not receive rental assistance and either (1) pay more than half their income toward rent, or (2) live in severely substandard housing.145 Substandard housing is measured using the American Housing Survey definition of housing with severe physical problems. These are varying degrees of problems with plumbing, heating, electrical wiring, and upkeep of the physical unit or public areas.146 Using data from the 2005 American Housing Survey, in its most recent report — Affordable Housing Needs 2005 — HUD found that 5.99 million households had worst case housing needs, a statistically significant increase of 16% over the 5.18 million households that had worst case needs in 2003.147 This represented an increase from 4.89% of all U.S. households to 5.50% of all households. The Affordable Housing Needs 2005 report also included an estimate of the number of persons with disabilities who have worst case housing needs. Because disability status is not reported in the American Housing Survey, HUD used three sources of income as proxies to estimate households where a non-elderly adult member has a disability. These three proxies were: (1) Social Security and Railroad Retirement Benefits, (2) Supplemental Security Income (SSI), and (3) public assistance such as welfare. Using these three income sources as proxies, HUD estimated that there were 542,000 households with a non-elderly adult member with 143 See, for example, Liz Enochs, “Affordable Housing Equity: Developers Share Tips for Converting Projects That Fail to Win 9% LIHTCs into 4% Deals,” Affordable Housing Finance, July 2007, available at [http://www.housingfinance.com/ahf/articles/2007/jul/ AFFORDABLE0707.htm]. 144 For the most recent report see U.S. Department of Housing and Urban Development, Affordable Housing Needs 2005, May 2007, available at [http://www.huduser.org/ Publications/pdf/AffHsgNeeds.pdf] (hereafter Affordable Housing Needs 2005). 145 HUD developed the definition using preference rules for admission to assisted housing. See Affordable Housing Needs 2005, p. 7. 146 For more information see Affordable Housing Needs 2005, pp. 85-86. 147 Ibid., p. 13. CRS-30 a disability that had worst case housing needs.148 These estimates did not include households with children. Less than a year after releasing the Affordable Housing Needs 2005 report, however, HUD released a supplement in which it revised the estimate of households with a non-elderly adult who has a disability and that has worst case housing needs.149 The supplement used an additional income proxy to arrive at an increased number of persons with disabilities with worst case housing needs over the number that had been estimated in the original report. In addition to Social Security/Railroad Retirement benefits, SSI, and public assistance, the supplemental report included cases where respondents to the American Housing Survey reported that they received Social Security Disability Insurance (SSDI), workers’ compensation, veterans’ disability payments, or other disability payments. Using these four income sources as a proxy for disability status, the HUD supplement estimated the number of households having a non-elderly adult member with a disability in two different categories: those households with children, and those without children. (The original Affordable Housing Needs 2005 report did not report the number of households with children and an adult with a disability.) Of very low-income households without children and an adult with a disability, HUD reported that 694,000 had worst case housing needs, making up 11.6% of all households with worst case housing needs (the original estimate in the Affordable Housing Needs 2005 report was 542,000). Of those very low-income households with children and an adult with a disability, the supplement estimated that 365,000 had worst case housing needs, making up 6.1% of all households with worst case housing needs. Nonetheless, HUD noted that even its updated estimates are an undercount of persons with disabilities who have worst case housing needs.150 This is due to the fact that homeowners, homeless persons, and persons living in institutions are not part of the worst case needs calculation. The HUD supplement to its Affordable Housing Needs 2005 report was in part in response to an analysis commissioned by the Consortium for Citizens with Disabilities (CCD) Housing Task Force, a coalition of groups that advocates for persons with disabilities.151 The CCD report, whose author had been an author on previous HUD Affordable Housing Needs reports, like the HUD supplement, used the fourth income proxy — SSDI, workers’ compensation, veterans’ disability or other disability benefits — for estimating disability status. Unlike the HUD methodology, however, the CCD report used as an adjustment factor data on persons 148 Ibid., p. 19. 149 U.S. Department of Housing and Urban Development, Housing Needs of Persons with Disabilities: Supplemental Findings to the Affordable Housing Needs 2005 Report, February 2008, available at [http://www.huduser.org/Publications/pdf/Affhsgneedsdis.pdf] (hereafter Supplemental Findings to the Affordable Housing Needs 2005 Report). 150 151 Ibid., pp. 1-2. Kathryn P. Nelson, The Hidden Housing Crisis: Worst Case Housing Needs Among Adults with Disabilities, Consortium for Citizens with Disabilities Housing Task Force, March 2008, available at [http://www.tacinc.org/Docs/HH/HiddenHousingCrisis.pdf]. CRS-31 with disabilities from two other surveys, the Survey of Income and Program Participation and the National Health Interview Survey. According to the CCD report, these two surveys ask more questions about disability than the American Housing Survey. Using these adjusted data, the CCD report estimated that between 1.3 and 1.4 million childless non-elderly adults with disabilities had worst case housing needs, while between 840,000 and 960,000 households with children and a non-elderly adult with a disability had worst case housing needs.152 Homeless Persons with Disabilities Although homelessness in the United States has always existed, it became a more prevalent phenomenon in the 1970s and 1980s, when the homeless population began to grow and become more visible to the general public. Explanations for the growth in homelessness include the demolition of skid rows,153 the decreased availability of affordable housing generally, the reduced need for seasonal unskilled labor, the reduced likelihood that relatives will accommodate homeless family members, the decreased value of public benefits, and changed admissions standards at mental hospitals.154 Early in the current decade, attention was again turned to homeless individuals, this time to those persons who experience so-called “chronic homelessness,” when President Bush announced an initiative to end chronic homelessness within ten years. In the late 1990s, researchers identified chronically homeless individuals as those who have a disability (including those who suffer from mental illness and/or substance abuse disorders) and who have been homeless for long periods of time.155 According to HUD, a person is chronically homeless if they have been continuously homeless for one year or have experienced four episodes of homelessness in the past three years.156 Estimates of the number of chronically homeless individuals as a percentage of the total homeless population range from 18% to 27%.157 Rates of mental health problems are estimated to exist in more than 60% of chronically 152 Ibid. 153 Peter H. Rossi, Down and Out in America: The Origins of Homelessness (Chicago: The University of Chicago Press, 1989), p. 33. 154 Ibid., pp. 181-194, 41. See, also, Martha Burt, Over the Edge: The Growth of Homelessness in the 1980s (New York: Russell Sage Foundation, 1992), pp. 31-126. 155 See Randall Kuhn and Dennis P. Culhane, “Applying Cluster Analysis to Test a Typology of Homelessness by Pattern of Shelter Utilization: Results from the Analysis of Administrative Data,” American Journal of Community Psychology 26, no. 2 (April 1998): 210-212. 156 157 24 C.F.R. §91.5. U.S. Department of Housing and Urban Development, The Third Annual Homeless Assessment Report to Congress, July 2008, p. 16, available at [http://www.hudhre.info/ documents/3rdHomelessAssessmentReport.pdf]; Carol L. M. Caton, Carol Wilkins, and Jacquelyn Anderson, People Who Experience Long-Term Homelessness: Characteristics and Intervention, 2007 National Symposium on Homelessness Research, September 2007, p. 4-3, available at [http://www.huduser.org/publications/pdf/p4.pdf] (hereafter People Who Experience Long-Term Homelessness: Characteristics and Intervention). CRS-32 homeless individuals, and more than 80% of individuals are estimated to have alcohol or drug problems.158 Medical problems, including HIV/AIDS, are also prevalent among chronically homeless individuals.159 Communities across the country have addressed chronic homelessness through a strategy called “housing first,” in which permanent supportive housing is found for homeless individuals prior to treatment of their illnesses and addictions. HUD makes funds available through its Homeless Assistance Grants for the construction or rehabilitation of new permanent supportive housing for chronically homeless individuals.160 In the first four years after the announcement of President Bush’s initiative to end chronic homelessness, an estimated 37,500 new permanent supportive housing units were added to the stock of housing available for homeless individuals with disabilities.161 Legislation The Frank Melville Supportive Housing Investment Act (H.R. 5772). A bill to amend the Section 811 program, the Frank Melville Supportive Housing Investment Act of 2008 (H.R. 5772) was introduced in the House on April 10, 2008. On July 30, 2008, the bill was approved by the House Financial Services Committee, and on September 17, 2008, it passed the full House under suspension of the rules. A similar bill with the same title was introduced in the Senate on September 25, 2008 (S. 3593). H.R. 5772 would make a number of changes to the Section 811 program. One of these would be to eliminate the funding of tenant-based rental assistance through the Section 811 program account. Advocates for persons with disabilities contend that Section 811 vouchers are poorly targeted and may not always be used to serve households with disabilities.162 Instead, existing and future vouchers would be 158 People Who Experience Long-Term Homelessness: Characteristics and Intervention, p. 4-4. 159 See, for example, D.P. Culhane, E. Gollub, R. Kuhn, and M. Shpaner, “The CoOccurrence of AIDS and Homelessness: Results from the Integration of Administrative Databases for AIDS Surveillance, and Public Shelter Utilization in Philadelphia,” Journal of Epidemiology and Community Health 55, no. 7 (2001): 515-520. Marjorie Robertson, et al., “HIV Seroprevalence Among Homeless and Marginally Housed Adults in San Francisco,” American Journal of Public Health 94, no. 7 (2004): 1207-1217. Angela A. Aidala and Gunjeong Lee, Housing Services and Housing Stability Among Persons Living with HIV/AIDS, Joseph L. Mailman School of Public Health, May 30, 2000, available online at [http://www.nyhiv.org/pdfs/chain/CHAIN%20Housing%20Stability%2032.pdf]. 160 For more information about these grants, see CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds, by Libby Perl. 161 People Who Experience Long-Term Homelessness: Characteristics and Intervention, p. 4-23. 162 See, for example, Written Statement of Ann O’Hara, Consortium for Citizens with Disabilities Housing Task Force, for the hearing before the House Financial Services (continued...) CRS-33 funded through the Section 8 account. The bill would authorize sufficient Section 8 funds to support the number of vouchers that were funded in FY2008. H.R. 5772 also would codify the requirement that Congress has inserted in recent appropriations acts requiring Section 811 vouchers to be turned over to households where an adult member has a disability when the current voucher holders give them up. Another proposed change would reduce the concentration of persons with disabilities in Section 811-funded housing by limiting the number of units in a building developed with Section 811 capital grants to 25% of the total units in the building. Limiting the number of units for persons with disabilities in a building would also encourage developers to use other funding sources, such as the Low Income Housing Tax Credit (LIHTC) to supplement the Section 811 funding. This 25% limitation would not apply to group homes or independent living facilities. In cases where grantees combine Section 811 capital grants with funding from other sources such as LIHTCs for the development of multifamily housing, the bill would delegate the review and processing of the project to state or local housing finance agencies (HFAs). Because HFAs are the agencies that administer tax credits, delegating the processing of the Section 811 capital grant to the HFA, together with the tax credit, is thought to be more efficient. In addition, H.R. 5772 would create a Project Rental Assistance-Only Competitive Demonstration Program to encourage mixed finance developments where rental units for persons with disabilities would be interspersed with units for non-disabled households. The rental assistance awarded through the demonstration program, instead of subsidizing units developed through Section 811 capital grants, would be used to subsidize units of housing developed through LIHTCs, the HOME program, or projects developed with government funds from other sources. Under the demonstration program, only extremely low-income persons with disabilities would be eligible for the assisted units (those with incomes at or below 30% of area median income) and no more than 25% of units in LIHTC and HOME developments would be allowed to be set-aside for those households. The initial term of the rental assistance would be 15 years, although facilities would be required to operate for at least 30 years as supportive housing for persons with disabilities. The bill also would amend the definition of “person with disabilities” in the Section 811 program to include a person who meets the Social Security Act definition of disability. As noted earlier in this report, the current Section 811 definition does not reference the Social Security definition. In addition, the bill would expand the Section 811 definition to include those individuals who are living with HIV/AIDS consistent with the Public Housing and Section 8 programs. (See Appendix A.) Current Section 811 regulations state that a “person whose sole impairment is a diagnosis of HIV positive ... (i.e. does not meet the qualifying criteria in [the statute]) will not be eligible for occupancy in a section 811 project.” The proposed language would instead state that the term person with disabilities “shall 162 (...continued) Committee, Subcommittee on Housing and Community Opportunity, H.R. 5772, The Frank Melville Supportive Housing Investment Act of 2008, 110th Cong., 2nd sess., June 20, 2008, available at [http://www.house.gov/apps/list/hearing/financialsvcs_dem/o’hara062008.pdf]. CRS-34 not exclude persons who have the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome.” H.R. 5772 also would make clear that persons age 62 and older may not be considered a “person with disabilities” for purposes of the Section 811 program. CRS-35 Appendix A. Definitions of Disability Applicable to HUD Housing Programs Table A-1. Definitions of Disability Applicable to HUD Housing Programs Provision Mental, Physical, or Emotional Impairment Chronic Mental Illness Developmental Disability Social Security Definition HIV/AIDS Status Drug and/or Alcohol Addiction Section 811 A physical, mental, or emotional impairment that is (1) expected to be of long-continued and indefinite duration, (2) substantially impedes a person’s ability to live independently, and (3) could be improved by more suitable housing conditions. A severe and persistent mental or emotional impairment. A severe, chronic disability that (1) is attributable to a mental or physical impairment or a combination of mental or physical impairments, (2) manifests before age 22, (3) is likely to continue