B-150689, MARCH 27, 1963, 42 COMP. GEN. 528

B-150689: Mar 27, 1963

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" WHICH IS DEFINED AS THE COST OF HOUSING CONSTRUCTION. AS THE PRACTICE IS TO INCLUDE SUCH EQUIPMENT IN CALCULATING THE ALLOWABLE AMOUNT OF AN INSURED MORTGAGE LOAN. THERE IS NO REASON TO EXCLUDE THE COST OF THE EQUIPMENT. REQUESTS A DECISION ON CERTAIN QUESTIONS WHICH HAVE ARISEN UNDER SECTION 202 OF THE HOUSING ACT OF 1959. "DEVELOPMENT COST" IS DEFINED IN SECTION 202 (D) (3) AS "COSTS OF CONSTRUCTION OF HOUSING AND OF OTHER RELATED FACILITIES. OF THE LAND ON WHICH IT IS LOCATED. THE TERM "RELATED FACILITIES" IS DEFINED IN SECTION 202 (D) (8). YOU ADVISE THAT UNDER THE PRACTICE OF THE FEDERAL HOUSING ADMINISTRATION (FHA) THE EQUIPMENT IN QUESTION MAY BE AND GENERALLY IS INCLUDED IN CALCULATING THE ALLOWABLE AMOUNT OF THE MORTGAGE LOAN INSURED.

B-150689, MARCH 27, 1963, 42 COMP. GEN. 528

HOUSING - LOANS - MAXIMUM LIMITATION LOANS FOR THE CONSTRUCTION OF HOUSING FOR THE ELDERLY UNDER SECTION 202 OF THE HOUSING ACT OF 1959, AS AMENDED, 12 U.S.C. 1701Q, IN AMOUNTS NOT TO EXCEED "TOTAL DEVELOPMENT COSTS," WHICH IS DEFINED AS THE COST OF HOUSING CONSTRUCTION, RELATED FACILITIES, LAND, AND SITE IMPROVEMENTS, MAY BE USED TO PURCHASE KITCHEN RANGES AND REFRIGERATORS, AS WELL AS CLOTHES WASHING MACHINES AND DRYERS FOR PROJECT UTILITY ROOMS USED BY ALL TENANTS, AND THE COST OF THE EQUIPMENT TREATED AS A PROJECT DEVELOPMENT COST, SECTION 202 NEITHER AUTHORIZING NOR PRECLUDING THE USE OF LOAN FUNDS FOR THE PURCHASE OF SUCH EQUIPMENT, AND THE EQUIPMENT SATISFYING THE SAFETY, COMFORT, AND CONVENIENCE FEATURES INTENDED FOR THE ELDERLY BY CONGRESS, AND AS THE PRACTICE IS TO INCLUDE SUCH EQUIPMENT IN CALCULATING THE ALLOWABLE AMOUNT OF AN INSURED MORTGAGE LOAN, IN THE ABSENCE OF A CONTRARY CONGRESSIONAL INTENT, THERE IS NO REASON TO EXCLUDE THE COST OF THE EQUIPMENT--- DIRECT LOAN PROGRAM ITEMS--- FROM SECTION 202 DEVELOPMENT COSTS.

TO THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, MARCH 27, 1963:

YOUR LETTER OF JANUARY 23, 1963, REQUESTS A DECISION ON CERTAIN QUESTIONS WHICH HAVE ARISEN UNDER SECTION 202 OF THE HOUSING ACT OF 1959, APPROVED SEPTEMBER 23, 1959, PUBLIC LAW 86-372, 73 STAT. 654, 667, AS AMENDED BY SECTION 201 OF THE HOUSING ACT OF 1961, APPROVED JUNE 30, 1961, PUBLIC LAW 87-70, 75 STAT. 149, 162, AND BY SECTION 3 OF THE SENIOR CITIZENS HOUSING ACT OF 1962, APPROVED SEPTEMBER 28, 1962, PUBLIC LAW 87-723, 76 STAT. 670, 12 U.S.C. 1701Q.

