Because as important as our work together has been these last several decades, it’s about to become even more important. Around HUD, I’m known as a “numbers guy” and when it comes to the baby-boom generation, the numbers don’t lie.
In 20 years, more than 70 million Americans will have reached retirement age. By 2040, our senior population will have doubled.
That means more demand for home and community based services, more demand for transportation, and more demand for buildings and home that are accessible.
But even today, we face serious challenges, with our immediate housing needs having grown in the wake of economic crisis.
HUD just reported the largest increase in worst case housing needs in the survey’s history between 2007 and 2009. At the same time, we have a public housing system that is losing 10,000 units every year. And by the time I finish speaking, we will have lost another.
These challenges take place in the context of a very difficult fiscal situation.
President Obama has made clear that we can’t build the future on a mountain of debt. That is why he just forged a bipartisan budget deal for the current fiscal year that invests in our future while making the largest annual spending cut in our history.
Given the tough choices and difficult cuts that had to be made, many of HUD’s rental assistance priorities were protected in this budget. In fact, we were able to include at least some funding for new construction for Section 202—which is a direct result of your hard work and the progress we have made reforming this program, which I will get to in a moment.
With our FY 2012 budget, we have begun to lay out a comprehensive strategy to reform and renovate rental housing, based on feedback we heard from you—the singular focus of which is to strengthen our public and assisted housing stocks for the future.
To make this possible, we are pursuing new authority where it is needed and maximizing the use of existing authorities.
Some of the new authorities we are seeking include launching a rental assistance demonstration to preserve 255,000 homes supported by our public housing and so-called orphan programs.
The demonstration is just one piece of this strategy—and we want to work with you to shape it. We are also working with Treasury and USDA to enhance the Low-Income Housing Tax Credit, which was responsible about half of all multifamily production in the 1990s.
In our budget, we’ve made a basis boost proposal to increase the tax credits available to preserve federally assisted housing and would allow for income averaging, which will be especially helpful for tax credit properties in regions with high rents.
The Tax Credit reminds us why we need to continue strengthening the Section 202 program for the future—which we began doing in our 2011 budget, when we called for suspending new construction.
Now, I know that wasn’t a popular decision. But seven times as many units for the elderly and disabled are produced under the Tax Credit.
That’s why the Section 202 reform bill President Obama signed into law last December was so important. That bill made critical changes to the program so that 202 developments can leverage private capital to build and preserve more units and while making the program more sustainable over the long haul.
It was these reforms combined with important progress made by our deputy assistant secretary for multifamily, Carol Galante, that allowed us to request $387 million for elderly expansion activities in our 2012 budget, including the new construction, rehabilitation, or preservation of over 2,800 new units.
These reforms include prioritizing developments that leverage other sources of financing such as the Low-Income Housing Tax Credit, new “readiness” criteria for projects that are farther along and can house seniors faster, and a new way of targeting funds at a scale that makes better sense for owners and managers over the long term.
All told, our proposed budget serves over 4.5 million families in our core rental assistance programs—86,000 more than in 2010—and proposes to capitalize the Affordable Housing Trust Fund for new affordable housing construction, a commitment the Obama administration reaffirmed in our housing finance proposal released earlier this year.
Obviously, we will again need to find common ground on a common-sense budget, as the president has said. But we can’t balance our budget on the backs of the most vulnerable—and it can’t be something we use as cover to do away with things we dislike politically.
Of course, redesigning these programs isn’t just about preserving and building more affordable housing.
It’s also about ensuring that housing better meets the needs of seniors—and is the platform for delivering the supportive services frail, elderly and disabled households need.
That is precisely why demand for our Section 232 financing program has grown exponentially over the last two years—providing critical financing for assisted living facilities and nursing homes across the country.
But you and I both know that with the need so great and our fiscal challenges growing every day, we need to find new ways of cost-effectively serving seniors.
All of these efforts are fundamentally about the same thing:
Providing seniors options for living where they want, whether it is in quality-assisted living or in their homes, their neighborhoods, their communities.
In recent years, we’ve seen seniors moving back to city centers and inner-ring suburbs. And I believe there are four fundamental reasons why.
First and foremost, because it’s a matter of affordability. Families who use transit spend, on average, 16% less on transportation costs.
Secondly, because they recognize these kinds of living arrangements translate into better health—with better access to doctors, better outdoor environments that are more walkable and better indoor environments that are more comfortable and more energy efficient.
Third, because they feel safer. The more Americans that live close to transit and accessible transportation, the safer our roads are because there are more choices for everyone.
And lastly, because of something that goes deeper than dollars and cents—because seniors value communities and neighborhoods.
Town centers and villages are not only more walkable for seniors—they’re not as isolating as sprawling communities are either, with front doors, porches, and sidewalks. These kinds of amenities have a huge impact on seniors’ ability to age in place.
These are the kinds of choices tens of thousands of seniors are already making—because they recognize that affordable housing, supportive community features and services, and adequate mobility options are essential to aging in place.
For example, we’ve found at HUD that helping frail elderly live at home independently can cost less than half to two-thirds of the costs in a nursing home.
But the truth is, preserving affordable housing in transit-rich areas is becoming a major challenge. This has huge implications for lower income seniors and those in minority communities in particular.
That’s one reason we are giving points to our Section 202 applicants who propose building senior housing in walkable neighborhoods with proximity to transit.
That’s one big reason last fall the Department of Transportation and HUD awarded $170 million to help regions and communities develop comprehensive housing and transportation plans that create jobs and economic growth.
In Randolph County, Va., where the local senior center runs the only transit service in the county, you can see how these grants weren’t about one-size-fits-all rules that tell communities what to do—but saving the taxpayer money by coordinating investments more effectively and efficiently.
In community after community, from Roanoke to Oakland, we’ve seen that senior housing can be anchors for transit-oriented development and neighborhood revitalization all across the country—anchors that not only serve seniors but do it leveraging millions of dollars in private investment.
By requesting another $150 million in our FY 2012 budget, we want every community in the country to have a chance to compete for these tools—and we need your support to ensure they do.
These investments reflect a larger conversation going on in communities around the country about how we can live within our means while still meeting the needs of our seniors.
Those conversations aren’t about big government or small government.
They’re about smarter government—one that does more with less. They’re about effective government—one that leverages private investment for the public good.
Because just as we can’t win the future if we don’t start living within our means today, we won’t win the future if we throw our hands up at the challenges we know are on the horizon.
Whatever the issue—whether it’s preserving housing, connecting that housing to a better quality of life, or rebuilding our communities—America’s seniors deserve the dignity of a secure retirement—and a government that’s on their side.
Shaun Donovan is secretary of the Department of Housing and Urban Development.