indefinitely, and (4) results in substantial functional limitations in three or more major life activities. No provision “A person infected with the human acquired immunodeficiency virus (HIV)” if they meet the definition of “person with disabilities” in the statute. “A person whose sole impairment is a diagnosis of HIV positive ... (i.e. does not meet the qualifying criteria in [the statute]) will not be eligible for occupancy in a Section 811 project.” “A person whose sole impairment is a diagnosis of ... alcoholism or drug addiction ... will not be eligible for occupancy in a Section 811 project.” Section 8 and Public Housing Section 202 Loan Program Same. Same. No Provision Same. Same as Section 811. Same. Inability to engage in substantial gainful activity by reason of a physical or mental impairment which can be expected to result in death or to last for not less than 12 months. The term person with disabilities “shall not exclude persons who have the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent...” Substantially the same. No Provision “Persons infected with the human acquired immunodeficiency virus (HIV) who are disabled as a result of infection with the HIV are eligible for occupancy in Section 202 projects ...” Substantially the same. Source: 42 U.S.C. §4013(k)(2) and 24 C.F.R. §891.305 (Section 811); 42 U.S.C. §1437a(b)(3)(E) and 24 C.F.R. §5.403 (Section 8 and Public Housing); and 24 C.F.R. §891.505 (Section 202).sources of financing, including the LIHTC and HOME program; reducing the concentration of housing units for persons with disabilities by limiting the units in multifamily housing dedicated to persons with disabilities to 25% of the total; and delegating the processing of mixed finance developments to state housing finance agencies. This report will be updated as warranted. Congressional Research Service . Section 811 and Other HUD Housing Programs for Persons with Disabilities Contents Introduction ................................................................................................................................1 Housing for Persons with Disabilities and the Fair Housing Act..................................................2 Reasonable Modifications ...............................................................................................3 Reasonable Accommodations..........................................................................................4 Section 811 Supportive Housing for Persons with Disabilities Program ......................................4 Evolution of the Section 811 Program ...................................................................................5 Section 202 Housing for the Elderly or Handicapped.......................................................5 Section 202 Set Aside for Non-elderly Handicapped Households.....................................6 Creation of the Section 811 Program ...............................................................................8 Definition of Person with Disabilities in HUD Housing Programs ........................................9 The Section 811 Program Definition ...............................................................................9 The Definition in Other HUD Programs ........................................................................ 10 Capital Grants and Project Rental Assistance....................................................................... 11 Eligible Facilities .......................................................................................................... 12 Rental Assistance .......................................................................................................... 13 Supportive Services ...................................................................................................... 13 Tenant-Based Vouchers ....................................................................................................... 14 Section 811 Mainstream Vouchers ................................................................................. 15 Other HUD Housing Designated for Persons with Disabilities .................................................. 16 Public Housing ................................................................................................................... 17 Project-Based Section 8 Rental Assistance .......................................................................... 18 Section 8 Vouchers for Persons with Disabilities ................................................................. 18 Housing Financed by Low-Income Housing Tax Credits and HUD Block Grants ...................... 20 The Low-Income Housing Tax Credit.................................................................................. 20 The HOME Investment Partnerships Program ..................................................................... 21 The Community Development Block Grant Program........................................................... 22 Issues and Trends ...................................................................................................................... 23 Using Section 811 Funds with Low-Income Housing Tax Credits ....................................... 23 Housing Need for Persons with Disabilities......................................................................... 25 Homeless Persons with Disabilities ..................................................................................... 27 Legislation .......................................................................................................................... 28 Tables Table 1. Section 811 Funding Levels, FY2003 to FY2009 ......................................................... 16 Table A-1.Definitions of Disability Applicable to HUD Housing Programs................................ 30 Appendixes Appendix. Definitions of Disability Applicable to HUD Housing Programs............................... 30 Congressional Research Service . Section 811 and Other HUD Housing Programs for Persons with Disabilities Contacts Author Contact Information ...................................................................................................... 31 Congressional Research Service . Section 811 and Other HUD Housing Programs for Persons with Disabilities Introduction Persons with physical disabilities, developmental disabilities, or mental illnesses frequently face difficulty in finding suitable housing, together with supportive services (often referred to as person-directed or consumer-directed services), in which they can live as active members of their community. For those individuals with physical disabilities, it may be difficult to find rental units that are accessible, and some prospective residents with disabilities may face discrimination in their search for housing.1 Zoning laws may also prevent the construction of homes where persons with disabilities live together.2 In addition, the affordability of housing and services may be an issue. Individuals with disabilities may have low incomes due to the inability to work, the need for additional education and training to find suitable employment, or employer discrimination.3 Insufficient income can put the costs of in-home care and supportive services out of reach, and services are not always available in all states through programs such as Medicare and Medicaid.4 As a result of these limitations, among other causes, persons with disabilities may be institutionalized in nursing homes, psychiatric hospitals, or similar facilities rather than living independently.5 Those individuals not in such facilities may still live in group homes or small multifamily housing developments dedicated to persons with disabilities instead of on their own.6 However, national recognition of the need for appropriate housing for persons with disabilities gained support after the 1999 Supreme Court decision in the case of Olmstead v. L.C. In that case, two women who had spent years in a psychiatric hospital argued that their institutionalization constituted discrimination under the Americans with Disabilities Act. The Supreme Court agreed, finding that “[s]tates are required to provide community-based treatment for persons with mental disabilities when the State’s treatment professionals determine that such placement is appropriate, and the placement can be reasonably accommodated ... ”7 Shortly after the ruling in Olmstead, on February 1, 2001, President Bush announced the “New Freedom Initiative,” an effort through multiple federal agencies, in cooperation with the states, to ensure full participation in society of persons with disabilities. Part of the New Freedom Initiative was an Executive Order implementing the Olmstead decision to ensure that all people with disabilities, not just those with mental illnesses, benefit from community-based treatment.8 However, for many states and 1 See, for example, Margery Austin Turner, Carla Herbig, Deborah Kaye, Julie Fenderson, and Diane Levy, Discrimination Against Persons with Disabilities: Barriers at Every Step, U.S. Department of Housing and Urban Development, May 2005, pp. 2-4, http://www.huduser.org/Publications/pdf/DDS_Barriers.pdf. 2 Claudia Center et al., “The Garrett History Brief,” Journal of Disability Policy Studies 12, no. 2 (2001): 72-73 (hereafter “The Garrett History Brief”). 3 See, for example, O’Day, Bonnie, and Marcie Goldstein. “Advocacy Issues and Strategies for the 21st Century: Key Informant Interviews.” Journal of Disability Policy Studies 15, no. 4 (January 1, 2005): 244. 4 Laurie E. Powers, Jo-Ann Sowers, and George H. S. Singer, “A Cross-Disability Analysis of Person-Directed, LongTerm Services,” Journal of Disability Policy Studies 17, no. 2 (January 1, 2006): 72. 5 The Garrett History Brief, pp. 71-72. 6 See, for example, Ann O’Hara, “HR 5772—The Frank Melville Supportive Housing Investment Act of 2008— Promotes Community Integration for People with Disabilities,” Opening Doors, a Publication of the Technical Assistance Collaborative and the Consortium for Citizens with Disabilities Housing Task Force, May 2008, http://www.tacinc.org/Docs/HH/OpeningDoors/ODIssue31.pdf. 7 Olmstead v. L.C., 527 U.S. 581, 607 (1999). 8 Executive Order 13217, “Community-Based Alternatives for Individuals with Disabilities,” Federal Register, vol. 66, no. 120, June 21, 2001, p. 33155. Congressional Research Service 1 . Section 811 and Other HUD Housing Programs for Persons with Disabilities communities, it may be difficult to achieve the goal of treatment in a community environment without the availability of accessible and affordable housing. 9 The federal government makes available funds to finance subsidized rental housing for persons with disabilities primarily through the Department of Housing and Urban Development (HUD). The Section 811 Supportive Housing for Persons with Disabilities program is the only federal program that funds supportive housing exclusively for persons with disabilities. However, the Section 811 program is not the only source of funds to provide housing units for persons with disabilities. Over the years, a number of other HUD programs have been used to fund housing units dedicated to persons with disabilities, and many of those units are still in service. These programs include the Section 202 Supportive Housing for the Elderly program, Public Housing, the project-based Section 8 rental assistance program, and the Section 8 voucher program. In recent years, federal block grant programs—the Community Development Block Grant and HOME Investment Partnerships program—have been a source of funds used by states and local communities to develop and rehabilitate housing for persons with disabilities. Another source of funds is the Low Income Housing Tax Credit, administered by the Internal Revenue Service, through which state governments have the discretion to prioritize housing for persons with disabilities. This report describes how federal funds are used to develop housing designated for persons with disabilities. It also discusses current issues surrounding housing for persons with disabilities, including mixed financing arrangements, worst case housing needs, persons with disabilities who are homeless, and legislation in the 110th Congress. Housing for Persons with Disabilities and the Fair Housing Act This report discusses federal programs that provide funds to develop affordable rental housing units specifically for persons with disabilities. Individuals with disabilities may also live in housing that has not been specifically designed for their needs, however. The Fair Housing Act (FHA), enacted as part of the Civil Rights Act of 1968, contains provisions that are meant to ensure that persons with disabilities may obtain accessible rental housing even in facilities not specifically designed for them. The FHA was created to prevent discrimination in the provision of housing based on “race, color, religion, and national origin.”10 In 1988, the Fair Housing Amendments Act (P.L. 100-430) amended the FHA to prevent discrimination based on “handicap.” The Fair Housing Act defines a “handicap” as (1) having a physical or mental impairment that substantially limits one or more major life activities, (2) having a record of such impairment, or (3) being perceived as having 9 See, for example, Linda Velgouse and Molly Dworken, Olmstead Update, Presentation for the American Association of Homes and Services for the Aging Annual Meeting, October 2002. 10 The Fair Housing Act is codified at Title 42, Chapter 45 of the United States Code. See sections 3601-3619. For more information about the Fair Housing Act, see CRS Report 95-710, The Fair Housing Act: A Legal Overview, by David H. Carpenter. Congressional Research Service 2 . Section 811 and Other HUD Housing Programs for Persons with Disabilities such impairment.11 In addition to prohibiting discrimination against persons based on handicap, the FHA imposes affirmative duties on housing providers. Under the Fair Housing Amendments Act of 1988, if a landlord fails to follow certain requirements to make housing accessible to persons with disabilities, it is considered discrimination. In the area of new construction, beginning 30 months after implementation of P.L. 100-430 (in 1988), it became unlawful for multifamily housing developers to design and construct housing of four or more units that fails to: (1) have common areas that are accessible and useable by persons with disabilities, (2) have doors wide enough to accommodate wheelchairs, and (3) include units with accessible routes through the unit; bathrooms and kitchens that are wheelchair accessible; electrical outlets, light switches and thermostats that are accessible; bathrooms with reinforcements where grab bars may be installed; and kitchens and baths that may be maneuvered through with a wheelchair.12 For units in older facilities, or in units not covered by the FHA, the Fair Housing Amendments Act recognized that modifications to units may be necessary to make them accessible to persons with disabilities. Under the law, it is discriminatory for landlords to refuse to allow tenants to make physical changes to the premises—referred to as “reasonable modifications”—where changes are necessary to afford tenants full enjoyment of the premises.13 In addition, the law gives tenants the right to ask their landlords for “reasonable accommodations” in the rules, policies, practices, or services that ordinarily apply to tenants living in rental property. It is considered discrimination under the FHA for a landlord to refuse to make a reasonable accommodation where it is necessary to give residents with disabilities an equal opportunity to use and enjoy their dwelling unit.14 Reasonable modifications and reasonable accommodations are described below. Reasonable Modifications While the FHA may require landlords to permit tenants to make reasonable modifications to the rental premises, the statute neither defines the term “reasonable modification,” nor the circumstances under which modifications might be required to ensure a tenant’s enjoyment of the premises. However, HUD and the Department of Justice (DOJ) have published joint guidance describing reasonable modifications.15 They may include changes to a rental unit such as widening doorways, installing a ramp or grab bars, or lowering cabinets.16 The HUD/DOJ guidance requires that there be an identifiable relationship between the tenant’s disability and the modification; if there is not, a landlord may refuse to allow the alteration.17 Landlords are not required to pay for modifications, and, if the modifications would prevent a future tenant’s enjoyment of the premises, the landlord may require tenants to restore the unit to its original state when moving out. In order to ensure that this occurs, a landlord may require tenants to deposit 11 42 U.S.C. § 3602(h). 