Study panels

One or two study panels, composed of nongovernment persons, would be established to review applications for project grants and to recommend to the Secretary action to be taken on them. (If two panels are created, each would consist of from 5 to 10 members. One panel would be called the Demonstration and Research Study Panel and the other the Training Projects Study Panel.) Members of the Panel or Panels would be experts in one or more aspects of aging and would be appointed by the Secretary of Health, Education, and Welfare for 4-year staggered terms.

Special Staff on Aging

Within the Research and Training Division of the Special Staff on Aging, a Grants Administration Branch would be responsible for the operation of the program. The Chief of the Branch, assisted by two program specialists and an administrative assistant, would receive and handle the applications (decide whether they are acceptable under the act, designate the study panel to which each application would be sent for action, maintain records and control of the applications, etc.); supervise arrangements for consultative services as necessary; collect and prepare special educational or informational materials; coordinate with the grant programs in cooperative educational research, the Social Security Administration research program, Public Health Service research, training, and demonstration grant programs, and the grant programs of the Office of Vocational Rehabilitation; and perform various services in connection with the program. The program specialists (one for research and development projects, and one for training projects) would act as executive secretaries for the appropriate study panels.

Steps in processing applications

The steps involved in processing applications for grants would be as follows: (1) Applications for grants received by the Secretary of Health, Education, and Welfare would be sent through the Director of the Special Staff on Aging to the Grants Administration Branch.

(2) The Grants Administration Branch, after preliminary examination, routine processing, and coordination with other grant programs, would refer each application to the appropriate study panel for review and preparation of a recommendation to the Secretary.

(3) The members of the study panels, individually, would provide technical review. When convened as a group, at specified intervals, each study panel would arrive at a group decision expressed in the form of a recommendation for approval or disapproval. The study panels would forward their recommendations to the Secretary of Health, Education, and Welfare via the Grants Administration Branch and the Director of the Special Staff on Aging.

(4) The Secretary would have the final authority for accepting or rejecting the recommendations of the study panels.

Financial participation by grantee

The Secretary, with the advice of the President's Council on Aging and the Advisory Committee on Aging would determine the amount of contributions required from (a) public agencies and (b) voluntary organizations for carrying out the project for which grants are requested. Such contributions would be specified in one or more terms of money, facilities, or services and, in the case of continuing grants, could be required in increasing proportions of total project cost.

Geographical distribution of grants

It is recognized that aging has nationwide impact and that there are variations from one locality to another. Therefore, the Secretary of Health, Education, and Welfare will give attention to spreading the grants throughout the United States. Through its regional representatives on aging-one on the staff of each of the regional offices-the Department already has an effective mechanism for encouraging and stimulating the nationwide submission of project applications.

Mr. BAILEY. The subcommittee will stand in recess, subject to call of the Chair.

(Whereupon, at 12:07 p.m. the subcommittee was recessed, subject to the call of the Chair.)

The following material was submitted for the record.)

STATEMENT BY SIDNEY SPECTOR, ASSISTANT ADMINISTRATOR, OFFICE OF HOUSING FOR SENIOR CITIZENS, HOUSING AND HOME FINANCE AGENCY

BACKGROUND

Aging should be one of the great social achievements of the 20th century. Most people now survive well beyond retirement and continue their contribution to their communities and to the Nation. Research indicates the likelihood of further gains both in longevity and in the capacity to enjoy full and active lives. However, our aged have unique social and economic problems which hamper the realization of this achievement. Crucial among these is the need for good housing adapted to the physical, psychological and economic changes which take place with age. This need calls for housing which is designed to sustain independence even when disability occurs; which nurtures and promotes dignity, self-respect and usefulness in the later years; and which older persons can afford.

Twenty-one million people are now 62 or over and by 1980 we expect at least 30 million people in this age group. Perhaps even more thought provoking than the numbers involved, is the fact that already 1 out of 3 persons reaching the age of 60 has a parent or close relative over 80. In 40 years, this ratio will rise to 2 out of 3. Then, our society will have the unique challenge of meeting the housing needs of not one, but two generations of senior citizens. As an indication of how fast our senior citizen population is growing, it may be noted that while the general population increased only 19 percent from 1950 to 1960, the older population rose 35 percent and the age group 85 and over increased just over 60 percent.