SECTION 202 (A), AS AMENDED, 12 U.S.C. 1701Q (A), AUTHORIZES THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, TO MAKE LOANS TO PRIVATE NONPROFIT CORPORATIONS, CONSUMER COOPERATIVES, OR PUBLIC BODIES OR AGENCIES FOR THE PROVISION OF RENTAL OR COOPERATIVE HOUSING AND RELATED FACILITIES FOR ELDERLY FAMILIES AND ELDERLY PERSONS. IT ALSO PROVIDES THAT THE AMOUNT OF THE LOAN MAY NOT EXCEED THE "TOTAL DEVELOPMENT COST" (AS DEFINED IN SUBSECTION (D) (3), 12 U.S.C. 1701Q (D) (3) ( AS DETERMINED BY THE ADMINISTRATOR.

"DEVELOPMENT COST" IS DEFINED IN SECTION 202 (D) (3) AS "COSTS OF CONSTRUCTION OF HOUSING AND OF OTHER RELATED FACILITIES, AND OF THE LAND ON WHICH IT IS LOCATED, INCLUDING NECESSARY SITE IMPROVEMENT.' THE TERM "RELATED FACILITIES" IS DEFINED IN SECTION 202 (D) (8), 12 U.S.C. 1701Q (D) (8), AS MEANING "NEW STRUCTURES SUITABLE FOR USE AS CAFETERIAS OR DINING HALLS, COMMUNITY ROOMS OR BUILDINGS, OR INFIRMARIES OR OTHER INPATIENT OR OUTPATIENT HEALTH FACILITIES OR FOR OTHER ESSENTIAL SERVICE FACILITIES.'

YOU REQUEST A DECISION AS TO WHETHER AUTHORITY EXISTS UNDER SECTION 202, AS AMENDED, FOR THE USE OF LOAN FUNDS FOR THE PURCHASE OF BASIC KITCHEN EQUIPMENT, SUCH AS RANGES AND REFRIGERATORS, WITH THEIR COST BEING TREATED AS ELIGIBLE PROJECT DEVELOPMENT COST. IN ADDITION YOU REQUEST A DECISION AS TO WHETHER LOAN FUNDS MAY BE USED FOR THE PURCHASE OF CLOTHES WASHING MACHINES AND DRYERS TO BE INSTALLED IN PROJECT UTILITY ROOMS FOR THE COMMON USE OF THE TENANTS. YOU ADVISE THAT UNDER THE PRACTICE OF THE FEDERAL HOUSING ADMINISTRATION (FHA) THE EQUIPMENT IN QUESTION MAY BE AND GENERALLY IS INCLUDED IN CALCULATING THE ALLOWABLE AMOUNT OF THE MORTGAGE LOAN INSURED. YOU STATE THAT FHA IN ALL CASES TAKES INTO ACCOUNT THE VALUE OF SUCH INCLUDED EQUIPMENT IN ESTIMATING THE APPRAISED VALUE OF MULTIFAMILY RENTAL OR COOPERATIVE PROJECTS, AND REQUIRES THAT THIS EQUIPMENT BE A PART OF THE MORTGAGE SECURITY.

ALTHOUGH THE CITED SECTION 202, AS AMENDED, DOES NOT SPECIFICALLY AUTHORIZE THE USE OF SECTION 202 LOAN FUNDS TO PURCHASE RANGES, REFRIGERATORS, CLOTHES WASHERS AND DRYERS, THERE IS NOTHING IN THAT SECTION OR IN ANY OTHER SECTION OF THE CITED ACTS WHICH EXPRESSLY PRECLUDES OR PROHIBITS THE USE OF LOAN FUNDS FOR SUCH PURPOSES IF OTHERWISE PROPER. FURTHER, WHILE THE LEGISLATIVE HISTORY OF SECTION 202, AS AMENDED, DOES NOT SHOW A CLEAR CONGRESSIONAL INTENT WITH RESPECT TO RANGES, REFRIGERATORS, CLOTHES WASHERS AND DRYERS, IT DOES SHOW, AS INDICATED IN YOUR LETTER, THAT THE PURPOSE OF THE HOUSING FOR SENIOR CITIZENS LOAN PROGRAM IS TO SERVE THOSE SENIOR CITIZENS IN THE LOWER INCOME GROUPS WHOSE INCOME IS TOO HIGH FOR ADMISSION TO LOW-RENT PUBLIC HOUSING BUT TOO LOW TO MEET THE RENTAL SCALE OF PROJECTS CONSTRUCTED UNDER THE FHA MORTGAGE INSURANCE PROGRAM OF HOUSING FOR ELDERLY PERSONS. SEE S.REP.NO. 2049, 87TH CONG., 2D SESS. ALSO, IN CONNECTION WITH CONGRESSIONAL INTENT THERE IS SECTION 2 OF THE SENIOR CITIZENS HOUSING ACT OF 1962 WHICH READS AS FOLLOWS:

THE CONGRESS FINDS THAT THERE IS A LARGE AND GROWING NEED FOR SUITABLE HOUSING FOR OLDER PEOPLE BOTH IN URBAN AND RURAL AREAS. OUR OLDER CITIZENS FACE SPECIAL PROBLEMS IN MEETING THEIR HOUSING NEEDS BECAUSE OF THE PREVALENCE OF MODEST AND LIMITED INCOMES AMONG THE ELDERLY, THEIR DIFFICULTY IN OBTAINING LIBERAL LONG-TERM HOME MORTGAGE CREDIT, AND THEIR NEED FOR HOUSING PLANNED AND DESIGNED TO INCLUDE FEATURES NECESSARY TO THE SAFETY AND CONVENIENCE OF THE OCCUPANTS IN A SUITABLE NEIGHBORHOOD ENVIRONMENT. THE CONGRESS FURTHER FINDS THAT THE PRESENT PROGRAMS FOR HOUSING THE ELDERLY UNDER THE HOUSING AND HOME FINANCE AGENCY HAVE PROVEN THE VALUE OF FEDERAL CREDIT ASSISTANCE IN THIS FIELD AND AT THE SAME TIME DEMONSTRATED THE URGENT NEED FOR AN EXPANDED AND MORE COMPREHENSIVE EFFORT TO MEET OUR RESPONSIBILITIES TO OUR SENIOR CITIZENS.

IN THE SAME CONNECTION NOTE THE FOLLOWING EXCERPTS FROM S.REPT.NO. 2049, 87TH CONG., 2D SESS. (PP. 3, 4, 5, AND 8) ON THE BILL WHICH BECAME THE SENIOR CITIZENS HOUSING ACT OF 1962:

IN THE FIELD OF HOUSING, SENIOR CITIZENS ARE CONFRONTED WITH A SPECIAL GROUP OF OBSTACLES. THEIR AGE MAKES IT PARTICULARLY DIFFICULT TO OBTAIN LIBERAL MORTGAGE FINANCING. BECAUSE THE GREAT MAJORITY OF THEM HAVE FIXED AND LIMITED INCOMES THEY ARE OFTEN UNABLE TO AFFORD THE KIND OF HOUSING THEY NEED.

ONE OF THE MOST SUCCESSFUL PROGRAMS TO HELP MEET THE HOUSING NEEDS OF THE ELDERLY IS THE PRESENT SECTION 202 PROGRAM OF LOW-INTEREST DIRECT LOANS FOR RENTAL HOUSING IN URBAN AREAS. THESE LOANS REDUCE RENTS BY AS MUCH AS $20 A MONTH COMPARED TO USUAL FINANCING CHARGES. * * *

IN OUR SOCIETY THE AGED HAVE UNIQUE SOCIAL AND ECONOMIC PROBLEMS. MOST OLDER PERSONS ARE MOBILE AND ABLE TO CARE FOR THEMSELVES WITH A MINIMUM OF HELP EVEN WHEN DISABLED. HOWEVER, 8 OUT OF 10 DO HAVE ONE OR MORE CHRONIC ILLNESSES; THEY SPEND TWICE AS MANY DAYS PER YEAR IN HOSPITALS AS DO THOSE UNDER 65; AND THEY HAVE DISEASES OF THE CIRCULATORY SYSTEM AT 3 TIMES THE RATE OF YOUNGER AGE GROUPS. ACCESS TO MEDICAL AND HEALTH FACILITIES AND PHYSICAL DESIGN TO COMPENSATE FOR DISABILITY ARE PRIME REQUIREMENTS FOR HOUSING OLDER PERSONS.