42 U.S.C. § 3604(f)(3)(C). 13 42 U.S.C. § 3604(f)(3)(A). 14 42 U.S.C. § 3604(f)(3)(B). 15 Examples of reasonable modifications are also in regulation. See 24 C.F.R. § 100.203. 12 16 See Reasonable Modifications Under the Fair Housing Act, Joint Statement of The Department of Housing and Urban Development and the Department of Justice, March 5, 2008, p. 4, http://www.hud.gov/offices/fheo/disabilities/ reasonable_modifications_mar08.pdf. 17 Ibid., p. 3. Congressional Research Service 3 . Section 811 and Other HUD Housing Programs for Persons with Disabilities funds into an escrow account to pay for restoration.18 However, landlords cannot require tenants to pay a higher security deposit because of modifications to the property. While no federal program exists specifically to help tenants with disabilities pay for home modifications, funding may be available at the state or local level. For example, some states make funds available through their Medicaid waiver programs to allow persons with disabilities to make modifications.19 States may also set up grant or loan programs using state, local, or federal funds to assist with home modifications. Sources of federal funds that could be used for this purpose include the HOME Investment Partnerships block grant and the Community Development Block Grant (these programs are described later in this report). Reasonable Accommodations In addition to permitting tenants to make reasonable modifications to their units under the FHA, landlords may be required to make “reasonable accommodations” to ensure that tenants with disabilities may use and enjoy their dwelling. Reasonable accommodations may involve altering or making an exception to rules, policies, practices, or services that would otherwise apply to tenants, but when applied to an individual with a disability may prevent them from maintaining their tenancy or fully enjoying use of the facility. 20 As with reasonable modifications, there must be a relationship between the disability and the requested accommodation. However, unlike reasonable modifications, a tenant may request an accommodation that will involve a cost to the housing provider, although the requested accommodation cannot pose an undue financial or administrative burden, and cannot fundamentally alter the provider’s operations.21 If the requested accommodation is reasonable, tenants cannot be charged an extra fee or be required to make a deposit into an escrow account. Examples of reasonable accommodations include changing the manner of rental payment for a tenant with a mental illness so that he or she need not leave the apartment or allowing assistance animals in a building that does not otherwise allow pets. Section 811 Supportive Housing for Persons with Disabilities Program The Section 811 Supportive Housing for Persons with Disabilities program is administered by HUD and funds permanent supportive housing for very low-income persons with disabilities (those with household income at or below 50% of area median income). The program primarily provides capital grants and project rental assistance to nonprofit housing developers. Section 811 capital grants can be used for construction, rehabilitation, or acquisition of buildings to be used as housing for persons with disabilities. 22 Nonprofit developers need not repay the capital grants as 18 24 CFR § 100.203(a). Terry Moore and Beth O’Connell, Compendium of Home Modification and Assistive Technology Policy and Practice Across the States, Abt Associates, prepared for the U.S. Department of Health and Human Services, October 27, 2006, http://www.hcbs.org/files/138/6854/assistive_tech_final_report.pdf. 20 See Reasonable Accommodations Under the Fair Housing Act, Joint Statement of the Department of Housing and Urban Development and the Department of Justice, May 17, 2004, http://www.nhl.gov/offices/fheo/library/ huddojstatement.pdf. 21 Ibid., pp. 8-9. 22 42 U.S.C. § 8013(b). 19 Congressional Research Service 4 . Section 811 and Other HUD Housing Programs for Persons with Disabilities long as the housing is available and affordable for at least 40 years to very low-income persons with disabilities. The Section 811 program also distributes tenant-based vouchers—sometimes referred to as “mainstream vouchers”—that can be used by eligible tenants to rent housing in the private market. Evolution of the Section 811 Program The Section 811 Supportive Housing for Persons with Disabilities program was created as part of the Cranston-Gonzalez Affordable Housing Act of 1990 (P.L. 101-625). Until enactment of Cranston-Gonzalez, HUD had funded housing units for persons with disabilities largely through the Section 202 Supportive Housing for the Elderly program, created in 1959. Over the years, the individuals with disabilities who were eligible for Section 202 housing expanded from persons with physical disabilities to those with developmental disabilities and eventually to individuals with chronic mental illnesses. Over time, Congress also began to implement a split between housing for elderly residents23 and those with disabilities, ultimately resulting in creation of the Section 811 program. However, units for persons with disabilities that were created as part of the Section 202 program continue to be financed through that program and governed by its rules, so the history of their development continues to be important.24 Section 202 Housing for the Elderly or Handicapped The Section 202 program was created as part of the Housing Act of 1959 (P.L. 86-372) and provided low-interest loans to non-profit developers to construct multifamily housing for families where one or more person is age 62 or older. Section 202 did not initially provide housing for persons with disabilities. Five years after the creation of the Section 202 program, the Housing Act of 1964 (P.L. 88-560) added non-elderly “handicapped” individuals and families to the definition of “elderly families” under the Section 202 program. At the time, “handicapped” was defined by P.L. 88-560 as a physical impairment (1) expected to be of long-continued or indefinite duration, (2) that substantially impedes the ability to live independently, and (3) is of such a nature that the ability to live independently could be improved by more suitable housing conditions. A mental or developmental disability was not included in the definition. The Housing Act of 1964 also changed the name of the Section 202 program to “Housing for the Elderly or Handicapped.” However, the law did not require that a certain number of units be set aside for tenants with disabilities or direct that units be made accessible. Very few tenants who were considered non-elderly handicapped participated in the Section 202 program between 1964 and 1974. Although data were not collected, HUD estimated that through 1977, less than 1% of Section 202 tenants were non-elderly handicapped, 25 and that “the vast majority of Section 202 projects [were] not designed to serve the handicapped ... ”26 23 Although other terms may be preferred, this report uses the term “elderly” to refer to those individuals eligible for HUD-assisted housing for persons age 62 or older because it is the term used by HUD. 24 For more information about the Section 202 program, see CRS Report RL33508, Section 202 and Other HUD Rental Housing Programs for Low-Income Elderly Residents, by Libby Perl. 25 U.S. Department of Housing and Urban Development, Housing for the Elderly and Handicapped: The Experience of the Section 202 Program from 1959 to 1977, January 1979, p. 36 (hereafter Housing for the Elderly and Handicapped). 26 Ibid., p. 67. Congressional Research Service 5 . Section 811 and Other HUD Housing Programs for Persons with Disabilities The Housing and Community Development Act of 1974 (P.L. 93-383) removed the word “physical” from the term “physical impairment” in the definition of handicap and also expanded the definition of handicap to include developmental disabilities. 27 The removal of the word “physical” was meant to make persons with mental illnesses eligible for Section 202 housing.28 However, the development of housing for this population did not occur immediately. In 1978, in the Conference Report accompanying the Housing and Community Development Amendments (P.L. 95-557), Congress acknowledged that “there has been some confusion over whether chronically mentally ill persons are eligible for section 202 housing,” and that it was “never the intent of Congress to exclude chronically mentally ill persons from participating in the section 202 program.”29 The report went on to direct HUD to develop criteria and standards for providing housing for this population. In 1978, HUD undertook a demonstration program together with the Department of Health and Human Services (then the Department of Health, Education, and Welfare), “to better understand the housing needs of the mentally ill.”30 In FY1982, the Section 202 program funded housing for chronically mentally ill individuals for the first time, making funds available for group homes and independent living facilities. 31 Section 202 Set Aside for Non-elderly Handicapped Households In 1978, the Housing and Community Development Amendments (P.L. 95-557) required that, beginning in FY1979, at least $50 million of the amounts available for loans under the Section 202 program be devoted to housing for non-elderly “handicapped” individuals.32 The new requirement was meant to “meet special needs [of the handicapped] which have not been adequately addressed in Section 202 projects.”33 Until enactment of the Housing and Community Development Amendments of 1978, a small number of accessible units in larger Section 202 developments designed primarily for elderly residents had been dedicated to persons with disabilities (about 1% of units). These Section 202 developments tended to be large multifamily rental buildings—the average number of units in Section 202 developments built prior to enactment of the Housing and Community Development Act of 1974 was 135.34 HUD suggested that one of the reasons for the low number of units designed for persons with disabilities through 27 See Section 210 of P.L. 93-383. “A person shall also be considered handicapped if such person is a developmentally disabled individual as defined in section 102(5) of the Developmental Disabilities Services and Facilities Construction Amendments of 1950.” 28 See discussion in U.S. Department of Housing and Urban Development, Standards and Criteria for Housing for the Chronically Mentally Ill in the Section 202/8 Direct Loan Program, April 1983, pp. 1-3 (hereafter Standards and Criteria for Housing for the Chronically Mentally Ill). 29 Conference Report to accompany S. 3084, The Housing and Community Development Amendments of 1978, 95th Cong., 2nd sess., H.Rept. 95-1792. 30 Standards and Criteria for Housing for the Chronically Mentally Ill, p. 2. 31 See U.S. Department of Housing and Urban Development, “Section 202 Loans for Housing for the Elderly or Handicapped; Announcement of Fund Availability, FY1982,” Federal Register, vol. 47, no. 76, April 20, 1982, pp. 16892-16894. 32 Housing provided for persons with disabilities through the Section 202 program is sometimes referred to as “Section 202(h)” housing, referring to the subparagraph that was added to the Section 202 statute by P.L. 95-557. 33 See Senate Committee on Banking, Housing, and Urban Affairs, S.Rept. 95-871, Senate report to accompany S. 3084, the Housing and Community Development Act of 1977, 95th Cong., 2nd sess., May 15, 1978. The Senate bill became the Housing and Community Development Amendments of 1978 (P.L. 95-557). 34 Housing for the Elderly and Handicapped, pp. 16-17. Congressional Research Service 6 . Section 811 and Other HUD Housing Programs for Persons with Disabilities the Section 202 program was the additional cost of making units accessible, putting project sponsors at a disadvantage in applying for funds.35 The set-aside was meant to address this issue. In addition, P.L. 95-557 specified that non-profit sponsors of Section 202 housing were expected to develop innovative ways of providing housing for persons with disabilities, including group homes and independent living complexes integrated into the surrounding community, together with supportive services tailored to resident needs. 36 After enactment of the Housing and Community Development Amendments of 1978 with its set-aside for housing for persons with disabilities, the number of developments built specifically for these households (versus elderly households) increased.37 HUD estimates that by the end of the 1980s, approximately 10% of units funded through the Section 202 program were in facilities designed for persons with disabilities.38 Nearly ten years after enactment of the Housing and Community Development Amendments, another law made changes to the way in which persons with disabilities were served under the Section 202 program. The Housing and Community Development Act of 1987 (P.L. 100-242) amended the law to require that 15% of the total amount available for Section 202 loans be set aside for persons with disabilities rather than the $50 million established in the 1978 Act (P.L. 95557). In appropriations acts from FY1988 through FY1991, Congress went beyond the statutory set aside, however, and required that 25% of Section 202 loan authority be used for housing for persons with disabilities.39 Another change made by P.L. 100-242 involved rental subsidies for those Section 202 units for persons with disabilities. Since the enactment of the Housing and Community Development Act of 1974, Section 202 units for both elderly and disabled residents had been subsidized through the project-based Section 8 rental assistance program. However, there was a growing acknowledgment that Section 8 rental assistance was not sufficient to support units for persons with disabilities because it did not take account of the higher cost of providing housing in smaller developments such as group homes. 40 P.L. 100-242 specified that rental assistance in projects for persons with disabilities should be provided through a separate subsidy program based on the “total actual and necessary reasonable costs of developing and operating the project,” not including, however, the costs of supportive services.41 The FY1989 HUD Appropriations Act (P.L. 100-404) provided rental assistance funds for housing for persons with disabilities separately from those for elderly residents. This separate rental assistance was the means of 35 U.S. Department of Housing and Urban Development, FY1980 Budget Justifications, p. K-3. 36 See H.Rept. 95-1161, House Committee on Banking, Finance, and Urban Affairs Report to accompany H.R. 12433, The Housing and Community Development Amendments of 1978, 95th Cong., 2nd sess. Portions of H.R. 12433 were inserted in the Senate version of the Housing and Community Development Amendments (S. 3084) which was enacted as P.L. 95-557. 37 House Committee on Aging, Subcommittee on Housing and Consumer Interests, The 1988 National Survey of Section 202 Housing for the Elderly and Handicapped, 101st Cong., 1st sess., December 1, 1989, p. 99. 38 U.S. Department of Housing and Urban Development, Evaluation of Supportive Housing Programs for Persons with Disabilities, July 1995, p. 8, http://www.huduser.org/Publications/pdf/suphous1.pdf. 39 See H.Rept. 100-498, Conference Report to accompany H.J.Res. 395, a joint resolution making continuing appropriations for FY1988; P.L. 100-404, the FY1989 HUD Appropriations Act; P.L. 101-144, the FY1990 HUD Appropriations Act; and P.L. 101-507, the FY1991 HUD Appropriations Act. 40 House Committee on Banking, Finance, and Urban Affairs, H.Rept. 100-122, to accompany H.R. 4, the Housing, Community Development, and Homeless Prevention Act of 1987, 110th Cong., 1st sess., June 2, 1987. 