Subsidized Elderly Housing

Abstract

Starting in the early 1960s, the federal govenunent joined with the private-sector housing developers in a partnership: in return for subsidized mortgages and tax benefits, developers would rent to low- and moderate-income tenants. Today, many elderly people live in these "publicly subsidized" units. The initial agreement, however, held out an escape clause: after 15 to 20 years, for-profit developers that wanted to end the partnership could prepay their mortgages, leaving tenants in those buildings "at risk" of rent increascs and/or evictions. This article discusses that partnership, its options for dissolution, and the current solutions to the problem of the expiring agreements, including a moratorium, vouchers, and incentives. The compromise legislation responds to all interested parties- owners, current and would-be tenants, local governments, taxpayers- through a multi-stage sequence of dissolution, yet such a finely tuned, acutely sensitive legislative solution may not work easily or efficiently.