TWO-THIRDS OF THE AGED NOW LIVE IN THEIR OWN HOMES. A LARGE PORTION OF THEM HAVE LIVED IN THESE HOMES FOR 30 YEARS OR MORE, AFTER HAVING PURCHASED THEM TO HOUSE THEIR YOUNG AND GROWING FAMILIES. THEY FACE PROBLEMS OF RISING MAINTENANCE EXPENSES, HIGHER PROPERTY TAXES, AND MAJOR REPAIRS AT A TIME WHEN THEIR PHYSICAL CAPACITIES ARE SUBSTANTIALLY REDUCED AND THEIR FAMILY INCOMES HALVED. AT THIS STAGE, MUCH OF THE EXISTING HOUSING OCCUPIED BY SENIOR CITIZENS IS TOO LARGE, TOO OLD, TOO COSTLY, OR TOO INEFFICIENT AND UNSAFE FOR THE CHANGES WHICH OCCUR WITH AGE.

HOUSING FOR THE NATION'S SENIOR CITIZENS THUS CONSTITUTES A SPECIAL PROBLEM REQUIRING SPECIAL ATTENTION. HOUSING FOR SENIOR CITIZENS MUST BE ADAPTED TO THE PHYSICAL, PSYCHOLOGICAL, AND ECONOMIC CHANGES WHICH TAKE PLACE WITH AGE. IT MUST BE ESPECIALLY (SIC) RESPONSIVE TO THE INCOME STATUS OF OUR SENIOR CITIZENS AND TO THE RELATIVE INFLEXIBILITY OF THEIR INCOME POTENTIALS. IT MUST BE DESIGNED TO PLAY A FUNDAMENTAL ROLE IN SUSTAINING THE WIDOWED AND OTHER SINGLE ELDERLY BY PROVIDING NEW SOURCES OF PERSONAL AND SOCIAL RELATIONSHIPS. A PROGRAM TO MEET THE HOUSING NEEDS AND LIVING REQUIREMENTS OF AMERICA'S OLDER PERSONS MUST, THEREFORE, AVOID RIGIDITIES AND DOGMATISMS AND PRIMARILY ENLARGE THE AREA OF INDIVIDUAL CHOICE AMONG PERSONS TO WHOM INDIVIDUAL CHOICE IS BASIC TO SELF-RESPECTING AND MEANINGFUL LIVING.

THE HOUSING PROVIDED UNDER THE DIRECT LOAN PROGRAM IS REQUIRED TO BE ESPECIALLY PLANNED AND BUILT FOR USE BY ELDERLY FAMILIES AND PERSONS. THE STRUCTURES MUST BE DESIGNED WITH THE SAFETY, COMFORT, AND CONVENIENCE OF OLDER PEOPLE IN MIND. THE HOUSING MUST BE ACCESSIBLE TO HEALTH FACILITIES, OTHER COMMUNITY GROUPS, TRANSPORTATION, SHOPPING FACILITIES, CHURCHES, RECREATION FACILITIES, AND OTHER SOCIAL CONTACTS, ALL OF WHICH ARE ESSENTIAL TO THE HEALTH AND HAPPINESS OF THE TENANTS. IT MUST ALSO BE CONSONANT WITH OVERALL PLANS FOR GROWTH OF THE COMMUNITY.

SECTION 2 OF THE 1962 ACT AND THE QUOTED EXCERPTS FROM THE ABOVE CITED SENATE REPORT MAKE IT CLEAR THAT IN ADDITION TO THE ECONOMIC FACTOR THE CONGRESS INTENDED THAT THE HOUSING BE DESIGNED AND PLANNED TO INCLUDE FEATURES NECESSARY FOR THE SAFETY, COMFORT AND CONVENIENCE OF OLDER PEOPLE. IT IS EVIDENT THAT RANGES, REFRIGERATORS, CLOTHES WASHERS AND DRYERS MAY REASONABLY BE CONSIDERED "FEATURES NECESSARY TO THE SAFETY AND CONVENIENCE OF THE OCCUPANTS.' WITHOUT SUCH EQUIPMENT THE OCCUPANTS MIGHT BE REQUIRED TO LEAVE THEIR OWN QUARTERS FOR MEALS AND TO WASH AND DRY CLOTHES, UNLESS IN THE LATTER INSTANCE A COMMERCIAL LAUNDRY WAS USED.