41 See Section 162 of P.L. 100-242. Congressional Research Service 7 . Section 811 and Other HUD Housing Programs for Persons with Disabilities subsidizing Section 202 units for persons with disabilities until the creation of the Section 811 program. 42 Creation of the Section 811 Program The incremental separation of housing for persons with disabilities from housing for elderly residents that began in 1978 with a set aside in the Section 202 program and continued with separate rental assistance in 1987 was made permanent in the Cranston-Gonzalez National Affordable Housing Act of 1990 (P.L. 101-625). Congress completely separated housing for persons with disabilities from the Section 202 program by creating the Section 811 Supportive Housing for Persons with Disabilities program. Not only did P.L. 101-625 separate the housing for persons with disabilities program from the housing for the elderly program, it also changed the way in which units would be financed under both the Section 202 and Section 811 programs. Until the enactment of P.L. 101-625, units created through the Section 202 program had been financed with a combination of loans and project-based Section 8 rental assistance contracts. P.L. 101-625 instituted a method of financing in which Section 202 and Section 811 developments would be financed through capital grants rather than loans. As long as units remain affordable to very low-income residents for at least 40 years, project owners need not repay the capital grants. The law also created a new form of rental assistance similar to Section 8, called PRAC, or project rental assistance contracts. In addition, the law instituted a new way of determining development cost limitations for both Section 202 and Section 811 facilities. The new method was to take account of special design features for persons with disabilities and congregate space for supportive services, among other factors. The provisions creating the Section 811 program originated in the Senate version of the bill (S. 566) that would become the Cranston-Gonzalez National Affordable Housing Act. The Senate Banking Committee, in its report regarding the bill, described the reasons behind creating a program separate from Section 202: The Committee believes that separation of the programs for elderly and persons with disabilities would further the goal of developing a program that meets the housing and related needs of nonelderly persons with disabilities. A separate program would spur the development of a bureaucracy knowledgeable about and sensitive to the special needs of tenants with disabilities, needs which can differ from those of many elderly residents. ... A separate program would also create an institutional voice for housing concerns that are particular to this constituency.43 The report also stressed the importance of changing the terminology used to refer to persons served through the Section 811 program, replacing “handicapped persons” with “persons with disabilities.”44 Community integration was another important goal of the new Section 811 program. In the years leading up to the enactment of P.L. 101-625, group homes and other facilities dedicated only to those persons with disabilities had been the focus of housing funded 42 The Section 202 units funded with this new rental assistance are sometimes called “Section 202/162 PACs,” referring to the section of the Housing and Community Development Act of 1987, as well as the new “project assistance contracts” created by P.L. 100-242. 43 S.Rept. 101-316, Report of the Senate Committee on Banking, Housing, and Urban Affairs, to accompany S. 566, the National Affordable Housing Act, 101st Cong., 2nd sess., June 8, 1990, p. 148. 44 Ibid. Congressional Research Service 8 . Section 811 and Other HUD Housing Programs for Persons with Disabilities through the Section 202 set aside. Under the Section 811 program, however, the HUD Secretary was to look to a variety of housing options, including scattered units in multifamily housing developments, condominiums, and cooperative housing. Cranston-Gonzalez authorized capital grants for the new Section 811 program at $271 million for FY1992 and project rental assistance at $246 million. In FY1992, Congress funded the new Section 811 program by appropriating $103 million for capital grants and $100 million for new project rental assistance contracts (P.L. 102-139). The Section 811 program was last authorized from FY2001 through FY2003 at “such sums as necessary” as part of the American Homeownership and Economic Opportunity Act of 2000 (P.L. 106-569). (For recent Section 811 funding levels, see Table 1 at the end of this section.) Definition of Person with Disabilities in HUD Housing Programs Resident eligibility for Section 811 housing is based on both income and disability status. The population served by the program, according to the statute, are very low-income persons with disabilities (those with incomes at or below 50% of area median income). Families of persons with disabilities are included in the definition, so that households composed of one or more persons, at least one of whom is an adult with a disability, may be served by the program.45 The way in which the Section 811 program defines “person with disabilities” differs in some ways from the way HUD defines “person with disabilities” in other programs. This section describes the definition in the Section 811 program, the Section 8 and Public Housing programs, and the Section 202 program. For a table comparing the definitions, see Appendix. The Section 811 Program Definition Under the Section 811 statute, a person with disabilities is defined as an individual having a physical, mental, or emotional impairment: (1) that is expected to be of long-continued and indefinite duration, (2) that substantially impedes his or her ability to live independently, and (3) is of such a nature that the ability to live independently could be improved by more suitable housing conditions.46 In addition, under the Section 811 statute, persons with developmental disabilities as defined under the Developmental Disabilities and Bill of Rights Act (P.L. 106-402) qualify for Section 811 housing.47 The regulations governing Section 811 elaborate further on the definition of “person with disabilities.”48 First, the regulation details what it means to be “developmentally disabled” (described in the section below) and specifies that a person with a “chronic mental illness” that seriously limits his or her ability to live independently and whose impairment could be improved by suitable housing meets the Section 811 definition of person with disabilities. The regulation goes on to state that persons with acquired immunodeficiency virus (HIV), alcoholism, or drug addiction may be considered disabled if they also have a disability as defined by the Section 811 45 42 U.S.C. § 8013(k)(2). Ibid. 47 42 U.S.C. § 15002(8). 48 24 C.F.R. § 891.305. 46 Congressional Research Service 9 . Section 811 and Other HUD Housing Programs for Persons with Disabilities statute. According to the regulation, “a person whose sole impairment is a diagnosis of HIV positive or alcoholism or drug addiction (i.e., does not meet the qualifying criteria in [the statute]) will not be eligible for occupancy in a section 811 project.”49 Developmental Disability According to Section 811 regulations—which mirror the Developmental Disabilities and Bill of Rights Act—a person has a developmental disability if he or she has a severe, chronic disability that (1) is attributable to a physical or mental impairment (or combination of physical and mental impairments); (2) manifests before age 22; (3) is likely to continue indefinitely, and (4) results in substantial functional limitations in at least three major life activities. Life activities are defined as • self care; • receptive and expressive language; • learning; • mobility; • self direction; • capacity for independent living; and • economic self-sufficiency. A fifth component of the definition is that the developmental disability reflects the need for individually planned and coordinated care, treatment, or other services for a lifetime or an extended duration. The Definition in Other HUD Programs The definition of the term “person with disabilities” in the Section 811 program differs somewhat from the definition for both the Section 8 and Public Housing programs, which are defined together in the same statute and regulation, 50 and properties developed under the Section 202 loan program, which is found in regulation.51 While the Section 8/Public Housing definition of person with disabilities includes the Section 811 statutory definition—a physical, mental, or emotional impairment and developmental disabilities—it also adds to the definition persons who are considered disabled under Title II of the Social Security Act.52 Neither the Section 811 statute nor the regulations governing the program include the Social Security definition of disability. Under the Social Security definition, a person is considered disabled if he or she is unable to work (“engage in any substantial gainful 49 HUD funds housing specifically for persons living with HIV/AIDS through the Housing Opportunities for Persons with AIDS (HOPWA) program. For more information about HOPWA, see CRS Report RL34318, Housing for Persons Living with HIV/AIDS, by Libby Perl. 50 The definition of person with disabilities for the Section 8 and Public Housing programs is at 42 U.S.C. § 1437a(b)(3) and 24 C.F.R. § 5.403. 51 24 C.F.R. § 891.505. 52 See 42 U.S.C. § 423(d). Congressional Research Service 10 . Section 811 and Other HUD Housing Programs for Persons with Disabilities activity”) due to a medically determinable physical or mental impairment that is expected to last at least 12 months or to result in death. A person may also be considered disabled under the Social Security Act definition if he or she is age 55 or older, is blind, and is unable to engage in substantial gainful activity. 53 The statute governing disability under Section 8 and Public Housing further specifies that the term person with disabilities “shall not exclude” those living with acquired immunodeficiency syndrome (AIDS) or conditions arising from its etiologic agent. Unlike the Section 811 regulation, the Section 8/Public Housing definition does not exclude persons whose only diagnosis is that of HIV positive. However, the Section 8/Public Housing regulation is similar to the Section 811 regulation in stating that an individual shall not be considered a person with disabilities based solely on drug or alcohol dependence. The term “handicapped person or individual” for purposes of facilities developed with Section 202 loans54—which contain units for persons with disabilities—is defined in regulation. The Section 202 program definition is very similar to the Section 811 definition, and differs only in the way in which it describes a person who is infected with HIV/AIDS. According to the regulation, those who are infected with HIV, and who are disabled as a result of the infection, are eligible for housing built through the Section 202 loan program. The type of housing for which those individuals would be eligible, according to the regulation, depends upon the nature of the person’s disability—i.e. housing that is designed for persons with physical disabilities, developmental disabilities, or chronic mental illnesses. Finally, like the law and regulations governing Section 811, Section 8, and Public Housing, Section 202 regulations make ineligible any person whose “sole impairment” is alcoholism or drug addiction. Capital Grants and Project Rental Assistance Most Section 811 funding is distributed as capital grants and project rental assistance to nonprofit housing sponsors (the program also funds tenant-based vouchers, described in the next section). With the capital grants, nonprofit grantees build or rehabilitate housing to be used for persons with disabilities and their families. HUD distributes the Section 811 capital grants through a twostep process. First, a formula is used to allocate available funds to the 51 local HUD offices based on the number of non-institutionalized persons within the jurisdiction of the local office who are between 16 and 64 years of age and have a disability. 55 Each of the 51 jurisdictions is ensured funding sufficient to support a minimum of ten Section 811 units. HUD then awards Section 811 grants through a competitive process in which nonprofit organizations submit applications, and awards are limited by the amount allocated to the local office. Grantees need not pay back the capital grants as long as the property remains affordable to very low-income tenants with disabilities (those with incomes at or below 50% of area median 53 For a more detailed discussion of the Social Security Act definition of “disability” see CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), by Scott Szymendera. 54 Non-elderly persons with disabilities do not reside in Section 202 developments funded through capital grants. 55 U.S. Department of Housing and Urban Development, “FY2008 SuperNOFA for HUD’s Discretionary Programs,” Federal Register, vol. 73, no. 92, May 12, 2008, p. 27320. The NOFA is available on the HUD website with different pagination at http://www.hud.gov/offices/adm/grants/nofa08/811sec.pdf (hereafter “FY2008 HUD NOFA”). Congressional Research Service 11 . Section 811 and Other HUD Housing Programs for Persons with Disabilities income) for at least 40 years.56 The project sponsors also receive rental assistance from HUD to make up the difference between the rent paid by residents and the costs of operating the housing development. In addition, project sponsors must ensure that residents in Section 811 housing receive appropriate supportive services. As of 2007, HUD reported that a total of 26,656 units had been built with Section 811 capital grants and were receiving rental assistance.57 This section of the report describes these components of the Section 811 program. Eligible Facilities The Section 811 statute governs the type of housing that may be provided through the program, but in some cases, the statutory definitions have been further refined through HUD regulation and policy. The physical design of Section 811 housing may take on several forms:58 • Group Home: The Section 811 statute defines a group home as a single-family residence designed for occupancy by not more than eight individuals with disabilities. However, HUD’s annual Notice of Funding Availability (NOFA) that guides applicants for Section 811 funds specifies that no more than six individuals with disabilities may live in a group home. 59 Bedrooms may be single or double occupancy, but in the latter case, only when requested by the residents.60 There must be at least one bathroom for every four residents, 61 and an additional bedroom may be provided for a staff person. 62 Project sponsors may not place more than one group home on a single site or on a site adjacent to another group home. 63 • Independent Living Facility: According to the Section 811 statute, an independent living facility has individual dwelling units with separate bedrooms, kitchens, and baths for each resident, with a maximum occupancy of 24 persons with disabilities per development (higher numbers may be allowed with approval from HUD). 64 However, the Section 811 NOFA further restricts the maximum number of persons in an independent living facility to 14 with some exceptions allowed. 65 The independent living units may be located on scattered sites, and a unit may be provided for a staff person. 66 • Condominium Projects: Condominium units are similar to independent living facilities, with separate bedrooms, baths and kitchens for each resident. Standards 56 42 U.S.C. § 8013(e)(1). U.S. Department of Housing and Urban Development, FY2007 Performance and Accountability Report, November 15, 2007, p. 439, http://www.hud.gov/offices/cfo/reports/2007/2007par.pdf. 58 42 U.S.C. § 8013(c)(1). 59 FY2008 HUD NOFA, p. 27325. 60 Ibid. 61 24 C.F.R. § 891.310. 