S. 118: Section 202 Supportive Housing for the Elderly Act of 2009

S. 118

Section 202 Supportive Housing for the Elderly Act of 2009

December 21, 2010 (111th Congress, 2nd Session)

Staff Contact

Floor Situation

S. 118 is expected to be considered on the floor of the House on Tuesday, December 21, 2010, under a motion to suspend the rules, requiring a two-thirds majority vote for passage.  S. 118 was introduced on January 6, 2009 by Sen. Herb Kohl (D-WI) and approved in the Senate by unanimous consent on December 18, 2010.

Bill Summary

S. 118 would amend the Housing Act of 1959 regarding project rental assistance for supportive housing for the elderly and would expand the eligible uses for savings generated by refinancing Section 202 loans.

The bill would change from discretionary to mandatory the authority of the Secretary of Housing and Urban Development (HUD) to adjust the annual amount of a contract for project rental assistance to provide for reasonable project costs.

The bill would restrict owner deposits to be used only to cover operating deficits during the first three years of operations would restrict the use of deposits to cover construction shortfalls or inadequate initial project rental assistance amounts.

The bill would require the Secretary to permit an owner of assisted housing to give a preference in tenant selection to the homeless elderly.

The bill would direct the Secretary either to: (1) operate a national competition for the non-metropolitan funds allocation of assistance for supportive housing for the elderly; or (2) make allocations to HUD regional offices.

The bill would amend the American Homeownership and Economic Opportunity Act of 2000 to revise requirements governing the following: (1) prepayment of debt for project-based rental housing assistance programs; (2) use of unexpended amounts; and (3) use of project residual receipts.

The bill would set forth requirements governing senior preservation rental assistance contracts in order to prevent displacement of elderly project residents in the case of refinancing or recapitalization, and to further project preservation and affordability.

The bill would direct the Secretary to carry out a demonstration program to sell to state housing finance agencies portfolios of mortgages associated with loans related to supportive housing for the elderly.

The bill would expand the definition of assisted living facility with respect to grants for conversion of elderly housing to such facilities.

The bill would amend the United States Housing Act of 1937 with respect to rental assistance on behalf of a family that uses an assisted living facility as a principal place of residence.

The bill would prohibit the Secretary from imposing conditions that restrict the use of sale or refinancing proceeds, or require the filing of a financial report, in connection with a sale or refinancing of a multifamily housing project, or the transfer of an assistance contract on such a property, that requires HUD approval unless such condition is as follows: (1) expressly authorized by an existing contract between the Secretary and the project owner; or (2) a general condition for new financing with a mortgage insured by the Secretary.

The bill would require the Secretary to establish and operate a national senior housing clearinghouse.


The Section 202 Housing for the Elderly program was established as part of the Housing Act of 1959. The program currently makes capital grants and rental assistance available to nonprofit entities to develop housing that is affordable to low-income elderly households.  Prior to 1990, the Department of Housing and Urban Development (HUD) made direct loans to nonprofit developers, rather than capital grants, with an average term of 40 years for those loans. HUD holds about 3,000 Section 202 loans with a total unpaid balance of over $3 billion. The interest rates for those loans range from 3 percent to 9 percent, with an average maturity date of 2025. Property owners who agree to operate their project until the maturity date of the original loan (under terms that are at least as advantageous to tenants as under the original loan agreement) may prepay their loans if such refinancing results in a lower interest rate and a reduction in debt service.


CBO estimates that S. 118 would increase direct spending by $5 million in 2011 because the bill would effectively modify the terms of existing federal loans, reducing the present value of expected cash flows for such loans.  Pay-as-you-go procedures apply because enacting the legislation would affect direct spending.