It is true that most older people are mobile and are able to care for themselves with a minimum of help even when disabled. However, 8 out of 10 do have 1 or more chronic illnesses and older people do spend twice as many days in hospitals as those under 65. Thus, access to medical facilities is an important consideration in planning housing for the elderly, and the design of housing for them should receive special attention to help offset their disabilities.

While not a homogenous income group, the aged tend to be in the low or moderate categories, with their median money incomes almost half of those under 65. About half of our aged families have incomes of less than $3,000 per year and a third less than $2,000. Single aged persons are in the most desperate straits, with half having income of less than $1,050 per year. Housing for senior citizens must relate particularly to their income levels and to the relative inflexibility of their income potentials.

With the cessation of regular employment and the end of years occupied by raising and educating a family and associated activities, many older people find themselves lacking in clear purpose. Yet on the average, they face 14 years of life expectancy after retirement and need new activities to fill their days. It is in this period when children have left home and when the death of a spouse so often occurs that serious social and emotional vacuums are created. Almost half the aged are either widowed, separated, divorced or single; a total of about 8 million people thus live alone. They are subject to social isolation, lowered incomes, and unsuitable living arrangements.

For the widowed and the single elderly, housing can play a fundamental part in providing badly needed sources of personal and social relationship. For the aged in general, housing can and does fill an expanded role as the focal point of their daily lives. It thus will foster either creative, productive activity or passive parasitism.

Studies vary on the exact dimensions of the housing needs of America's senior citizens. Much additional data are required to identify their needs more clearly. A major portion will be provided by special tabulations now being processed by the U.S. Bureau of Census and for the first time we will have detailed data on the kinds of housing older people occupy, the cost, room size, and quality of their housing, their incomes, and their status of dependence or independence.

With the aged population increasing at a net rate of over 400,000 each year, and with the seemingly irreversible trend toward earlier retirement, the volume of need and its urgency are large and intense. Our national policy on housing for senior citizens should recognize that the progress of science, technology, and living conditions encourage the feeling that a better life should be available for everyone. These rising expectations are evident not only for the working years, but also for those spent in retirement and old age. In the years to come, senior citizens will be increasingly insistent on decent, independent living facilities and our housing programs should be prepared to meet their legitimate needs.

TYPES OF PROGRAMS

With the passage of the Housing Act of 1961, the Housing and Home Finance Agency has a basic set of programs which seek to meet the varied housing needs of America's senior citizens primarily by providing several methods of financial assistance, each appropriate to the objectives of the particular program in which it is used. These programs include mortgage insurance for individually owned and for rental housing, direct loans at low rates of interest, low-rent housing with Federal contributions and mortgage insurance for proprietary nursing homes.

The mortgage insurance program is administered by the Federal Housing Administration and is available under section 231 to assist both profit and nonprofit groups in the construction or rehabilitation of rental housing for senior citizens. The sales housing program (sec. 203) is also administered by the Federal Housing Administration and provides assistance to those elderly persons who can afford and want to buy their own homes. The nursing home program (sec. 232) is also administered through the Federal Housing Administration; nursing homes serve other than just elderly patients of course, but older people make up the greatest proportion of their patients.

The Federal National Mortgage Association, a constituent agency of HHFA, through its special assistance functions, is authorized to make advance commitments to buy FHA section 231 mortgages covering nonprofit projects. These advance commitments provide assurance of permanent financing to sponsors of FHA-insured projects and thereby facilitate their ability to arrange interim construction financing from private sources. It also may purchase mortgages under its secondary market operations.

The Community Facilities Administration administers the section 202 program of direct loans from the Federal Government to nonprofit groups, consumer cooperatives and qualified public agencies to assist them in sponsoring rental housing for older families and persons whose incomes are just above the public housing limit, but below the amount needed to pay rentals for suitable housing otherwise available.

The Public Housing Administration administers the low-rent housing program for the elderly and provides Federal financial and technical assistance to local housing authorities in this field. Annual contributions are made by PHA to cover any deficit in the debt service charges for bonds sold by the local housing authorities to obtain their permanent financing. By virtue of these contribu tions, a local housing authority can make suitable housing available to the elderly at very low rentals.

Early in 1961, the Office of Housing for Senior Citizens was created by the Administrator to assist in coordinating the policies and standards of these senior citizen housing programs. Actual administration and operation, however, continue as the responsibility of the operating agencies: the FHA, CFA, and PHA.