62 FY2008 HUD NOFA, p. 27325. 63 42 U.S.C. § 8013(k)(1). 64 42 U.S.C. § 8013(k)(4). 57 65 FY2008 HUD NOFA p. 27325. Project sponsors may request an exception to the project size limitation if they can show site control. 66 Ibid. Congressional Research Service 12 . Section 811 and Other HUD Housing Programs for Persons with Disabilities for condominium units under the Section 811 program are not provided in statute or regulation, but are outlined in the annual HUD NOFA. The maximum number of units allowed on a site or scattered sites is the greater of 14 units or 10% of units in a development, not to exceed 24 units.67 Unlike independent living facilities, a unit may not be used by a staff person. Project sponsors may choose to serve residents that fall within one of three major disability categories—physical disability, developmental disability, and chronic mental illness—or any combination of the three. 68 In addition, with HUD approval, project sponsors may further restrict residency to a subcategory of disability that falls within one of these three categories. For example, a group house dedicated to individuals with developmental disabilities could choose specifically to serve those persons with autism (with HUD’s consent). However, if HUD approves the restriction, a project sponsor cannot deny occupancy to an otherwise qualified applicant who meets the definition of the broader disability category.69 For example, in the case of a group home for persons with autism, the owners could not deny a qualified application from a person with another developmental disability, but could deny a qualified application from a person with a physical disability. In order to qualify to restrict residency by categories of disability, applicants for Section 811 funds must explain why it is necessary to restrict residency, and why it is not possible to serve residents in a more integrated setting.70 Rental Assistance Nonprofit organizations that are awarded capital grants to build or rehabilitate Section 811 housing facilities also enter into contracts with HUD to receive project rental assistance (referred to as PRAC). The rental assistance is paid to project sponsors by HUD in order to make up the difference between the rent paid by tenants and the cost of operating the Section 811 housing facility.71 Residents in Section 811 housing must be “very low income” (with income at or below 50% of area median income), 72 and they pay the higher of 30% of their adjusted income or 10% of their gross income toward rent.73 The initial term of PRAC contracts is three years, and they are renewable on an annual basis subject to appropriations. Supportive Services Housing developed through Section 811 capital grants must be supportive housing, that is, owners must make supportive services available to residents to help them live independently. Supportive housing is a model used to assist a variety of populations for whom it might be difficult to maintain housing, not just persons with disabilities. These groups include elderly residents, families with young children whose parents are making the transition to work, formerly homeless individuals, and those living with HIV/AIDS. Services are to be tailored to the individual needs of residents and so depend upon the population being served. Specifically, the Section 811 statute 67 Ibid., pp. 27325-27326. Ibid., p. 27319. 69 Ibid. 70 Ibid., p. 27332. 71 42 U.S.C. § 8013(d)(2). 72 42 U.S.C. § 8013(d). 73 42 U.S.C. § 8013(d)(3). 68 Congressional Research Service 13 . Section 811 and Other HUD Housing Programs for Persons with Disabilities requires property owners to ensure the availability of supportive services to address the health (including mental health), and other individual needs of residents.74 However, Section 811 funds cannot themselves be used to fund supportive services for residents.75 Owners may provide supportive services directly to residents, or may coordinate the availability of services through outside agencies or service providers. Services may include assistance with activities of daily living; counseling for mental health issues, drug, or alcohol addictions; case management; and employment assistance. When organizations apply to HUD for Section 811 capital grants, they must submit a supportive services plan that has been certified by the appropriate state or local agency responsible for overseeing services to persons with disabilities as being well-designed to serve the needs of the prospective residents.76 The supportive services plans must include the following information (among other requirements): (1) a detailed description of the service needs of the population that will be served; (2) a list of community service providers that will provide services, and letters of intent from those providers; (3) the experience of the proposed service providers; (4) a description of how state and local agencies will be involved in the project; and (5) the applicant’s commitment to provide services for residents.77 While project sponsors are required to ensure that supportive services are available, they cannot require residents to accept them. Tenant-Based Vouchers Tenant-based rental assistance allows individuals and families to find rental housing on the private market rather than in specific housing developments. The rental assistance goes with the tenant rather than being tied to a specific housing unit. Rental assistance is provided in the form of a voucher, through which HUD pays a portion of a tenant’s rent to landlords who are willing to accept the voucher (federal law does not require landlords to accept vouchers). The Section 8 voucher program is the primary way in which HUD provides tenant-based rental assistance, although tenant-based assistance is available through other programs, including Section 811.78 In both programs, tenants with vouchers pay between 30% and 40% of their income toward rent and HUD pays the difference between the family’s contribution and the rent for the unit, subject to certain limits. This section of the report describes Section 811 vouchers for persons with disabilities; Section 8 vouchers for persons with disabilities are described later in the report. (For more information about the Section 8 program, see CRS Report RL32284, An Overview of the Section 8 Housing Programs, by Maggie McCarty). 74 42 U.S.C. § 8013(k)(3). FY2008 HUD NOFA, p. 27334. 76 Ibid. 77 FY2008 HUD NOFA, pp. 27332-27333. 75 78 For example, HUD’s Shelter Plus Care and Supportive Housing Programs make tenant-based rental assistance available for homeless individuals. For more information about these programs see CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds, by Libby Perl. Congressional Research Service 14 . Section 811 and Other HUD Housing Programs for Persons with Disabilities Section 811 Mainstream Vouchers The Housing and Community Development Act of 1992 (P.L. 102-550) made tenant-based rental assistance part of the Section 811 program by authorizing the use of vouchers for eligible households. 79 The vouchers, sometimes referred to as “mainstream vouchers,” are administered using the same rules that govern the Section 8 voucher program. Unlike Section 8 vouchers, however, these vouchers are funded through the Section 811 account for initial five-year terms (Section 8 vouchers are funded on an annual basis). The first year in which Congress set aside funding for mainstream vouchers was FY1997. The HUD Appropriations Act for that year (P.L. 104-204) specified that HUD could use up to 25% of the amount appropriated for the Section 811 program for five-year vouchers. In the first two years that the Section 811 vouchers were distributed, only public housing authorities (PHAs) could administer the vouchers, but beginning in FY1999, private nonprofit organizations were eligible to apply to administer them.80 HUD makes vouchers available through an annual Notice of Funding Availability (NOFA) process through which PHAs and private nonprofit organizations interested in administering the vouchers apply to HUD. Applicants are scored based on a number of factors, which include the number of persons with disabilities at or below poverty in the area to be served by the applicant as well as the existence of agreements with organizations that will provide supportive services to voucher holders.81 Since 2005, HUD has required voucher administrators (PHAs and private nonprofit organizations) to help persons with disabilities who have Section 811 vouchers to obtain supportive services if they request them, as well as to provide technical assistance to landlords in making reasonable accommodations or reasonable modifications.82 The NOFAs issued by HUD in FY1997-FY1999 specified that the Section 811 vouchers should remain available to disabled families during the initial funding term of the voucher (five years), but were silent on who could use the voucher if the original family left the program (either voluntarily or due to eviction or other non-voluntary reason) after the initial funding period was over. Advocates for persons with disabilities have pointed out that these vouchers may have been provided to non-disabled households after the original tenant left the program.83 However, in annual appropriations acts since FY2005, Congress has required that Section 811 vouchers be made available to disabled families upon turnover.84 Further, in 2004, HUD began to require that PHAs track the disability status of families using Section 811 vouchers and provide the records to 79 42 U.S.C. § 8103(d)(4). U.S. Department of Housing and Urban Development, “Mainstream Housing Opportunities for Persons with Disabilities FY1999 Funding Availability,” Federal Register, vol. 64, no. 44, March 8, 1999, p. 11303. 80 81 For more information on criteria used to select applicants, see, for example, U.S. Department of Housing and Urban Development, “Notice of Funding Availability for FY2005 Mainstream Housing Opportunities for Persons with Disabilities Program,” Federal Register, vol. 70, no. 211, November 2, 2005, pp. 66730-66732. 82 See Department of Housing and Urban Development Notice PIH-2005-5, “New Freedom Initiative, Executive Order 13217: ‘Community-Based Alternatives for Individuals with Disabilities,’ and the Housing Choice Voucher Program,” February 1, 2005, http://www.hud.gov/offices/adm/hudclips/notices/pih/files/05-5PIHN.doc (hereafter, “HUD Notice PIH-2005-5”). PIH-2005-5 was extended indefinitely by PIH Letter L-2007-01, http://www.hud.gov/offices/adm/ hudclips/letters/07-1PIHL.doc. 83 See, for example, the Consortium for Citizens with Disabilities, Letter to Josh B. Bolton, Director of the Office of Management and Budget, January 14, 2005. “[T]he CCD Housing Task Force believes there is a high likelihood that at least some of these precious 811 tenant based funds are being used to support non-disabled households.” 84 The first appropriations act to have this requirement was the FY2005 Consolidated Appropriations Act, P.L. 108447. Congressional Research Service 15 . Section 811 and Other HUD Housing Programs for Persons with Disabilities HUD. 85 Prior to 2004, HUD did not collect this information. As of 2007, HUD reported that a total of 14,836 Section 811 vouchers were funded through the Section 811 account.86 Table 1. Section 811 Funding Levels, FY2003 to FY2009 (dollars in thousands) Section 811 Capital Grants and PRACa Section 811 Vouchersb Total for Section 811c 2003 166,787 81,851 248,886 2004 173,721 74,904 249,092 2005 149,455 88,179 238,080 2006 152,603 78,269 231,268 2007 158,697 77,517 236,610 2008 161,655 74,745 237,000 2009 —d 87,000 250,000 Fiscal Year Source: Department of Housing and Urban Development Budget Justifications FY2005 through FY2009 and the FY2009 Omnibus Appropriations Act, P.L. 111-8. a. PRAC refers to “project-based rental assistance contracts.” Amounts for PRAC include renewals of existing contracts as well as rental assistance for new units. b. Amounts for Section 811 vouchers include funds to renew existing vouchers. c. The total may be slightly greater than the sum of funds allocated for capital grants, PRAC, and vouchers due to funds appropriated for the working capital fund that are included in the total. d. P.L. 111-8 did not specify a funding level for capital grants and PRAC. Other HUD Housing Designated for Persons with Disabilities While the Section 811 program is dedicated solely to persons with disabilities, HUD also funds housing for persons with disabilities through programs that serve all tenant populations, but that also give project owners the ability to designate buildings to special populations, including elderly persons and persons with disabilities.87 In addition to housing historically provided through the Section 202 program (described in the “Evolution of Section 811” section of this report), property owners that participate in the project-based Section 8 rental assistance program and Public Housing Authorities (PHAs) that administer the Public Housing program may choose to designate buildings specifically for elderly residents and residents with disabilities together (sometimes referred to as “mixed population” developments) or for residents with disabilities alone. In addition, the Section 8 voucher program sets aside housing vouchers specifically for persons with disabilities. 85 In a notice dated August 5, 2004, HUD noted that mainstream vouchers would be tracked in its data set. See Notice PIH-2004-13, “Codes for Special Programs Reported on the Family Report,” available at http://www.hud.gov/offices/ adm/hudclips/notices/pih/files/04-13PIHN.doc. 86 HUD FY2007 Performance and Accountability Report, p. 439. 87 Tenants with disabilities may also live in assisted housing units that are not specifically designated for their use. Congressional Research Service 16 . Section 811 and Other HUD Housing Programs for Persons with Disabilities Public Housing Public housing is the original federally assisted housing program for low-income families, created as part of the Housing Act of 1937 (P.L. 75-412). The program provides housing for very lowincome households (those with incomes at or below 50% of area median income) and requires tenants to pay 30% of their income toward rent. The Housing Act of 1956 (P.L. 84-1020) authorized the Public Housing Administration (a predecessor to HUD) to provide units specifically for low-income elderly individuals. 88 The first elderly-only public housing development was built by 1960.89 Beginning in 1961, the HUD definition of “elderly family” was amended to include individuals with disabilities of any age.90 Since then, persons with disabilities have lived in public housing facilities designated for elderly residents (defined as households where one or more person is age 62 or older). Public housing developments designated for elderly residents, and where a mixed population of elderly residents and residents with disabilities live together, have been controversial. During the early years of public housing for elderly persons, disabled residents made up only a small proportion of residents. The number of residents with disabilities living in public housing for the elderly began to increase in the 1980s and early 1990s for at least two reasons. First, individuals with mental illnesses were less likely to be institutionalized as a result of the availability of outpatient mental health care, and were therefore in need of affordable housing.91 A second factor was passage of the 1988 Fair Housing Act Amendments (P.L. 100-430). The amendments added persons with a “handicap” to the class of individuals protected from discrimination in the provision of housing. The definition of “handicap” included individuals with alcohol and drug addictions.92 Following these changes, Public Housing experienced an increase in the number of younger residents with disabilities, often with mental illnesses and addictions. Along with the increase, Public Housing Authorities reported a greater number of incidents of disruptive behavior, and some elderly residents reported feeling unsafe.93 Due to tension between elderly residents and residents with disabilities, in the Housing and Community Development Act of 1992 (P.L. 102-550) Congress allowed PHAs to designate buildings as elderly only, disabled only, or as mixed population facilities. 