FURTHER, YOUR LETTER INDICATES THAT UNDER THE PRACTICE OF FHA THE EQUIPMENT IN QUESTION MAY BE AND GENERALLY IS INCLUDED IN CALCULATING THE ALLOWABLE AMOUNT OF THE MORTGAGE LOANS INSURED. WE FOUND NOTHING IN THE LEGISLATIVE HISTORY OF SECTION 202, AS AMENDED, TO INDICATE THAT THE CONGRESS INTENDED TO EXCLUDE FROM DEVELOPMENT COSTS IN THE SECTION 202 DIRECT LOAN PROGRAM ITEMS ALLOWED IN CALCULATING THE ALLOWABLE AMOUNT OF THE MORTGAGE IN CONNECTION WITH FHA INSURED LOANS FOR SENIOR CITIZENS' HOUSING. IT WOULD SEEM REASONABLE TO ASSUME, IN THE ABSENCE OF A CLEAR CONGRESSIONAL INTENT TO THE CONTRARY, THAT THE CONGRESS INTENDED A SIMILAR APPROACH WITH RESPECT TO THE FHA SENIOR CITIZENS HOUSING PROGRAM AND THE SECTION 202 SENIOR CITIZENS HOUSING DIRECT LOAN PROGRAM.

AS INDICATED IN YOUR LETTER, IF THE DEVELOPERS OF SENIOR CITIZENS' HOUSING ARE NOT PERMITTED TO INCLUDE THE COST OF RANGES, REFRIGERATORS, CLOTHES WASHERS AND DRYERS IN THE DEVELOPMENT COSTS, THE DEVELOPERS MIGHT BE COMPELLED TO SEEK MORE COSTLY SHORT-TERM FINANCING FOR THIS PURPOSE. THIS WOULD UNDOUBTEDLY RESULT IN HIGHER RENTAL RATES THAN WOULD OTHERWISE BE ESTABLISHED, AND TEND TO DEFEAT THE INTENT OF THE CONGRESS THAT THE PROGRAM PROVIDE HOUSING FOR SENIOR CITIZENS WITH MODERATE INCOMES AT RENTS THEY CAN AFFORD.

FURTHER, THE INSTALLATION OF CLOTHES WASHERS AND DRYERS IN PROJECT UTILITY ROOMS FOR THE COMMON USE OF THE TENANTS, WOULD BE AUTHORIZED BY SECTION 202 (A) (2), 12 U.S.C. 1701Q (A) (2), UNDER THE TERM "RELATED FACILITIES," AS THAT TERM IS DEFINED IN 202 (D) (8), SINCE UTILITY ROOMS WITH WASHING MACHINES AND DRYERS INSTALLED FOR THE COMMON USE OF THE TENANTS WOULD BE "STRUCTURES SUITABLE * * * FOR OTHER ESSENTIAL SERVICE FACILITIES.'

IN LIGHT OF THE FOREGOING IT IS OUR VIEW THAT FUNDS LOANED PURSUANT TO SECTION 202 OF THE HOUSING ACT OF 1959, AS AMENDED, MAY BE USED FOR (1) THE PURCHASE OF RANGES AND REFRIGERATORS AND (2) THE PURCHASE OF CLOTHES WASHING MACHINES AND DRYERS TO BE INSTALLED IN PROJECT UTILITY ROOMS FOR THE COMMON USE OF THE TENANTS, WITH THE COST OF SUCH EQUIPMENT BEING TREATED AS AN ELIGIBLE PROJECT DEVELOPMENT COST. WE HAVE BEEN INFORMED THAT YOUR AGENCY IS NOT CONCERNED WITH OTHER ITEMS OF "BASIC KITCHEN EQUIPMENT" AT THIS TIME.