Senior citizens housing activity in 1961

Stimulated by the important amendments and new provisions contained in the Housing Act of 1961, the HHFA programs providing financial assistance for housing for senior citizens made rapid strides during 1961. With the administration giving major emphasis to accelerating activity and with momentum building up, the volume of applications accepted and programed for rental units in 1961 totaled 44,353, almost equal to the previous 5-year total of 44,602. Perhaps even more significant is the fact that in 1961 commitments of 22,483 units in the three rental programs more than doubled the 10,623 total for 1960. Commitments in 1961 alone were equal to about 80 percent of the 1956-60 total. The 4,644 units completed among the three programs in 1961 were almost 21⁄2 times the 1,924 completed in 1960. This 1961 total was also greater than 4,299 completed in the preceding 5-year period.

Just as was the case with the direct loan program, the nursing home program became active only in 1960 and showed substantial gains in 1961. In 1960, only 171 nursing home beds were insured under the FHA program, but in 1961, 1,630 beds were insured.

Along with the large increase in activity in all of these programs in 1961, the end of the year found substantial backlogs of applications in process in each program, totaling around 30,000 housing units and over 3,000 nursing home beds. These facts suggest that the housing needs of the Nation's senior citizens are being recognized by more and more people and groups are taking action in response to these needs.

BRIEF DESCRIPTION OF THE SENIOR CITIZEN HOUSING PROGRAMS

FHA programs of mortgage insurance

Rental housing-section 231.-The Federal Housing Administration is authorized to insure lenders against losses on mortgages used for construction or rehabilitation of rental accommodations for older persons 62 years of age or older. The amount of an insured mortgage may not exceed $12.5 million for a private mortgagor or $50 million if the mortgagor is a Federal or State instrumentality, corporate municipality, or a nonprofit development or housing corporation restricted by Federal or State laws or regulations of banking or insurance departments as to rent charges, capital structure, rate of return or methods of operation. The maximum insurable cost per room in an elevator building in a high-cost area is $4,000 as provided in the 1961 Housing Act.

Where the sponsor is a public instrumentality or a private nonprofit organization, the FHA will insure a mortgage for as much as 100 percent of estimated "replacement cost," while rehabilitation projects are insurable for 100 percent of the "estimated value." When the sponsor is a profit-motivated group, the FHA will insure mortgages up to 90 percent of estimated "replacement cost" for new construction or of "estimated value" for a rehabilitated project. Mortgages may be eligible with terms of up to 40 years and can bear interest at not more than the FHA prescribed rate, currently 54 percent, plus one-half percent mortgage insurance premium.

Sales housing-section 203.-For those older persons who desire and are able to own their own homes, section 203 of the National Housing Act provides liberalized methods to assist in the financing of such homes. The FHA is authorized to insure a lender against losses on a mortgage for housing being purchased by a person 62 years or more, and it is possible for friends, relatives, or even a corporation to make the downpayment.

In addition, if an older person is unable to qualify as an acceptable mortgage risk, either because of age, physical condition, or financial position, it is permissible for a third party to become a cosigner of the mortgage. In this way, a son or daughter can, by signing the note with an elderly parent, assure the financial acceptability of an older person to a lending institution.

Nursing homes

FHA-section 232.-Although the program of aids for nursing homes is not limited to any age group, older persons make up the greatest proportion of patients in nursing homes.

The Housing Act of 1961, amending the act of 1959, authorized the Federal Housing Administration to insure mortgages for financing qualified new or rehabilitated proprietary nursing homes up to 90 percent of estimated value of the property. These are nursing homes which are privately owned, and for patients "who are not acutely ill and do not need hospital care but require skilled nursing care and related medical services."

The Federal Housing Administration is authorized to insure mortgages up to $12 million. The maximum rate of interest for these loans is 54 percent plus one-half of 1 percent mortgage insurance premium.

The FHA cannot insure a mortgage for a nursing home unless it has received, from the appropriate State agency, a certificate indicating that the home is needed and that reasonable minimum standards for licensing and operating such establishments are in force in the State or in the political subdivision in which the nursing home is located.

The nursing homes developed under this program are financed with loans from FHA approved private lenders, who in turn are insured by FHA against losses on these loans.