94 In 1996, The Public Housing Opportunity Extension Act of 1996 (P.L. 104-120) streamlined the process for designating public housing projects. If a PHA wants to change the composition of a building to elderly residents only or to residents with disabilities, it must submit a plan to HUD to ask for 88 Prior to this, HUD’s definition of elderly families did not include single individuals. 89 Frances Merchant Carp, A Future for the Aged, Victoria Plaza and Its Residents (Austin: University of Texas Press, 1966). 90 The Housing Act of 1961 (P.L. 87-70) made all households in which an adult member has a disability eligible for public housing. Prior to this, in the Housing Act of 1959 (P.L. 86-372), near-elderly households with an adult member with a disability were made eligible. Near-elderly households are those with an adult member age 50 and older. 91 See General Accounting Office (now the Government Accountability Office), Housing Persons with Mental Disabilities with the Elderly, GAO/RCED-92-81, August 1992, pp. 10-11, http://archive.gao.gov/d33t10/147294.pdf. 92 According to the House Judiciary Committee Report accompanying H.R. 1158, the Fair Housing Act Amendments of 1988, enacted as P.L. 100-430, the bill used the same definitions and concepts from the Rehabilitation Act of 1973 (P.L. 93-112), which included drug addiction and alcoholism as physical or mental impairments (see 28 CFR §41.31). However, under P.L. 100-430, handicap does not include “current, illegal use of or addiction to a controlled substance.” 93 Housing Persons with Mental Disabilities with the Elderly, p. 17. See, also, remarks of Representative Peter Blute, Congressional Record, daily edition, vol. 142 (February 27, 1996), p. H1274. 94 The provisions are codified at 42 U.S.C. § 1437e; the regulations are at 24 CFR §§ 945.101-945.303. Congressional Research Service 17 . Section 811 and Other HUD Housing Programs for Persons with Disabilities approval. If the plan is approved, PHAs cannot evict non-eligible residents. For example, if a PHA designates a building with a mix of elderly residents and residents with disabilities as elderly only, tenants with disabilities may not be evicted. If tenants want to move, however, PHAs may help them relocate. According to HUD data, of the 180 Public Housing projects that are designated for elderly tenants, tenants with disabilities, or both populations together, 25 projects set aside units for tenants with disabilities. 95 Project-Based Section 8 Rental Assistance Between 1974 and 1983, the Section 8 new construction and substantial rehabilitation program made rental assistance available to developers that were creating new and rehabilitated rental housing for low-income families. 96 From the inception of the program, owners were able to develop properties designated for use by elderly residents together with tenants with disabilities. The Housing and Community Development Act of 1992 (P.L. 102-550) gave owners of properties designed primarily for occupancy by mixed populations—elderly families together with tenants with disabilities—the ability to establish a preference for elderly families when selecting tenants.97 However, unlike Public Housing, most Section 8 properties may not completely exclude residents with disabilities. The statute requires owners that choose to create a preference for elderly residents to continue to reserve some units for households where an adult member has a disability and where the household is not considered elderly or near elderly (defined as at least 50 years old but below the age of 98). Specifically, owners are required to set aside the lower of the number of units occupied by disabled families in 99 or 10% of units. If owners are unable to rent the units reserved for elderly residents to eligible families, they may give a preference to near elderly families with an adult member who has a disability. 100 If owners are unable to rent units designated for non-elderly and non-near elderly persons with disabilities, they may rent them to near elderly persons with disabilities. Section 8 Vouchers for Persons with Disabilities In addition to housing vouchers made available through the Section 811 program (described earlier in this report), HUD has set aside Section 8 vouchers for families with an adult member who has a disability. The voucher portion of the Section 8 program was created in 1983 as part of the Supplemental Appropriations Act of 1984 (P.L. 98-181). Unlike project-based Section 8 rental assistance, which is tied to specific rental units, tenants may use Section 8 vouchers to rent any eligible housing unit. To be eligible, a unit must meet minimum housing quality standards and a family’s portion of the rent cannot exceed 40% of their income. 101 In addition, a landlord must agree to accept the voucher.102 95 HUD Designated Housing Status Report, http://www.hud.gov/offices/pih/programs/ph/dhp/designated.cfm. 96 The new construction and substantial rehabilitation program was created in P.L. 93-383; authority to enter into new contracts was suspended in P.L. 98-181. For more information on Section 8 housing, see CRS Report RL32284, An Overview of the Section 8 Housing Programs, by Maggie McCarty. 97 The provisions are codified at 42 U.S.C. §§ 13611-13620. 98 42 U.S.C. § 1437a(b)(3). 99 Specifically, the statute refers to the higher of the number of units occupied by individuals or families with disabilities on either October 28, 1992 or January 1, 1992. 42 U.S.C. § 13612(b). 100 42 U.S.C. § 13613. 101 This 40% cap on a tenant’s contribution is in effect only for the first year. After the first year, if rent increases and (continued...) Congressional Research Service 18 . Section 811 and Other HUD Housing Programs for Persons with Disabilities Congress appropriated funds for Section 8 vouchers for persons with disabilities, sometimes referred to as “designated housing vouchers,” in response to enactment of the Housing and Community Development Act of 1992 (P.L. 102-550). As discussed earlier, provisions in P.L. 102-550 permitted owners of Public Housing and project-based Section 8 developments where elderly residents and residents with disabilities lived together to either designate buildings as elderly only or to prioritize elderly tenants.103 Section 8 owners were given the authority to create a preference for elderly families in these designated buildings, though they could not exclude disabled families altogether. PHAs were given the authority to designate entire buildings as elderly only. Although PHAs cannot evict tenants with disabilities if a building is designated as elderly only, with attrition, eventually a building may have only elderly residents. These policy changes affected the ability of tenants with disabilities to live in these facilities. From FY1997 through FY2002, Congress appropriated funds for Section 8 vouchers in order to assist tenants with disabilities who would have been eligible to reside in those Section 8 and Public Housing developments prior to their designation as elderly only or elderly preference. PHAs applied for these designated housing vouchers, which they then provided to eligible tenants. In FY2008, for the first time since FY2002, Congress appropriated additional funds for designated housing vouchers.104 The FY2008 Consolidated Appropriations Act (P.L. 110-161) provided $30 million for Section 8 vouchers for tenants with disabilities affected by the designation or restriction of tenant populations to elderly only. Unlike Section 811 mainstream vouchers, Section 8 designated housing vouchers for persons with disabilities shall remain available to other disabled households upon turnover “to the extent practicable [emphasis added].”105 (Section 811 vouchers must be made available only to families where an adult member has a disability.) HUD defines the term “to the extent practicable” to mean that before a voucher can be provided to a non-disabled household, every eligible nonelderly disabled family on a PHA’s waiting list must have received a voucher, and that outreach must not have resulted in finding an eligible family. 106 As with Section 811 vouchers, PHAs must assist tenants who request help in finding supportive services, and provide technical assistance to landlords in providing reasonable accommodations and modifications. (...continued) the family wishes to continue to live in the unit, then the family can choose to contribute more than 40% of its income toward rent. 102 For more information about the Section 8 program, see CRS Report RL32284, An Overview of the Section 8 Housing Programs, by Maggie McCarty. 103 See Title VI, Subtitle B of P.L. 102-550 for Public Housing and Title VI, Subtitle D for Section 8. The law also gave authority to owners of Section 202, Section 221(d)(3), and Section 236 properties to continue to restrict occupancy to elderly families according to the rules in place at the time the projects were developed (see Section 658). 104 Amounts appropriated from FY1997 through FY2002 were $50 million in FY1997 (P.L. 104-204) and $40 million in each of FY1998 (P.L. 105-65), FY1999 (P.L. 105-276), FY2000 (P.L. 106-74), FY2001 (P.L. 106-377), and FY2002 (P.L. 107-73). 105 The phrase “to the extent practicable” appeared in appropriations laws beginning in FY2003 (P.L. 108-7) through FY2006 (P.L. 109-115). The FY2007 House-passed HUD appropriations bill (H.R. 5576) also contained this phrase, but a year-long continuing resolution was enacted in lieu of separate appropriations laws. The FY2008 HUD Appropriations Act did not contain this phrase. 106 HUD Notice PIH-2005-5. Congressional Research Service 19 . Section 811 and Other HUD Housing Programs for Persons with Disabilities Housing Financed by Low-Income Housing Tax Credits and HUD Block Grants Beginning in the 1980s, the federal government took a less direct role in the development of affordable housing. At the same time, the production and rehabilitation of housing at the state and local level began to increase. 107 This occurred, in part, due to the enactment of the Low-Income Housing Tax Credit (LIHTC) and the HOME Investment Partnerships program. These programs distribute funds to states and localities for the production of affordable housing. States and localities may, in turn, decide to target a portion of the funds from these programs to develop affordable housing for persons with disabilities. This section of the report describes the LIHTC and the HOME program, as well as the Community Development Block Grant (CDBG), a program created in 1974 to assist states and localities with economic development, including housing activities that benefit low- and moderate-income households. The Low-Income Housing Tax Credit The Low-Income Housing Tax Credit (LIHTC) was enacted as part of the Tax Reform Act of 1986 (P.L. 99-514). The program provides incentives for the development of affordable rental housing through federal tax credits administered by the Internal Revenue Service (IRS). The IRS allocates tax credits to states based on population, and states award the credits to developers to use as a source of financing for the development of affordable rental housing.108 The states, generally through their state housing finance agencies (HFAs), award the tax credits to housing developers through a competitive process that is based on state priorities as set out annually in their Qualified Allocation Plan (QAP). Developers may either retain the credits themselves or sell them in exchange for equity to fund a housing development. Developers of LIHTC-financed housing must ensure that at least 40% of the units are affordable to households with incomes at or below 60% of the area median income, or that at least 20% of units are affordable to households with incomes at or below 50% of the area median income. 109 The projects must remain affordable for at least 15 years, although there are incentives in place to encourage developers to maintain affordability for 30 years. Rent charged for the rent-restricted units in a development may not exceed 30% of an imputed income limitation—calculated based on area median incomes. In their Qualified Allocation Plans, states set forth the criteria they will use in selecting projects to receive the tax credits.110 By statute, states must prioritize LIHTC projects that serve the lowest income tenants for the longest period of time in their QAPs. In addition, the LIHTC statute requires states to consider certain criteria in determining how they will set housing priorities in the QAP. One of the ten criteria that states must consider is tenant populations with special 107 For more background on the evolution of federal housing assistance policy, see CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by Maggie McCarty et al. 108 For more information on the LIHTC, see CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit, by Mark P. Keightley. 109 26 U.S.C. § 42(g). 110 26 U.S.C. § 42(m)(1)(B). Congressional Research Service 20 . Section 811 and Other HUD Housing Programs for Persons with Disabilities needs. 111 Tenant populations with special needs may include persons with disabilities (others with special needs include individuals and families who are homeless, elderly individuals, or other populations in need of housing with supportive services).112 States may choose to make housing units for populations with special needs one of the priorities in the competition for tax credits in a number of ways.113 These methods include: • requiring developers to set aside a portion of units for special needs populations—for example, North Carolina requires that the greater of five units or 10% of units in each tax credit development be devoted to persons with disabilities or those who are homeless;114 • setting aside a certain dollar value or percentage of available tax credits for a specified population—for example, Illinois sets aside $2 million of the total available tax credits for developments where at least 50% of units serve persons with special needs;115 • developing a scoring system in the competition for tax credits that awards additional points for proposals that take account of certain special needs populations—for example, New Mexico awards 15 points in the tax credit competition to developers that propose to build housing in which at least 25% of units are dedicated to persons with special needs.116 The HOME Investment Partnerships Program The HOME Investment Partnerships program (referred to as the HOME program) is a block grant to states and local jurisdictions—referred to as “participating jurisdictions”—distributed via a formula for the purpose of developing both affordable rental housing and affordable housing for homeowners.117 The factors used to distribute HOME funds to eligible states and jurisdictions include population, the number of rental units occupied by households in poverty, housing overcrowding, the number of units with incomplete kitchens or plumbing, and the age of housing. 118 HOME funds can be used to build or rehabilitate housing, to provide tenant-based rental assistance, and to provide assistance to homeowners and homebuyers. Assistance must go 111 Until enactment of P.L. 110-289, the Housing and Economic Recovery Act of 2008, the LIHTC statute contained eight selection criteria. P.L. 110-289 added two more. See 26 U.S.C. §42(m)(1)(C). 112 See Joseph Guggenheim, Tax Credits for Low Income Housing (Glen Echo, MD: Simon Publications, 1996) p. 33. 113 For more information about how state QAPs promote housing for populations with special needs, see James Tassos, Housing Credit Policies in 2007 That Promote Supportive Housing, The Corporation for Supportive Housing and Enterprise Community Partners, http://www.practitionerresources.org/cache/documents/657/65721.pdf. The report was updated with an addendum for 2008. That report is available at http://documents.csh.org/documents/pubs/ QAPStudy2008Update.pdf. 114 Housing Credit Policies in 2007 That Promote Supportive Housing, p. 9. 115 Ibid., p. 10. 116 Ibid., p. 13. 117 The HOME program is codified at 42 U.S.C. §§ 12741-12756. For more information about HOME, see CRS Report R40118, An Overview of the HOME Investment Partnerships Program, by Katie Jones. 118 24 C.F.R. § 92.50(c). In general, in order to be considered a “participating jurisdiction” eligible for HOME funds, a locality must qualify for at least $750,000 under the HOME formula. 42 U.S.C. § 12746. All states receive allocations under the HOME formula. 42 U.S.C. § 12747(b)(2). Congressional Research Service 21 . Section 811 and Other HUD Housing Programs for Persons with Disabilities to low-income households (at least 90% of funds must assist those with incomes at or below 60% of area median income), and any housing provided must be affordable. Like funds provided to states through the LIHTC, states and localities that receive HOME funds have discretion in choosing the populations they wish to serve. Also like the LIHTC, jurisdictions that receive HOME funds develop a plan regarding how they will distribute funds. This is done through HUD’s Consolidated Plan process. Jurisdictions applying for funds from four HUD formula grant programs, including HOME,119 submit a single Consolidated Plan to HUD. The plan includes an assessment of community needs and a proposal to address those needs, using both federal funds and community resources. State and local plans must also contain a housing needs assessment, including the need for housing for persons with disabilities.120 In developing the plan, states and communities must adopt a citizen participation plan, through which they are encouraged to consult with citizens with disabilities. 121 States are further required to consult with organizations that provide services (including fair housing services) to persons with disabilities when preparing their consolidated plan. 122 After taking into consideration the needs of persons with disabilities, HOME recipient jurisdictions may choose to prioritize housing for persons with disabilities as part of their Consolidated Plans.123 In the tenant-based rental assistance portion of the program, the HOME regulations specify that recipient jurisdictions may choose to establish a preference for tenants with special needs, including persons with disabilities.124 Further, recipients of HOME funds may choose to target tenant-based rental assistance to individuals with a specific disability. In terms of new or rehabilitated rental housing that may be developed with HOME funds, communities can choose to develop not only multifamily rental housing and single family homes, but also transitional housing, single room occupancy projects, and group homes. 125 Some jurisdictions may find that these types of housing developments are well suited for tenants with disabilities. The Community Development Block Grant Program The Community Development Block Grant (CDBG) program was enacted as part of the Housing Act of 1974 (P.L. 93-383) with the purpose of developing viable urban communities by funding housing, community, and economic development activities that principally benefit low- and moderate-income households. 126 The CDBG program distributes 70% of total funds through formula grants to entitlement communities—central cities of metropolitan areas, cities with populations of 50,000 or more, and urban counties—and the remaining 30% goes to states for use in small, non-entitlement communities.127 The allocation of CDBG funds is determined through a formula that targets an area’s need for community development using a variety of factors 119 The other three programs are the Community Development Block Grant, Housing Opportunities for Persons with AIDS, and the Emergency Shelter Grants. 120 24 C.F.R. § 91.205 and § 91.305. 121 24 C.F.R. § 91.105 and § 91.115. 122 24 C.F.R. § 91.110. 123 24 C.F.R. § 91.215 and § 92.209. 124 24 C.F.R. § 92.209(c)(2). 125 24 C.F.R.§ 92.2. 126 42 U.S.C. § 5301(c). 127 42 U.S.C. § 5306. Congressional Research Service 22 . Section 811 and Other HUD Housing Programs for Persons with Disabilities including population, poverty, overcrowded housing, age of housing, and the lag in community growth.128 The CDBG program is subject to the same Consolidated Plan requirements as the HOME program (described previously) in which the needs of persons with disabilities must be taken into consideration. In addition, in response to the Bush Administration’s New Freedom Initiative, HUD issued guidance to assist CDBG recipients with “identifying the needs of persons with disabilities and targeting CDBG resources to meet those needs during the development of the jurisdictions’ consolidated plans.”129 While many of the purposes of CDBG funds involve the improvement of neighborhoods, the creation of public facilities, or the promotion of economic opportunity, funds may also be used to rehabilitate housing, including making housing accessible for persons with disabilities. CDBG funds may also be used to make public facilities accessible to persons with disabilities.130 In addition, communities may use CDBG funds for “public services,” which include such services as employment counseling. According to HUD, promoting economic opportunities for persons with disabilities through job training and employment counseling are valid uses of CDBG funds.131 Issues and Trends Using Section 811 Funds with Low-Income Housing Tax Credits Financing affordable housing, including housing for persons with disabilities, may require multiple streams of funding in order to support the design, construction, and ongoing operating costs of a project. In addition to federal funds provided through HUD programs, affordable housing developers may use mortgage revenue bonds, tax credits, and local housing trust fund resources, among other sources, to develop housing for low-income and special needs populations. While HUD funds once might have been sufficient on their own to develop an affordable housing project, that is rarely the case today. This is true for Section 811 developers, who often must bring together multiple sources of funding to develop a project. In 2000, in order to help Section 811 (and Section 202) developers bring together multiple financing sources, Congress enacted a law that makes the interaction of Section 811 funds and the Low-Income Housing Tax Credits (LIHTCs) more feasible by changing the definition of “private nonprofit organization” in the Section 811 statute. This change, and its implication for Section 811 developers, is described below. The value of LIHTCs are determined, in part, based on the cost of developing a property— referred to as the qualified basis.132 The costs of constructing, acquiring, and rehabilitating a 128 Ibid. 129 HUD Notice CPD-050-03, “Implementing the New Freedom Initiative and Involving Persons with Disabilities in the Preparation of the Consolidated Plan through Citizen Participation,” June 6, 2005, http://www.hud.gov/offices/adm/ hudclips/notices/cpd/05-3c.doc. 130 42 U.S.C. § 5305(a)(5). 131 HUD Notice CPD-050-03. 132 Specifically, a property’s qualified basis is determined as follows: (1) the cost of constructing, acquiring, or rehabilitating the property is calculated, (2) this amount is reduced by federal grants received by the developer, and (3) (continued...) Congressional Research Service 23 . Section 811 and Other HUD Housing Programs for Persons with Disabilities property (among other costs133) are included in calculating the qualified basis, but the amount must then be reduced by any federal grants received by the developer, which in turn reduces the value of the tax credits. Therefore, if a nonprofit developer were to receive a Section 811 capital grant, its value would be subtracted in calculating the qualified basis which could result in minimal LIHTCs. The Homeownership and Economic Opportunity Act (P.L. 106-569), enacted in 2000, allowed for-profit limited partnerships, where a nonprofit organization is the sole general partner, to be eligible Section 811 owners. The changed law allows a nonprofit Section 811 grantee to loan the Section 811 capital grant to the limited partnership. Under this arrangement, the Section 811 funds are no longer a “federal grant” to be subtracted in calculating the qualified basis, potentially increasing the value of LIHTCs. The change in the law to allow for-profit limited partnerships to own Section 811 housing developments has not immediately made mixed financing arrangements common, however. The transactions are complicated and may require extensive expertise in housing finance to make them work. HUD acknowledges that “most developers seek to avoid the use of federal grant financing in most LIHTC projects.”134 In addition, the treatment of Section 811 PRAC in tax credit transactions has been unclear. Although the IRS has created exceptions to the rule that federal grants do not count toward the qualified basis of a property for certain categories of rental assistance, Section 811 PRAC has not been among the exceptions. The programs that have been exempted from the requirement include Section 8 project-based rental assistance payments and public housing capital and operating funds, 135 the Native American Housing Block Grant Program,136 Rent Supplement and Rental Assistance Payments programs,137 and the Shelter Plus Care and Single Room Occupancy programs.138 Despite language in the Homeownership and Economic Opportunity Act of 2000 indicating that Congress intended Section 811 (and Section 202) assistance to be included in calculating qualified basis (rather than subtracted from it), the IRS has not issued a ruling that would be necessary to make this possible. 139 Another possible limitation in developing mixed finance projects using federal grants such as Section 811 together with the LIHTC was removed with passage of the Housing and Economic (...continued) the resulting value is then multiplied by the percentage of space in the housing development that is devoted to lowincome use. This percentage is the lower of either the “unit fraction”—the ratio of low-income units to all units in the building—or the “floor space fraction”—the ratio of square footage in low-income units to total square footage. 26 U.S.C. § 42(c). The qualified basis is then multiplied by the value of the tax credits—these are roughly either 9% or 4%—to determine the total annual value of the tax credits. 133 In addition to the costs of materials, construction, and/or rehabilitation, among the costs included in determining qualified basis are: contractor fees, developer fees, engineering fees and the cost of drawing up architectural specifications. Among the costs that are not included are the cost of land and fees associated with long-term financing. See Joseph Guggenheim, Tax Credits for Low Income Housing (Glen Echo, MD: Simon Publications, 1996) p. 37. 134 See HUD website, “Calculating the Qualified Basis,” http://www.hud.gov/offices/cpd/affordablehousing/training/ web/lihtc/calculating/qualifiedbasis.cfm. 135 26 C.F.R. § 1.42-16. 136 Rev. Rul. 2008-6. 137 Rev. Rul. 2002-65. 138 Rev. Rul. 98-49. 139 P.L. 106-569 amended the Section 811 statute to state that “[n]otwithstanding any other provision of law, assistance amounts provided under this section may be treated as amounts not derived from a Federal grant.” See Section 842. On September 17, 2003, the IRS issued a letter stating that it was reviewing the applicability of the LIHTC section of federal grants to PRAC under the Section 202 program. The letter is available at http://www.irs.gov/pub/irs-wd/040061.pdf. Congressional Research Service 24 . Section 811 and Other HUD Housing Programs for Persons with Disabilities Recovery Act of 2008 (P.L. 110-289). Under LIHTC law, developers may qualify for tax credits worth roughly 9% or 4%.140 Under previous LIHTC law, the higher 9% credit was available for new construction that was not federally subsidized, while the 4% credit was available for either federally subsidized new construction or existing buildings. The statutory definition of “federally subsidized” included below market federal loans (the structure used by limited partnerships to loan Section 811 capital grants).141 The fact that developers of federally subsidized buildings did not qualify for the higher tax credit made financing projects with the LIHTC less lucrative. Developers either had to accept the lower, 4% credit, or to set up a system through which federal grants were loaned to the project at a market rate of interest.142 However, P.L. 110-289 removed the phrase “below market federal loans” from the definition of federal subsidy in the LIHTC statute. This makes all federally subsidized new construction placed in service after the effective date of P.L. 110-289 eligible for 9% tax credits. The 9% credits are very competitive, 143 however, and it may still be difficult for Section 811 developers to obtain them. Housing Need for Persons with Disabilities According to both advocates for persons with disabilities and HUD, persons with disabilities have a need for affordable housing. Since 1991, HUD has regularly released reports (ten to date) on the worst case needs for affordable housing in the United States.144 HUD defines households with worst case housing needs as very low-income renter households (those households with incomes at or below 50% of area median income) that do not receive rental assistance and either (1) pay more than half their income toward rent, or (2) live in severely substandard housing.145 Substandard housing is measured using the American Housing Survey definition of housing with severe physical problems. These are varying degrees of problems with plumbing, heating, electrical wiring, and upkeep of the physical unit or public areas.146 Using data from the 2005 American Housing Survey, in its most recent report—Affordable Housing Needs 2005—HUD found that 5.99 million households had worst case housing needs, a statistically significant 140 These credit rates are not set exactly at 9% and 4%—they vary depending on the current interest rate used in the Department of the Treasury credit rate formula. For more information about this issue, see CRS Report RS22917, The Low-Income Housing Tax Credit Program: The Fixed Subsidy and Variable Rate, by Mark P. Keightley. 141 The statute also specifically exempted funds received under CDBG, HOME, and Native American Housing and Self Determination Act programs from the definition of federally subsidized, so those projects have been eligible for the 9% credit all along. 142 See U.S. Department of Housing and Urban Development, “Mixed Finance Development for Supportive Housing for the Elderly or Persons with Disabilities: Final Rule,” Federal Register vol. 70, no. 176, September 13, 2005, p. 54202. 143 See, for example, Liz Enochs, “Affordable Housing Equity: Developers Share Tips for Converting Projects That Fail to Win 9% LIHTCs into 4% Deals,” Affordable Housing Finance, July 2007, http://www.housingfinance.com/ahf/ articles/2007/jul/AFFORDABLE0707.htm. 144 For the most recent report see U.S. Department of Housing and Urban Development, Affordable Housing Needs 2005, May 2007, http://www.huduser.org/Publications/pdf/AffHsgNeeds.pdf (hereafter Affordable Housing Needs 2005). 145 HUD developed the definition using preference rules for admission to assisted housing. See Affordable Housing Needs 2005, p. 7. 146 For more information see Affordable Housing Needs 2005, pp. 85-86. Congressional Research Service 25 . Section 811 and Other HUD Housing Programs for Persons with Disabilities increase of 16% over the 5.18 million households that had worst case needs in 2003.147 This represented an increase from 4.89% of all U.S. households to 5.50% of all households. The Affordable Housing Needs 2005 report also included an estimate of the number of persons with disabilities who have worst case housing needs. Because disability status is not reported in the American Housing Survey, HUD used three sources of income as proxies to estimate households where a non-elderly adult member has a disability. These three proxies were: (1) Social Security and Railroad Retirement Benefits, (2) Supplemental Security Income (SSI), and (3) public assistance such as welfare. Using these three income sources as proxies, HUD estimated that there were 542,000 households with a non-elderly adult member with a disability that had worst case housing needs. 148 These estimates did not include households with children. Less than a year after releasing the Affordable Housing Needs 2005 report, however, HUD released a supplement in which it revised the estimate of households with a non-elderly adult who has a disability and that has worst case housing needs. 149 The supplement used an additional income proxy to arrive at an increased number of persons with disabilities with worst case housing needs over the number that had been estimated in the original report. In addition to Social Security/Railroad Retirement benefits, SSI, and public assistance, the supplemental report included cases where respondents to the American Housing Survey reported that they received Social Security Disability Insurance (SSDI), workers’ compensation, veterans’ disability payments, or other disability payments. Using these four income sources as a proxy for disability status, the HUD supplement estimated the number of households having a non-elderly adult member with a disability in two different categories: those households with children, and those without children. (The original Affordable Housing Needs 2005 report did not report the number of households with children and an adult with a disability.) Of very low-income households without children and an adult with a disability, HUD reported that 694,000 had worst case housing needs, making up 11.6% of all households with worst case housing needs (the original estimate in the Affordable Housing Needs 2005 report was 542,000). Of those very low-income households with children and an adult with a disability, the supplement estimated that 365,000 had worst case housing needs, making up 6.1% of all households with worst case housing needs. Nonetheless, HUD noted that even its updated estimates are an undercount of persons with disabilities who have worst case housing needs. 150 This is due to the fact that homeowners, homeless persons, and persons living in institutions are not part of the worst case needs calculation. The HUD supplement to its Affordable Housing Needs 2005 report was in part in response to an analysis commissioned by the Consortium for Citizens with Disabilities (CCD) Housing Task Force, a coalition of groups that advocates for persons with disabilities.151 The CCD report, whose author had been an author on previous HUD Affordable Housing Needs reports, like the 147 148 Ibid., p. 13. Ibid., p. 19. 149 U.S. Department of Housing and Urban Development, Housing Needs of Persons with Disabilities: Supplemental Findings to the Affordable Housing Needs 2005 Report, February 2008, http://www.huduser.org/Publications/pdf/ Affhsgneedsdis.pdf (hereafter Supplemental Findings to the Affordable Housing Needs 2005 Report). 150 Ibid., pp. 1-2. 151 Kathryn P. Nelson, The Hidden Housing Crisis: Worst Case Housing Needs Among Adults with Disabilities, Consortium for Citizens with Disabilities Housing Task Force, March 2008, http://www.tacinc.org/Docs/HH/ HiddenHousingCrisis.pdf. Congressional Research Service 26 . Section 811 and Other HUD Housing Programs for Persons with Disabilities HUD supplement, used the fourth income proxy—SSDI, workers’ compensation, veterans’ disability or other disability benefits—for estimating disability status. Unlike the HUD methodology, however, the CCD report used as an adjustment factor data on persons with disabilities from two other surveys, the Survey of Income and Program Participation and the National Health Interview Survey. According to the CCD report, these two surveys ask more questions about disability than the American Housing Survey. Using these adjusted data, the CCD report estimated that between 1.3 and 1.4 million childless non-elderly adults with disabilities had worst case housing needs, while between 840,000 and 960,000 households with children and a non-elderly adult with a disability had worst case housing needs.152 Homeless Persons with Disabilities Although homelessness in the United States has always existed, it became a more prevalent phenomenon in the 1970s and 1980s, when the homeless population began to grow and become more visible to the general public. Explanations for the growth in homelessness include the demolition of skid rows,153 the decreased availability of affordable housing generally, the reduced need for seasonal unskilled labor, the reduced likelihood that relatives will accommodate homeless family members, the decreased value of public benefits, and changed admissions standards at mental hospitals.154 Early in the current decade, attention was again turned to homeless individuals, this time to those persons who experience so-called “chronic homelessness,” when President Bush announced an initiative to end chronic homelessness within ten years. In the late 1990s, researchers identified chronically homeless individuals as those who have a disability (including those who suffer from mental illness and/or substance abuse disorders) and who have been homeless for long periods of time. 155 According to HUD, a person is chronically homeless if they have been continuously homeless for one year or have experienced four episodes of homelessness in the past three years.156 Estimates of the number of chronically homeless individuals as a percentage of the total homeless population range from 18% to 27%.157 Rates of mental health problems are estimated to exist in more than 60% of chronically homeless individuals, and more than 80% of individuals 152 Ibid. Peter H. Rossi, Down and Out in America: The Origins of Homelessness (Chicago: The University of Chicago Press, 1989), p. 33. 154 Ibid., pp. 181-194, 41. See, also, Martha Burt, Over the Edge: The Growth of Homelessness in the 1980s (New York: Russell Sage Foundation, 1992), pp. 31-126. 153 155 See Randall Kuhn and Dennis P. Culhane, “Applying Cluster Analysis to Test a Typology of Homelessness by Pattern of Shelter Utilization: Results from the Analysis of Administrative Data,” American Journal of Community Psychology 26, no. 2 (April 1998): 210-212. 156 24 C.F.R. § 91.5. 157 U.S. Department of Housing and Urban Development, The Third Annual Homeless Assessment Report to Congress, July 2008, p. 16, http://www.hudhre.info/documents/3rdHomelessAssessmentReport.pdf; Carol L. M. Caton, Carol Wilkins, and Jacquelyn Anderson, People Who Experience Long-Term Homelessness: Characteristics and Intervention, 2007 National Symposium on Homelessness Research, September 2007, p. 4-3, http://www.huduser.org/ publications/pdf/p4.pdf (hereafter People Who Experience Long-Term Homelessness: Characteristics and Intervention). Congressional Research Service 27 . Section 811 and Other HUD Housing Programs for Persons with Disabilities are estimated to have alcohol or drug problems.158 Medical problems, including HIV/AIDS, are also prevalent among chronically homeless individuals.159 Communities across the country have addressed chronic homelessness through a strategy called “housing first,” in which permanent supportive housing is found for homeless individuals prior to treatment of their illnesses and addictions. HUD makes funds available through its Homeless Assistance Grants for the construction or rehabilitation of new permanent supportive housing for chronically homeless individuals. 160 In the first four years after the announcement of President Bush’s initiative to end chronic homelessness, an estimated 37,500 new permanent supportive housing units were added to the stock of housing available for homeless individuals with disabilities.161 Legislation On March 23, 2009, a bill to amend the Section 811 program, the Frank Melville Supportive Housing Investment Act of 2009 (H.R. 1675) was introduced in the House. The bill is identical to a bill of the same name that was passed by the House in the 110th Congress, H.R. 5772. H.R. 1675 would make a number of changes to the Section 811 program. One of these would be to eliminate the funding of tenant-based rental assistance through the Section 811 program account. Advocates for persons with disabilities contend that Section 811 vouchers are poorly targeted and may not always be used to serve households with disabilities.162 Instead, existing and future vouchers would be funded through the Section 8 account. The bill would authorize sufficient Section 8 funds in FY2010 to support the number of Section 811 vouchers that were funded in FY2009. H.R. 1675 also would codify the requirement that Congress has inserted in recent appropriations acts requiring vouchers funded under the Section 811 program to be turned over to households where an adult member has a disability when the current voucher holders give them up. This requirement would also extend to any Section 8 vouchers for persons with disabilities that are currently funded or that may be funded in the future. Another proposed change under H.R. 1675 would reduce the concentration of persons with disabilities living in Section 811-funded housing by limiting the number of units in multifamily housing developed with Section 811 capital grants to 25% of the total units in the building. Due to the need to finance the remaining 75% of units, this limitation would also encourage 158 People Who Experience Long-Term Homelessness: Characteristics and Intervention, p. 4-4. 159 See, for example, D.P. Culhane, E. Gollub, R. Kuhn, and M. Shpaner, “The Co-Occurrence of AIDS and Homelessness: Results from the Integration of Administrative Databases for AIDS Surveillance, and Public Shelter Utilization in Philadelphia,” Journal of Epidemiology and Community Health 55, no. 7 (2001): 515-520. Marjorie Robertson, et al., “HIV Seroprevalence Among Homeless and Marginally Housed Adults in San Francisco,” American Journal of Public Health 94, no. 7 (2004): 1207-1217. Angela A. Aidala and Gunjeong Lee, Housing Services and Housing Stability Among Persons Living with HIV/AIDS, Joseph L. Mailman School of Public Health, May 30, 2000, http://www.nyhiv.org/pdfs/chain/CHAIN%20Housing%20Stability%2032.pdf. 160 For more information about these grants, see CRS Report RL33764, The HUD Homeless Assistance Grants: Distribution of Funds, by Libby Perl. 161 People Who Experience Long-Term Homelessness: Characteristics and Intervention, p. 4-23. 162 See, for example, Written Statement of Ann O’Hara, Consortium for Citizens with Disabilities Housing Task Force, for the hearing before the House Financial Services Committee, Subcommittee on Housing and Community Opportunity, H.R. 5772, The Frank Melville Supportive Housing Investment Act of 2008, 110th Cong., 2nd sess., June 20, 2008, http://financialservices.house.gov/hearing110/o%27hara062008.pdf. Congressional Research Service 28 . Section 811 and Other HUD Housing Programs for Persons with Disabilities developers to use other funding sources, such as the Low Income Housing Tax Credit (LIHTC), to supplement the Section 811 funding. This 25% limitation would not apply to group homes or independent living facilities. In cases where grantees combine Section 811 capital grants with funding from other sources such as LIHTCs for the development of multifamily housing, the bill would delegate the review and processing of the project to state or local housing finance agencies (HFAs) rather than HUD. Because HFAs are the agencies that administer tax credits, delegating the processing of the Section 811 capital grant to the HFA, together with the tax credit, is thought to be more efficient. This provision is similar to one that was enacted regarding the Section 202 Supportive Housing for the Elderly Program. The Housing and Economic Recovery Act of 2008 (P.L. 110-289) included a provision to direct HUD to delegate to state HFAs the ability to process Section 202 capital grants when developers also intend to use other funding sources. In addition, H.R. 1675 would create a Project Rental Assistance-Only Competitive Demonstration Program to encourage mixed finance developments where rental units for persons with disabilities would be interspersed with units for non-disabled households. The rental assistance awarded through the demonstration program, instead of subsidizing units developed through Section 811 capital grants, would be used to subsidize units of housing developed through LIHTCs, the HOME program, or projects developed with government funds from other sources. Under the demonstration program, only extremely low-income persons with disabilities would be eligible for the assisted units (those with incomes at or below 30% of area median income) and no more than 25% of units in LIHTC and HOME developments would be allowed to be set-aside for those households. The initial term of the rental assistance would be 15 years, although facilities would be required to operate for at least 30 years as supportive housing for persons with disabilities. The bill also would amend the definition of “person with disabilities” in the Section 811 program to include a person who meets the Social Security Act definition of disability. As noted earlier in this report, the current Section 811 definition does not reference the Social Security definition. In addition, the bill would expand the Section 811 definition to include those individuals who are living with HIV/AIDS consistent with the Public Housing and Section 8 programs. (See Appendix) Current Section 811 regulations state that a “person whose sole impairment is a diagnosis of HIV positive ... (i.e. does not meet the qualifying criteria in [the statute]) will not be eligible for occupancy in a section 811 project.” The proposed language would instead state that the term person with disabilities “shall not exclude persons who have the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome.” H.R. 1675 also would make clear that persons age 62 and older may not be considered a “person with disabilities” for purposes of the Section 811 program. Congressional Research Service 29 . Appendix. Definitions of Disability Applicable to HUD Housing Programs Table A-1.Definitions of Disability Applicable to HUD Housing Programs Provision Section 811 Section 8 and Public Housing Section 202 Loan Program Mental, Physical, or Emotional Impairment A physical, mental, or emotional impairment that is (1) expected to be of long-continued and indefinite duration, (2) substantially impedes a person’s ability to live independently, and (3) could be improved by more suitable housing conditions. Same. Same. Chronic Mental Illness A severe and persistent mental or emotional impairment. No Provision Same as Section 811. Developmental Disability A severe, chronic disability that (1) is attributable to a mental or physical impairment or a combination of mental or physical impairments, (2) manifests before age 22, (3) is likely to continue indefinitely, and (4) results in substantial functional limitations in three or more major life activities. Same. Same. Social Security Definition No provision Inability to engage in substantial gainful activity by reason of a physical or mental impairment which can be expected to result in death or to last for not less than 12 months. No Provision HIV/AIDS Status “A person infected with the human acquired immunodeficiency virus (HIV)” if they meet the definition of “person with disabilities” in the statute. “A person whose sole impairment is a diagnosis of HIV positive ... (i.e. does not meet the qualifying criteria in [the statute]) will not be eligible for occupancy in a Section 811 project.” The term person with disabilities “shall not exclude persons who have the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent...” “Persons infected with the human acquired immunodeficiency virus (HIV) who are disabled as a result of infection with the HIV are eligible for occupancy in Section 202 projects ...” Drug and/or Alcohol Addiction “A person whose sole impairment is a diagnosis of ... alcoholism or drug addiction ... will not be eligible for occupancy in a Section 811 project.” Substantially the same. Substantially the same. Source: 42 U.S.C. § 4013(k)(2) and 24 C.F.R. § 891.305 (Section 811); 42 U.S.C. § 1437a(b)(3)(E) and 24 C.F.R. § 5.403 (Section 8 and Public Housing); and 24 C.F.R. § 891.505 (Section 202). CRS-30 . Section 811 and Other HUD Housing Programs for Persons with Disabilities Author Contact Information Libby Perl Analyst in Housing Policy eperl@crs.loc.gov, 7-7806 Congressional Research Service 31